ASTROTECH Corp 10-K

Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities   Market Information, Holders, and Dividends   Our common stock is principally traded on The Nasdaq Capital Market under the symbol ASTC. We have never paid cash dividends and have no intention of paying dividends in the future.   36 Table of Contents   We have 250,000,000 shares of common stock authorized for issuance. As of September 13, 2022, we had 50,630,849 shares of common stock outstanding, which were held by approximately 130 holders of record. This number does not include beneficial or other owners for whom common stock may be held in “street” name. The last reported sale price of our common stock as reported by The Nasdaq Capital Market on September 13, 2022 was $0.47 per share. Sales of Unregistered Securities None.   Item 6.      Reserved   Item 7.      Management ’ s Discussion and Analysis of Financial Condition and Results of Operations   The following information should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes included below in Item 8 of this Annual Report on Form 10-K.    This discussion contains forward-looking statements that involve risks and uncertainties.    Our actual results may differ materially from those anticipated in these forward-looking statements.   Business Overview   Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology through its wholly-owned subsidiaries:     ● Astrotech Technologies, Inc. (“ATI”) owns and licenses the intellectual property related to the Astrotech Mass Spectrometer Technology™ (the “AMS Technology”).     ● 1 st  Detect Corporation (“1 st  Detect”) is a manufacturer of explosives trace detectors capable of also detecting narcotics. It was developed for use at airports, cargo and other secured facilities, and borders worldwide. 1 st  Detect holds an exclusive AMS Technology license from ATI for air passenger and cargo security applications.     ● AgLAB, Inc. (“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes. AgLAB holds an exclusive AMS Technology license from ATI for agriculture applications.     ● BreathTech Corporation (“BreathTech”) is developing a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection. BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications.   Astrotech Technologies, Inc. ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1 st  Detect. Long recognized as the gold standard in chemical detection, mass spectrometry has historically been considered to be too costly, bulky, and cumbersome. In contrast, the AMS Technology has been designed to be comparatively inexpensive, small, and easy to use. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 23 granted patents and one additional patent in process along with extensive trade secrets. With a number of diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of use. ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1 st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in breath analysis applications. ATI has contracted with Sanmina Corporation (“Sanmina”), a leading contract manufacturer with a worldwide presence, to manufacture our mass spectrometer products. Leveraging their expertise, Sanmina has helped to improve the manufacturability and reliability of our systems.   37 Table of Contents   1 st Detect Corporation   1 st  Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide. We believe that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). We further believe that IMS-based ETDs are fraught with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has a virtually unlimited and easily expandable threat library.   In order to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries, we obtained ECAC certification. We are currently selling the TRACER 1000 to customers who accept ECAC certification. We have deployed the TRACER 1000 in approximately 20 locations in 11 countries throughout Europe and Asia.   On August 25, 2021, 1 st Detect announced that it secured an important landmark purchase order from a distributor for the TRACER 1000, representing the first units to be deployed at an airport security checkpoint for passenger screening. These systems were sold to the customer during the second quarter of fiscal year 2022.   In the United States, we are working with the U.S. Transportation Security Administration (“TSA”) towards air cargo certification. On March 27, 2018, we announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, we announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports. On November 14, 2019, we announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, we have received valuable feedback from all programs. Following ECAC certification and our early traction within the cargo market, testing for cargo security continued with the TSA. With the onset of the COVID-19 pandemic, all testing within the TSA was put on hold; however, we resumed cargo testing during the summer of 2020, and we subsequently announced on September 9, 2020, that the TRACER 1000 passed the non-detection testing portion of the TSA’s ACSQT. Due to delays caused by COVID-19, TSA cargo detection testing is ongoing, but has proceeded much more slowly than originally anticipated. As a result, efforts are primarily focused on our other opportunities. TSA cargo detection testing is the final step to be listed on the Air Cargo Screening Technology List (“ACSTL”) as an “approved” device. If approved, the TRACER 1000 will be approved for cargo sales in the United States.   AgLAB Inc.   AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB-1000™ series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes. The AgLAB product line is a derivative of our core AMS Technology. The AMS Technology provides a significant competitive advantage due to its small size, rugged design, quick analysis, and ease of use. AgLAB recently completed several successful field trials to demonstrate that the AgLAB-1000-D2™ can be used in the distillation process to significantly boost the potency and weight yields of THC and CBD oil manufacturing. We plan to launch a family of “process control” instruments, methods, and solutions that we believe could be valuable additions to many nutraceutical extraction and distillation laboratories.   BreathTech Corporation   BreathTech, an exclusive licensee of ATI for use in breath analysis, is developing the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection. While vaccines have been deployed to mitigate the most serious effects of COVID-19, many people remain unvaccinated and new variants continue to pose a significant and evolving threat. New tools to aid in the battle against COVID-19 and other diseases remain of the utmost importance to help more quickly identify that an infection may be present, and BreathTech, in conjunction with Cleveland Clinic, is developing a quick and easy to use device to help determine the presence of infections.   38 Table of Contents   In June 2022, we expanded our existing study that initially focused on COVID-19 with Cleveland Clinic to use the BreathTest-1000 to screen for a variety of diseases spanning the entire body. The project will focus on detecting bloodstream infections, respiratory infections such as influenza types A and B and respiratory syncytial virus (“RSV”), carriage of Staphylococcus aureus, and Clostridioides difficile (“C. diff”) infections.   Development of the BreathTest-1000 follows our results in pre-clinical trials for the BreathDetect-1000™, a rapid self-serve breathalyzer that was designed to detect bacterial infections in the respiratory tract, including pneumonia. The pre-clinical trials were conducted in collaboration with UT Health San Antonio in 2017.   COVID-19   We are subject to risks and uncertainties as a result of the COVID-19 pandemic. To date, we have seen delays with respect to the TSA certification process and parts of our supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation. In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID-19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines.   We continue to manage production, to secure alternative supplies where available, and to take other proactive actions. We believe that we will be able to pass the inflation caused by raw materials shortages and increased shipping costs to our customers by increasing the price of our instruments. If supply chain shortages become more severe or longer term in nature, our business and results of operations could be adversely impacted; however, we do not expect this issue to materially adversely affect our liquidity position. The long-term impact of the COVID-19 pandemic on our business may not be fully reflected until future periods.   We continue to evaluate the current and potential impact of the pandemic on our business, results of operations, and consolidated financial statements. We also continue to actively monitor developments and business conditions, including those that may be related to additional COVID-19 variants and other diseases, that may cause us to take further actions that alter business operations as may be required by applicable authorities or that we determine are in the best interests of our employees, customers, suppliers, and stockholders.   Coronavirus Aid, Relief and Economic Security Act (the “ CARES Act ” )   On March 27, 2020, the CARES Act was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The most significant relief measures which we qualified for are a loan pursuant to the Paycheck Protection Program for which we have received full forgiveness, alternative minimum tax credit refunds, employee retention credit, and payroll tax deferral. The payroll tax deferral was effective from the enactment date through December 31, 2020, and the deferred amount will be repaid in two installments. 50% of the deferred amount has been paid as of December 31, 2021, and the remainder will be due by December 31, 2022. The deferred payroll taxes are recorded within accrued liabilities on the condensed consolidated balance sheets.   We will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to us, and the potential impacts on our business.   Critical Accounting Estimates   The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that directly affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. A critical accounting estimate is one that involves a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience and on various other assumptions that are believed 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. Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may differ from these estimates under different assumptions or conditions. We believe the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements:   39 Table of Contents   Revenue Recognition   We adopted the provisions of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) in fiscal year 2019. Under Topic 606, we recognize revenue when our customers obtain control of the goods, warranty services are delivered, or performance obligations are met.   Revenue for our product sales is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue related to extended product warranty arrangements is deferred and recognized over time, as services are delivered. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, we perform the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the assessment of the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as we satisfy each performance obligation. As part of the accounting for arrangements under Topic 606, we must use significant judgment to determine: (a) the performance obligations based on the determination under step (ii) above; (b) the transaction price under step (iii) above; and (c) the standalone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. We also use judgment to determine whether milestones or other variable consideration should be included in the transaction price as described below. The transaction price is allocated to each performance obligation based on the relative stand-alone selling price of each performance obligation in the contract, and we recognize revenue based on those amounts when, or as, the performance obligations under the contract are satisfied.   The standalone selling price is the price at which an entity would sell a promised good or service separately to a customer. Management estimates the standalone selling price of each of the identified performance obligations in our customer contracts, maximizing the use of observable inputs. Because we have not sold the same goods or services in our contracts separately to any customers on a standalone basis and there are no similar observable transactions in the marketplace, we estimate the standalone selling price of each performance obligation in our customer arrangements based on observable independent pricing of our products when available or, if unavailable, our estimate of costs to be incurred to fulfil our obligations associated with the performance, plus a reasonable margin.   We determined that our only contract liability under Topic 606 is deferred revenue. Amounts received prior to revenue recognition are recorded as deferred revenue in the consolidated balance sheets. Amounts are recorded as accounts receivable when our right to consideration is unconditional.   We recognize revenue on product sales to customers when the transfer of control happens. We recognize revenue on training when the service has been rendered. We include a standard one-year warranty with our product sales. These standard warranties are accounted for at the time product revenues are recognized. We also offer warranty extensions for an additional fee. Revenue related to warranty extensions is recognized on a straight-line basis over the term. Product revenues are recorded net of variable consideration, including discounts.   Impairment of Long-lived Assets   We review the carrying amount of our long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset or an asset group may not be fully recoverable. If indicators of impairment exist, an impairment loss would be recognized when the estimated undiscounted future cash flows expected to result from the use of the asset or asset group and its eventual disposition are less than its carrying amount. The impairment charge is determined based upon the excess of the carrying value of the asset over its estimated fair value, with estimated fair value determined based upon an estimate of discounted future cash flows or other appropriate measures of estimated fair value. For purposes of recognition of impairment for long-lived assets, we group assets and liabilities at the lowest level for which cash flows are separately identifiable.   Valuation of Inventory   Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. We reserve or write down inventory for estimated obsolescence, inventory in excess of reasonably expected sales, or unmarketable inventory, in an amount equal to the difference between the cost of inventory and the estimated market value, based upon assumption about future demand and market conditions. If actual market conditions are less favorable than those projected, additional inventory adjustments may be required. Inventory impairment charges establish a new cost basis for inventory and charges are not reversed subsequently to income, even if circumstances later suggest that increased carrying amounts are recoverable.   40 Table of Contents   Warranty Provision   The standard warranty periods we provide for our products can range from one to seven years. We establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience, and for any known or anticipated product warranty issues. Our warranty obligations are impacted by a number of factors, including historical warranty costs, actual product failure rates, service delivery costs, and the use of materials. If our actual results are different from our assumptions, increases or decreases to warranty reserves could be required, which could impact our cost of revenue and gross margins.   Results of Operations for the Years Ended June 30, 2022 and 2021   Selected financial data for the fiscal years ended June 30, 2022 and 2021 of our operations are as follows:       Years Ended June 30,   (In thousands)   2022     2021     Variance   Revenue   $ 869     $ 334     $ 535   Cost of revenue     677       298       (379 ) Gross profit     192       36       156   Gross margin percentage     22 %     11 %     11 % Operating expenses                         Selling, general and administrative     6,006       4,741       (1,265 ) Research and development     2,781       2,692       (89 ) Disposal of corporate lease     —       513       513   Total operating expenses     8,787       7,946       (841 ) Other income and (expense), net     265       (235 )     500   Gain from extinguishment of debt - PPP loan     —       542       (542 ) Income tax benefit     —       —       —   Net loss   $ (8,330 )   $ (7,603 )   $ (727 ) Net unrealized losses, net of zero tax expense     (1,176 )     (23 )     (1,153 ) Total comprehensive loss   $ (9,506 )   $ (7,626 )   $ (1,880 )   Revenue – Total revenue increased significantly by $535 thousand, or 160.2%, to $869 thousand for the fiscal year ended June 30, 2022, compared to $334 thousand for the fiscal year ended June 30, 2021. All of the fiscal year 2022 revenue was comprised of sales related to our TRACER 1000 units to distributors to the airport security market and DHL (Deutsche Post AG). In fiscal year 2021, all of our revenue was related to sales of the TRACER 1000 to DHL (Deutsche Post AG) and distributors.   Cost of Revenue and Gross Profit – Cost of revenue is comprised of labor, materials, shipping, warranty reserve, and overhead allocation related to the sale of TRACER 1000 units. Gross profit is comprised of revenue less cost of revenue. Cost of revenue increased $379 thousand, or 127.2%, for the fiscal year ended June 30, 2022, compared to the year ended June 30, 2021, due to the increase in revenue described above. Gross profit increased $156 thousand, or 433.3%, and gross margin increased to 22% during the fiscal year ended June 30, 2022, compared to the year ended June 30, 2021, as we have increased production and benefited from associated volume discounts. Further, we have benefited from implementing specific enhancements to our technology that have improved the reliability of our systems.   Operating Expenses – Our operating expenses increased $841 thousand, or 10.6%, during the fiscal year ended June 30, 2022, compared to the fiscal year ended June 30, 2021. Significant changes to operating expenses include the following:     •  Selling, General and Administrative Expenses  – Our selling, general and administrative expenses increased by $1.3 million, or 26.7%, for the year ended June 30, 2022, compared to the year ended June 30, 2021. This is due to an increase in restricted non-cash equity compensation for employees to incentivize long-term employee retention, director fees for our lead independent director, and legal expenses related to our ongoing derivative litigation.   41 Table of Contents     •  Research and Development Expenses –   Research and development expenses increased $89 thousand, or 3.3%, for the year ended June 30, 2022, compared to the year ended June 30, 2021, largely driven by an increase in expenses related to contractors and consultants and equipment for development of our BreathTech and AgLAB products.      •  Disposal of long-lived assets decreased $513 thousand due to the termination of our corporate office lease and the disposal of the leasehold improvement assets and ROU assets and lease liabilities associated with that lease in fiscal year 2021. As a result of this termination, our net cash savings over the remainder of the lease was estimated to be approximately $870 thousand.   Other income and (expense), net – Other income, net for the year ended June 30, 2022 was $265 thousand compared to other expense, net of $235 thousand for the year ended June 30, 2021. During fiscal year 2022, other income and expense, net was driven by increased income earned on short-term, capital-preservation investments as interest rates have increased and a reduction of interest expense from the partial payment of related party notes in September 2021 which was the primary driver of the prior year other expense, net.   Gain from extinguishment of PPP loan –   We received full forgiveness of our PPP promissory note from the Small Business Administration in April 2021.   Income Taxes – Our income tax benefit did not change for the year ended June 30, 2022, compared to the year ended June 30, 2021. The realization of tax benefits depends on the existence of future taxable income. Pursuant to ASC 740 “Income Taxes”, a valuation allowance has been established on all of our deferred tax assets.   LIQUIDITY AND CAPITAL RESOURCES   Sources of Liquidity   During the fiscal year 2021, we successfully completed several public offerings of our common stock, raising net proceeds of approximately $67.6 million which will be used to satisfy our short-term and long-term capital needs. We expect that our short- and long-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense associated with rollout of our AgLAB and BreathTech products to commercial customers, additional research and development expenses associated with expanding our product offerings, and expenses associated with being a public company. Our short-term capital expenditure needs relate primarily to the expansion of our research and development capabilities and optimization of existing business processes. We believe that our cash and cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months following the date these consolidated financial statements are issued.   Funding Requirements   We expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development efforts and expand our business efforts. Furthermore, we have incurred and will continue to incur additional costs as a result of being a public company. Accordingly, we will need to obtain additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs, or future commercialization efforts.   Because of the numerous risks and uncertainties associated with our research and development efforts, we are unable to estimate the exact amount of our operating capital requirements. Our future capital requirements will depend on many factors, including:     ● future research and development efforts;     ● our ability to enter into and terms and timing of any collaborations, licensing agreements, or other arrangements;   42 Table of Contents     ● the costs of sales, marketing, distribution and manufacturing efforts;     ● our headcount growth and associated costs as we expand our business;     ● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property related claims; and     ● the costs of operating as a public company.   Until such time, if ever, as we can generate positive cash flows from operations, we expect to finance our additional cash needs through a combination of equity offerings, debt financing, equity financing, merging, or engaging in a strategic partnership. To the extent that we raise additional capital through the sale of equity, our existing stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of holders of common stock. Debt financing, if available, 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.   If we raise funds through additional strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or future revenue streams or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity offerings, debt financings, equity financing or engaging in a strategic partnership, we may be required to delay, limit, or reduce our expansion efforts.   Consolidated Balance Sheet   Total assets for the year ended June 30, 2022 were $56.2 million compared to total assets of $65.6 million as of the end of fiscal year 2021. The following table sets forth the significant components of the consolidated balance sheet as of June 30, 2022, compared with June 30, 2021:       Years Ended June 30,   (In thousands)   2022     2021     Variance   Assets:                         Current assets   $ 54,950     $ 65,110     $ (10,160 ) Property and equipment, net     1,098       263       835   Operating leases, right-of-use asset, net     162       249       (87 ) Other assets, net     11       11       —   Total   $ 56,221     $ 65,633     $ (9,412 ) Liabilities and stockholders’ equity:                         Current liabilities   $ 2,682     $ 4,211     $ (1,529 ) Lease liabilities, net of current portion     303       215       88   Stockholders’ equity     53,236       61,207       (7,971 ) Total   $ 56,221     $ 65,633     $ (9,412 )   Current assets – Current assets decreased $10.2 million as of June 30, 2022, compared to June 30, 2021, as a result of cash used for continuing operating expenses and for the partial repayment of the related party notes.   43 Table of Contents   Property and equipment, net – Property and equipment increased $835 thousand as of June 30, 2022, compared to June 30, 2021, due to purchases of R&D equipment relating to our BreathTech and AgLAB product development as well as the addition of leasehold improvement assets related to our R&D facility in Austin.   Operating leases, right-of-use asset – Operating leases, right-of-use asset decreased $87 thousand as of June 30, 2022, compared to June 30, 2021, due to the ongoing amortization of our ROU assets.   Current liabilities – Current liabilities decreased $1.5 million as of June 30, 2022, compared to June 30, 2021, due to a decrease in related party notes payable, partially offset by an increase in accrued payroll related expenses.   Other long-term liabilities – Other long-term liabilities increased $88 thousand for the year ended June 30, 2022, compared to June 30, 2021, due to an increase in non-current lease liabilities related to a financing lease for R&D equipment.   Cash Flows   The following is a summary of the change in our cash and cash equivalents:       Years Ended June 30,   (In thousands)   2022     2021     Variance   Change in cash and cash equivalents:                         Net cash used in operating activities   $ (6,792 )   $ (7,398 )   $ 606   Net cash used in investing activities     (596 )     (27,585 )     26,989   Net cash (used in) provided by financing activities     (2,095 )     67,570       (69,665 ) Net change in cash and cash equivalents   $ (9,483 )   $ 32,587     $ (42,070 )   Cash and Cash Equivalents   At June 30, 2022, we held cash and cash equivalents of $26.4 million and our net working capital was approximately $52.3 million. At June 30, 2021, we held cash and cash equivalents of $35.9 million and our net working capital was approximately $60.9 million. Cash and cash equivalents decreased by approximately $9.5 million during the year ended June 30, 2022, due to funding our continuing operating expenses as well as partial repayment of the related party notes.   Operating Activities   Net cash used in operating activities was $6.8 million for the year ended June 30, 2022, compared to cash used in operating activities of $7.4 million for the year ended June 30, 2021. This decrease was caused by less inventory purchases in fiscal year 2022 compared to 2021, partially offset by a decrease in accounts payable as well as the receipt of an alternative minimum tax credit in the prior period.   44 Table of Contents   Investing Activities   Net cash used in investing activities for the year ended June 30, 2022 decreased $27.0 million, compared to the year ended June 30, 2021. The decrease in cash used in investing activities was due to purchasing short-term available-for-sale investments in the fourth quarter of fiscal year 2021.   Financing Activities   Cash used in financing activities was $2.1 million for the year ended June 30, 2022, compared to cash provided by financing activities of $67.6 million for the year ended June 30, 2021. This change in cash for financing activities was the result of the sale of common stock through equity offerings in fiscal year 2021, compared to the repayment of the principal amount of $1.0 million and accrued interest of $172 thousand on the 2020 Note (as defined below) and $1.0 million of the principal amount and $330 thousand of accrued interest on the 2019 Note (as defined below) in fiscal year 2022. The remaining balance of $500 thousand of the 2019 Note was extended to September 5, 2022.   Debt   On September 5, 2019, the Company entered into a related party term note with a principal amount of $1.5 million (the “2019 Note”), and on February 13, 2020, the Company entered into a second related party term note with a principal amount of $1.0 million (the “2020 Note”). As of June 30, 2022, we held debt through the 2019 Note totaling $500 thousand. During fiscal year 2022, upon maturity of the 2019 Note and 2020 Note, we paid the principal amount of $1.0 million and accrued interest of $172 thousand on the 2020 Note and the 2020 Note was canceled, and $1.0 million of the principal amount and $330 thousand of accrued interest on the 2019 Note. The maturity date on the remaining balance of $500 thousand of the 2019 Note was extended to September 5, 2022. For more information regarding the 2019 Note and the 2020 Note, see Note 7.   Contractual Obligations and Commitments   The following table summarized our commitments to settle contractual obligations as of June 30, 2022:       Payments Due by Period   (In thousands)   Total     Less than 1 Year     1 to 3 Years     4 to 5 Years     More than 5 Years   Operating lease commitments (1)   $ 197     $ 104     $ 93       —       —   Finance lease commitments (2)     375       154       221       —       —   Debt obligations (3)     555       555       —       —       —   Total   $ 1,127     $ 813     $ 314     $ —     $ —     (1) Consists of payments due for our lease of research and development space in Austin, Texas that expires June 2024.  (2) Consists of payments due for our leases of two pieces of equipment that expire between December 2024 and February 2025. (3) Consists of the contractually required payment of principal and interest payable under the 2019 Note.    Off-Balance Sheet Arrangements   We did not have any off-balance sheet arrangements as of June 30, 2022.   Item   7A.      Quantitative and Qualitative Disclosures about Market Risk   Not applicable to smaller reporting companies.   45 Table of Contents   Item   8.      Financial Statements and Supplementary Data       REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Board of Directors and Stockholders Astrotech Corporation Austin, Texas   Opinion on the Consolidated Financial Statements   We have audited the accompanying consolidated balance sheet of Astrotech Corporation and subsidiaries (the "Company") as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.   Basis for Opinion   These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.   Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.  We believe that our audits provide a reasonable basis for our opinion.   46 Table of Contents   Critical Audit Matter   The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.   Revenue Recognition – Refer to Note 2 in the Financial Statements   Critical Audit Matter Description   The Company has three revenue streams: product revenue, consumables revenue, and training revenue. Training revenue is recognized as training is performed. Product revenue is recognized when their customer has control of the unit(s) sold. Consumables revenue is recognized at a pro rata portion of the transaction price related to the items shipped and deferred until delivered, shipped at six-month intervals or as defined in the customer’s contract.   Significant judgment is exercised by the Company in determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing of when revenue is recognized) for each performance obligation.   The related audit effort to evaluate revenue recognition for customer agreements required a high degree of auditor judgment.   How the Critical Audit Matter Was Addressed in the Audit     o We gained an understanding of internal controls related to revenue recognition.   o We evaluated management's significant accounting policies for reasonableness.   o We selected a sample of revenue recognized and performed the following procedures:     ●    Reviewed the Company's revenue recognition policy for compliance with ASC 606     ●    Inspect evidence of the arrangement with the customer in the form of an executed contract, purchase order, or other documentation to evaluate whether the arrangement meets the five criteria required for a contract to exist and for revenue to be recognized.       Armanino LLP San Francisco, California   We have served as the Company's auditor since 2019.   September 15, 2022   47 Table of Contents     ASTROTECH CORPORATION Consolidated Balance Sheets (In thousands, except share and per share data)       June 30,       2022     2021   Assets                 Current assets                 Cash and cash equivalents   $ 26,453     $ 35,936   Short-term investments     26,173       27,351   Accounts receivable     56       5   Cost and estimated revenue in excess of billings     2       —   Inventory, net:                 Raw materials     864       1,056   Work-in-process     136       147   Finished goods     518       297   Prepaid expenses and other current assets     748       318   Total current assets     54,950       65,110   Property and equipment, net     1,098       263   Operating leases, right-of-use asset, net     162       249   Other assets, net     11       11   Total assets   $ 56,221     $ 65,633   Liabilities and stockholders’ equity                 Current liabilities                 Accounts payable   $ 169     $ 396   Payroll related accruals     816       344   Accrued expenses and other liabilities     961       888   Income tax payable     2       2   Term note payable - related party     500       2,500   Lease liabilities, current     234       81   Total current liabilities     2,682       4,211   Lease liabilities, net of current portion     303       215   Total liabilities     2,985       4,426   Commitments and contingencies (Note 14)                     Stockholders’ equity                 Convertible preferred stock, $ 0.001 par value, 2,500,000 shares authorized; 280,898 shares of Series D issued and outstanding at June 30, 2022 and 2021     —       —   Common stock, $ 0.001 par value, 250,000,000 and 50,000,000 shares authorized at June 30, 2022 and 2021 respectively; 50,567,864 and 49,450,558 shares issued and outstanding at June 30, 2022 and 2021, respectively     190,642       190,641   Additional paid-in capital     79,505       77,971   Accumulated deficit     ( 215,712 )     ( 207,382 ) Accumulated other comprehensive loss     ( 1,199 )     ( 23 ) Total stockholders’ equity     53,236       61,207   Total liabilities and stockholders’ equity   $ 56,221     $ 65,633     See accompanying notes to consolidated financial statements.   48 Table of Contents     ASTROTECH CORPORATION Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data)       June 30,       2022     2021   Revenue   $ 869     $ 334   Cost of revenue     677       298   Gross profit     192       36   Operating expenses:                 Selling, general and administrative     6,006       4,741   Research and development     2,781       2,692   Disposal of corporate lease     —       513   Total operating expenses     8,787       7,946   Loss from operations     ( 8,595 )     ( 7,910 ) Other income and (expense), net     265       ( 235 ) Gain on extinguishment of debt - PPP loan     —       542   Loss from operations before income taxes     ( 8,330 )     ( 7,603 ) Income tax benefit     —       —   Net loss   $ ( 8,330 )   $ ( 7,603 ) Weighted average common shares outstanding:                 Basic and diluted     47,702       21,984   Basic and diluted net loss per common share:   $ ( 0.17 )   $ ( 0.35 ) Other comprehensive loss, net of tax:                 Net loss   $ ( 8,330 )   $ ( 7,603 ) Available-for-sale securities                 Net unrealized losses, net of zero tax expense     ( 1,176 )     ( 23 ) Total comprehensive loss   $ ( 9,506 )   $ ( 7,626 )   See accompanying notes to consolidated financial statements.   49 Table of Contents     ASTROTECH CORPORATION Consolidated Statement of Changes in Stockholders’ Equity (In thousands)       Preferred Stock     Common Stock                                               Class D                                                               Number of Shares Outstanding     Amount     Number of Shares Outstanding     Amount     Treasury Stock Amount     Additional Paid-In Capital     Accumulated Deficit     Accumulated Other Comprehensive Loss     Total Stockholders’ Equity   Balance at June 30, 2020     281     $ —       7,850     $ 190,599     $ ( 4,129 )   $ 13,934     $ ( 199,779 )   $ —     $ 625   Net change in available-for-sale marketable securities     —       —       —       —       —       —       —       ( 23 )     ( 23 ) Issuance of shares, net of offering issuance costs of $ 5,685     —       —       39,585       40       4,129       63,413       —       —       67,582   Stock-based compensation     —       —       2,087       2       —       630       —       —       632   Cancelation of restricted stock     —       —       ( 71 )     —       —       ( 6 )     —       —       ( 6 ) Net loss     —       —       —       —       —       —       ( 7,603 )     —       ( 7,603 ) Balance at June 30, 2021     281     $ —       49,451       190,641       —       77,971       ( 207,382 )     ( 23 )     61,207   Net change in available-for-sale marketable securities, net of zero tax     —       —       —       —       —       —       —       ( 1,176 )     ( 1,176 ) Stock-based compensation     —       —       1,371       1       —       1,534       —       —       1,535   Cancelation of restricted stock     —       —       ( 254 )     —       —       —       —       —       —   Net loss     —       —       —       —       —       —       ( 8,330 )     —       ( 8,330 ) Balance at June 30, 2022     281     $ —       50,568     $ 190,642     $ —     $ 79,505     $ ( 215,712 )   $ ( 1,199 )   $ 53,236     See the accompanying notes to consolidated financial statements.   50 Table of Contents     ASTROTECH CORPORATION Consolidated Statements of Cash Flows (In thousands)       Years Ended June 30,       2022     2021   Cash flows from operating activities:                 Net loss   $ ( 8,330 )   $ ( 7,603 ) Adjustments to reconcile net loss from operations to net cash used in operating activities:                 Stock-based compensation     1,535       626   Depreciation and amortization     236       203   Gain from extinguishment of debt - PPP loan     —       ( 542 ) Loss on impairment of long-lived assets     —       173   Changes in assets and liabilities:                 Accounts receivable     ( 51 )     96   Cost and estimated revenue in excess of billings     ( 2 )     —   Inventory, net     ( 18 )     ( 824 ) Income tax receivable     —       429   Accounts payable     ( 227 )     157   Other assets and liabilities     65       ( 113 ) Net cash used in operating activities     ( 6,792 )     ( 7,398 ) Cash flows from investing activities:                 Purchases of security investments     —       ( 27,374 ) Purchases of property and equipment     ( 596 )     ( 211 ) Net cash used in investing activities     ( 596 )     ( 27,585 ) Cash flows from financing activities:                 Repayment of related party debt     ( 2,000 )     —   Repayments on lease financing     ( 95 )     ( 12 ) Proceeds from issuance of stock, net of offering issuance costs     —       67,582   Net cash (used in) provided by financing activities   $ ( 2,095 )   $ 67,570   Net change in cash and cash equivalents   $ ( 9,483 )   $ 32,587   Cash and cash equivalents at beginning of period     35,936       3,349   Cash and cash equivalents at end of period   $ 26,453     $ 35,936   Supplemental disclosures of cash flow information:                 Cash paid for interest   $ 515     $ 3   Acquisition of equipment through finance lease   $ 394     $ —   Operating right-of-use assets and associated liabilities   $ —     $ 246     See accompanying notes to consolidated financial statements.   51 Table of Contents   ASTROTECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended June 30, 2022 and 2021   ( 1 ) Description of the Company and Operating Environment   Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology.   Business Overview   Segment Information – The Company has determined that it does not meet the criteria of Accounting Standards Codification (“ASC”) 280 “Segment Reporting” because the Company’s subsidiaries represent Company brands that leverage the same core technology rather than independent operating segments. Furthermore, restatement of prior results is not necessary as they would mirror the consolidated results.   Astrotech Technologies, Inc.   Astrotech Technologies, Inc ("ATI") owns and licenses the Astrotech Mass Spectrometer Technology™ (the “AMS Technology”), the platform mass spectrometry technology originally developed by 1 st  Detect Corporation ( "1 st  Detect"). The AMS Technology has been designed to be comparatively inexpensive, small, and easy to use. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 23 granted patents and one additional patent in process along with extensive trade secrets. With a number of diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of use. ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1 st Detect for use in the security and detection market, to AgLAB Inc. ("AgLAB") for use in the agriculture market, and to BreathTech Corporation (“BreathTech”) for use in breath analysis applications.   ATI has contracted with Sanmina Corporation (“Sanmina”), a leading contract manufacturer with a worldwide presence, to manufacture our mass spectrometer products. Leveraging Sanmina’s expertise, we have improved the manufacturability and reliability of our systems.   1 st Detect Corporation   1 st  Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide. The Company believes that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). The Company further believes that IMS-based ETDs are fraught with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has a virtually unlimited and easily expandable threat library.   52 Table of Contents   In order to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries, we obtained ECAC certification. The Company is currently selling the TRACER 1000 to customers who accept ECAC certification.  As of June 30, 2022,  the Company has deployed the TRACER 1000 in approximately 20 locations in 11  countries throughout Europe and Asia.   On August 25, 2021, 1 st Detect announced that it secured a purchase order from a distributor for the TRACER 1000, representing the first units to be deployed at an airport security checkpoint for passenger screening. These systems were sold to the customer during the second quarter of fiscal year 2022.   In the United States, the Company is working with the U.S. Transportation Security Administration (“TSA”) towards air cargo certification. On March 27, 2018, the Company announced the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test’s (“ACSQT”) and, on April 4, 2018, the Company announced that the TRACER 1000 began testing with TSA for passenger screening at airports. On November 14, 2019, the Company announced the TRACER 1000 had been selected by the TSA’s Innovation Task Force to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, the Company has received valuable feedback from all programs. Following ECAC certification and the Company's early traction within the cargo market, testing for cargo security continued with the TSA. With the COVID- 19 pandemic, all testing within the TSA was put on hold; however, cargo testing resumed during the summer of 2020, and the Company subsequently announced on September 9, 2020  the TRACER 1000 passed the non-detection testing portion of the TSA’s ACSQT. TSA cargo detection testing is ongoing and is the next and final step to be listed on the Air Cargo Screening Technology List (“ACSTL”) as an “approved” device. If approved, the TRACER 1000 will be approved for cargo sales in the United States.    AgLAB Inc.   AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB- 1000™ series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes. The AgLAB product line is a derivative of the Company’s core AMS Technology.    BreathTech Corporation   BreathTech is developing the BreathTest- 1000™, a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection. The Company believes that new tools to aid in the battle against COVID- 19 and other diseases. This remains of the utmost importance to help quickly identify that an infection may be present, and BreathTech, in conjunction with Cleveland Clinic, are developing a quick and easy to use device to help determine the presence of infections.   In June 2022, the Company expanded its existing study that initially focused on COVID- 19 with Cleveland Clinic to use the BreathTest- 1000 to screen for a variety of diseases spanning the entire body. The project will focus on detecting bloodstream infections, respiratory infections such as influenza types A and B and respiratory syncytial virus (“RSV”), carriage of Staphylococcus aureus, and Clostridioides difficile (“C. diff”) infections.   Development of the BreathTest- 1000 follows the Company’s results in pre-clinical trials for the BreathDetect- 1000™, a rapid self-serve breathalyzer that was designed to detect bacterial infections in the respiratory tract, including pneumonia. The pre-clinical trials were conducted in collaboration with UT Health San Antonio in 2017.    53 Table of Contents     (2)   Summary of Significant Accounting Policies   Principles of Consolidation and Basis of Presentation   The consolidated financial statements include the accounts of Astrotech Corporation and its wholly-owned subsidiaries that are required to be consolidated. All intercompany transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation and have had no impact on net income or stockholders' equity.   Use of Estimates   The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that directly affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may vary.   Revenue Recognition   Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606” ), which was adopted by the Company in fiscal year 2019. The methodology used is based on contract type and how products and services are provided. The guidelines of Topic 606 establish a five -step process to govern the recognition and reporting of revenue from contracts with customers. The five steps are: (i) identify the contract with a customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the performance obligations are satisfied.   An additional factor is reasonable assurance of collectability. This necessitates deferral of all or a portion of revenue recognition until collection. During the fiscal year ended June 30, 2022 , the Company had two material revenue sources that comprised substantially all of its $ 869 thousand in revenue. During the fiscal year ended  June 30, 2021 , the Company recognized revenue from two  material customers for total revenue of $ 334 thousand. Revenue was recognized at a point in time consistent with the guidelines in Topic 606.   Contract Assets and Liabilities.  The Company enters into contracts to sell products and provide services, and it recognizes contract assets and liabilities that arise from these transactions. The Company recognizes revenue and corresponding accounts receivable according to Topic 606  and, at times, recognizes revenue in advance of the time when contracts give it the right to invoice a customer. The Company may also receive consideration, per the terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as deferred revenue. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before services have been performed. In such instances, the Company records a deferred revenue liability. The Company recognizes these contract liabilities as sales after all revenue recognition criteria are met.   Practical Expedients.  In cases where the Company is responsible for shipping after the customer has obtained control of the goods, it has elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation. Additionally, the Company has elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. The Company only gives consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year.   54 Table of Contents   Product Sales.  The Company recognizes revenue from sales of products upon shipment or delivery when control of the product transfers to the customer, depending on the terms of each sale, and when collection is probable. In the circumstance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until the Company has achieved the acceptance criteria unless the customer acceptance criteria are perfunctory or inconsequential. The Company generally offers customers payment terms of 60 days or less.   Freight. The Company records shipping and handling fees that it charges to its customers as revenue and related costs as cost of goods sold.   Multiple Performance Obligations.  Certain agreements with customers include the sale of equipment involving multiple elements in cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. In general, our performance obligations are related to the sale of TRACER- 1000 systems, training, associated consumables which can be delivered in multiple occurrences, and future maintenance. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met.   The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire amount of consideration is attributed to that obligation. When a contract contains multiple performance obligations the standalone selling price is first estimated using the observable price, which is generally a list price net of applicable discount or the price used to sell the good or service in similar circumstances. In circumstances when a selling price is not directly observable, the Company will estimate the standalone selling price using information available including our market assessment and expected cost plus margin.   The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods. The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of site acceptance test, and in the case of after-market consumables and service deliverables, the passage of time.   Foreign Currency   The Company’s international operations are subject to certain opportunities and risks, including from foreign currency fluctuations and governmental actions. During fiscal years 2022  and 2021 , the Company conducted business in eleven  and ten countries, respectively. The Company closely monitors its operations in each country in which it does business and seeks to adopt appropriate strategies that are responsive to changing economic and political environments. The Company currently conducts business in the U.S. dollar and the Euro. Weaknesses in one currency in which the Company does business are often offset by strengths in the other currency. Revenues, costs, and expenses are translated at the applicable rate on the date of the transaction. Translation gains and losses, if any, are calculated on accounts receivable or accounts payable outstanding at the rate applicable at the end of the period. The Company includes gains and losses resulting from foreign currency transactions in income, while it excludes those resulting from translation of financial statements from income and includes them as a component of accumulated other comprehensive loss when applicable. Transaction gains and losses, which were included in the Company’s consolidated statements of operations and comprehensive loss, amounted to a loss of approximately $ 13 thousand for the fiscal year ended June 30, 2022  and a gain of approximately $ 3 thousand for the fiscal year ended  June 30, 2021 .   55 Table of Contents   Warranty Provision   Astrotech offers its customers warranties on the products that it sells. These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, the Company records a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. The Company periodically adjusts this provision based on historical experience and anticipated expenses. The Company charges actual expenses of repairs under warranty, including parts and labor, to this provision when incurred. The current obligation for warranty provision is included in accrued expenses and other liabilities in the consolidated balance sheets, whose activity for each of the two fiscal years ended June 30, 2022 and 2021  is summarized in the following table:    (In thousands)   Warranty Provision   Balance as of June 30, 2020   $ 18   Warranty claims provided for     49   Settlements made     ( 51 ) Balance as of June 30, 2021     16   Warranty claims provided for     112   Settlements made     ( 78 ) Balance as of June 30, 2022   $ 50     Research and Development   Research and development costs are expensed as incurred. Research and development costs are used to improve system functionality, streamline and simplify the user experience, and extend our capabilities into customer-defined, application-specific opportunities. Research and development expenses for the fiscal years ended June 30, 2022 and 2021  were $ 2.8 million and $ 2.7 million, respectively.   Net Loss per Common Share   Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is the same as basic net loss per common share as the potential dilutive shares are considered to be anti-dilutive. For more information, see Note 12.   Cash and Cash Equivalents   The Company considers short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are comprised primarily of operating cash accounts, money market investments, and mutual fund investments.   Accounts Receivable   The carrying value of the Company’s accounts receivable, net of an allowance for doubtful accounts, represents their estimated net realizable value. Astrotech estimates an allowance for doubtful accounts based on type of customer, age of outstanding receivable, historical collection trends, and existing economic conditions. If events or changes in circumstances indicate that a specific receivable balance may be unrealizable, further consideration is given to the collectability of those balances, and the allowance is adjusted accordingly. Receivable balances deemed uncollectible are written off against the allowance. The Company anticipates collecting all unreserved receivables within one year. As of June 30, 2022 and 2021 , there was no allowance for doubtful accounts deemed necessary.   Inventory   The Company computes inventory cost on a first -in, first -out basis, and inventory is valued at the lower-of-cost or net realizable value. The valuation of inventory also requires the Company to estimate obsolete and excess inventory as well as inventory that is not of saleable quality.   56 Table of Contents   Property and Equipment, net   Property and equipment are stated at cost, less accumulated depreciation. All furniture, fixtures, and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets, which is generally five years. Purchased software is typically depreciated over three years. Leasehold improvements are amortized over the shorter of the useful life of the improvement or the term of the lease. Repairs and maintenance are expensed when incurred.   Impairment of Long-Lived Assets   The Company continuously evaluates its long-lived assets for impairment to assess whether the carrying amount of an asset may not be recoverable. Our evaluation is based on an assessment of potential indicators of impairment, such as an adverse change in the business climate that could affect the value of an asset, current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of an asset, and a current expectation that, more likely than not, an asset will be disposed of before the end of its previously estimated useful life. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Recoverability of long-lived assets is dependent on a number of conditions, including uncertainty about future events and demand for our services. There was no impairment of long-lived assets recognized during the fiscal year ended June 30, 2022.  Due to the termination of its corporate office lease in August 2020, the Company recorded an impairment of long-lived assets of $ 173 thousand for the fiscal year ended  June 30, 2021 , which is included in disposal of corporate lease in the accompanying consolidated statements of operations and comprehensive loss.      Fair Value of Financial Instruments   Astrotech’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. Management believes the carrying amounts of these assets and liabilities approximates their fair value due to their liquidity. For more information about the Company’s accounting policies surrounding fair value investments, see Note 6.   Available-for-Sale Investments   Investments that are designated as available-for-sale are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss. The Company determines the cost of investments sold based on a first -in, first -out cost basis at the individual security level. The Company also considers specific adverse conditions related to the financial health of, and the business outlook for, the investee which may include industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in the investee’s credit rating. The Company records other than temporary impairments on marketable equity securities and marketable equity method investments in gains (losses) on equity investments, net of previously recorded gains (losses). For more information on investments, see Note 3.   Operating Leases   The Company adopted Accounting Standards Update No. 2016 - 02, “Leases (Topic 842 )” ("ASU 2016 - 02" ) effective July 1, 2019. ASU 2016 - 02 requires that the Company determines, at the inception of an arrangement, whether the arrangement is or contains a lease, based on the unique facts and circumstances present. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Right-of-use (“ROU”) assets and operating lease liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain, at inception, that the Company will exercise that option. The interest rate implicit in lease contracts is typically not readily determinable; accordingly, the Company uses its incremental borrowing rate, which is the rate that would be incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment, based upon the information available at the commencement date. The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation, when determinable, and are recognized in determining its ROU assets. The Company’s operating leases are reflected in the operating lease, right-of-use asset; lease liabilities, current; and lease liabilities, non-current in its consolidated balance sheets.   57 Table of Contents   Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. As a result of the Company’s adoption of ASU 2016 - 02, it no longer recognizes deferred rent on the consolidated balance sheet. Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease. Variable lease payments are amounts owed by the Company to a lessor that are not fixed, such as reimbursement for common area maintenance costs for our facility lease, and are expensed when incurred.   Financing leases, formerly referred to as capitalized leases, are treated similarly to operating leases except that the asset subject to the lease is included in the appropriate fixed asset category, rather than recorded as a right-of-use asset, and depreciated over its estimated useful life, or lease term, if shorter. For more information, see Note 4.   Stock-Based Compensation   The Company accounts for stock-based awards to employees based on the fair value of the award on the grant date. The fair value of stock options is estimated using the expected dividend yields of the Company’s stock, the expected volatility of the stock, the expected length of time the options remain outstanding, and the risk-free interest rates. Changes in one or more of these factors may significantly affect the estimated fair value of the stock options. The Company recognizes forfeitures as they occur. The fair value of awards that are likely to meet goals, if any, are recorded as an expense over the vesting period. For more information, see Note 10.   Income Taxes   The Company accounts for income taxes under the liability method, whereby deferred tax asset or liability account balances are determined based on the difference between the financial statement and the tax bases of assets and liabilities using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.   In December 2019, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) No. 2019 - 12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019 - 12 are meant to simplify and reduce the cost of accounting for income taxes. The FASB has stated that the ASU is being issued as part of its Simplification Initiative, which is meant to reduce complexity in accounting standards by improving certain areas of U.S. GAAP without compromising information provided to users of financial statements. The Company adopted this guidance as of June 30, 2022 and the adoption had no impact on the Company’s consolidated financial statements.   Treasury Stock   The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders’ equity. During fiscal year 2021, Astrotech sold all treasury stock held by the Company.   Accounting Pronouncements   In November 2021, FASB issued ASU No.   2021 - 10, “Government Assistance (Topic 832 )” (“ASU 2021 - 10” ), which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model. The new pronouncement requires entities to provide information about the nature of the transaction, terms and conditions associated with the transaction, and financial statement line items affected by the transaction. ASU 2021 - 10 is effective for fiscal years beginning after December 15, 2021. The Company does not expect the adoption of ASU 2021 - 10 to have a material impact on its financial statements.   58 Table of Contents     ( 3 ) Investments   The following tables summarize gains and losses related to the Company’s investments:       June 30, 2022   Available-for-Sale   Adjusted     Unrealized     Unrealized     Fair   (In thousands)   Cost     Gain     Loss     Value   Mutual Funds - Corporate & Government Debt   $ 19,997     $ —     $ ( 806 )   $ 19,191   ETFs - Corporate & Government Debt     7,375             ( 393 )     6,982   Total   $ 27,372     $ —     $ ( 1,199 )   $ 26,173                                         June 30, 2021   Available-for-Sale   Adjusted     Unrealized     Unrealized     Fair   (In thousands)   Cost     Gain     Loss     Value   Mutual Funds - Corporate & Government Debt   $ 19,998     $ —     $ ( 13 )   $ 19,985   ETFs - Corporate & Government Debt     7,376       —       ( 10 )     7,366   Total   $ 27,374     $ —     $ ( 23 )   $ 27,351       ( 4 ) Leases   On April 27, 2021, Astrotech entered into a new lease for a research and development facility of approximately 5,960 square feet in Austin, Texas that includes a laboratory, a small production shop, and offices for staff, although the Company’s accounting and administrative employees continue to work remotely. The lease commenced on June 1, 2021 and has a lease term of 36 months.   On August 3, 2020, the Company terminated its corporate office lease of 5,219 square feet in Austin, Texas that housed executive management, finance and accounting, sales, and marketing and communications. The lease began in November 2016 and was originally set to expire in December 2023. Upon lease termination, the Company recognized a decrease in the related operating ROU asset and operating lease liability of approximately $ 539 thousand and $ 506 thousand, respectively.   Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate in determining the present value of lease payments. Significant judgment is required when determining the Company’s incremental borrowing rate. Lease expense for lease payments is recognized on a straight-line basis over the lease term.   Upon the adoption of Topic 842, the Company’s accounting for financing leases, previously referred to as capital leases, remains substantially unchanged from prior guidance.   59 Table of Contents   The balance sheet presentation of the Company’s operating and finance leases is as follows:   (In thousands)   Classification on the Consolidated Balance Sheet   June 30, 2022   Assets:             Operating lease assets   Operating leases, right-of-use assets, net     162   Financing lease assets   Property and equipment, net     466   Total lease assets       $ 628                 Liabilities:             Current:             Operating lease obligations   Lease liabilities, current     95   Financing lease obligations   Lease liabilities, current     139   Non-current:             Operating lease obligations   Lease liabilities, non-current     90   Financing lease obligations   Lease liabilities, non-current     213   Total lease liabilities       $ 537     Future minimum lease payments as of June 30, 2022 under non-cancelable leases are as follows (in thousands):   For the Year Ended June 30,   Operating Leases     Financing Leases     Total   2023     104       154     $ 258   2024     93       154       247   2025     —       67       67   2026     —       —       —   2027     —       —       —   Thereafter     —       —       —   Total lease obligations     197       375       572   Less: imputed interest     12       23       35   Present value of net minimum lease obligations     185       352       537   Less: lease liabilities - current     95       139       234   Lease liabilities - non-current   $ 90     $ 213     $ 303     Other information as of June 30, 2022 is as follows:   Weighted-average remaining lease term (years):         Operating leases     1.85   Financing leases     2.45   Weighted-average discount rate:         Operating leases     6.4 % Financing leases     5.3 %   Cash payments for operating leases for the years ended June 30, 2022 and 2021 totaled $ 86  thousand and $ 195 thousand, respectively. Cash payments for financing leases for the years ended June 30, 2022 and 2021 totaled $ 95  thousand and $ 12 thousand, respectively.   60 Table of Contents     ( 5 ) Property and Equipment, net   As of June 30, 2022 and 2021 , property and equipment, net consisted of the following:        June 30,   (In thousands)   2022     2021   Furniture, fixtures, equipment & leasehold improvements   $ 1,371     $ 535   Software     264       315   Capital improvements in progress     242       187   Gross property and equipment     1,877       1,037   Accumulated depreciation and amortization     ( 779 )     ( 774 ) Property and equipment, net   $ 1,098     $ 263     Depreciation and amortization expense of property and equipment was $ 148 thousand for the year ended June 30, 2022 and $ 55 thousand for the year ended  June 30, 2021 .   On August 3, 2020, the Company terminated its corporate office lease in Austin, Texas and wrote-off the remaining net book value of the related leasehold improvement assets in the amount of $ 229 thousand.    ( 6 ) Fair Value Measurement   ASC Topic 820 “Fair Value Measurement” (“Topic 820” ) defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. Topic 820 is applicable whenever assets and liabilities are measured and included in the financial statements at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows:   Level 1 - Quoted prices in active markets for identical assets or liabilities.   Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.   Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.   The following tables present the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of June 30, 2022 and  June 30, 2021 :       June 30, 2022       Carrying     Fair Value Measured Using     Fair   (In thousands)   Amount     Level 1     Level 2     Level 3     Value   Available-for-Sale Securities                                         Mutual Funds - Corporate & Government Debt   $ 19,191     $ 19,191     $ —     $ —     $ 19,191   ETFs - Corporate & Government Debt     6,982       6,982       —       —       6,982   Total   $ 26,173     $ 26,173     $ —     $ —     $ 26,173         June 30, 2021       Carrying     Fair Value Measured Using     Fair   (In thousands)   Amount     Level 1     Level 2     Level 3     Value   Available-for-Sale Securities                                         Mutual Funds - Corporate & Government Debt   $ 19,985     $ 19,985     $ —     $ —     $ 19,985   ETFs - Corporate & Government Debt     7,366       7,366       —       —       7,366   Total   $ 27,351     $ 27,351     $ —     $ —     $ 27,351     The value of available-for-sale investments is based on pricing from third -party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs).   61 Table of Contents     ( 7 ) Debt   On September 5, 2019, the Company entered into a private placement transaction with Thomas B. Pickens III, the Chief Executive Officer and Chairman of the Board of Directors of the Company, for the issuance and sale of a secured promissory note to Mr. Pickens with a principal amount of $ 1.5 million (the “2019 Note”), and on February 13, 2020, the Company entered into a second private placement transaction with Mr. Pickens for the issuance and sale of a second secured promissory note to Mr. Pickens with a principal amount of $ 1.0 million (the “2020 Note” and, collectively with the 2019 Note, the “Original Notes”). Interest on the Original Notes accrued at 11 % per annum. The principal amount and accrued interest on the Original Notes originally were to become due and payable on September 5, 2020; however, on August 24, 2020, the Company and Mr. Pickens agreed to extend the date of maturity of the Original Notes and payment of accrued interest to September 5, 2021 ( the “Extended Maturity Date”). The Company had the option to prepay the principal amount and all accrued interest on the Original Notes at any time prior to the Extended Maturity Date.   In connection with the issuance of the Original Notes, the Company, along with 1 st  Detect Corporation and Astrotech Technologies, Inc. (the “Subsidiaries”), entered into two security agreements, dated as of September 5, 2019 and February 13, 2020 ( collectively, the “Original Security Agreements”), with Mr. Pickens, pursuant to which the Company and the Subsidiaries granted to Mr. Pickens a security interest in all of the Company’s and the Subsidiaries’ Collateral, as such term is defined in the Original Security Agreements. In addition, the Subsidiaries jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Original Notes pursuant to a subsidiary guarantee.   On September 3, 2021, the Company entered into ( 1 ) the Omnibus Amendment to the Secured Promissory Notes (the “Amended Notes”) with Mr. Pickens, in connection with the Original Notes, and ( 2 ) the Omnibus Amendment to the Security Agreements (the “Amended Security Agreements”, and together with the Amended Notes, the “Amendments”) with the Subsidiaries, in connection with the Original Security Agreements. Pursuant to the Amendments, (a) the principal amount of $ 1.0 million and accrued interest of $ 172 thousand on the 2020 Note was paid in full and the 2020 Note was canceled, and (b) $ 1.0 million of the principal amount and $ 330 thousand of accrued interest on the 2019 Note was paid and the maturity date on the remaining balance of $ 500 thousand of the 2019 Note was extended to September 5, 2022 ( the “Amended Maturity Date”).   In addition, the Subsidiaries jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the remaining balance on the 2019 Note pursuant to subsidiary guarantees, dated September 5, 2019 and February 13, 2020, as amended by the Omnibus Amendments to Subsidiary Guarantees, dated August 24, 2020 and September 3, 2021, respectively (the Omnibus Amendment to Subsidiary Guarantees dated September 3, 2021, the “Amended Subsidiary Guarantee”). The Subsidiary Guarantee with respect to the 2020 Note was also canceled by the Amended Subsidiary Guarantee due to the 2020 Note being repaid in full.   Interest expense related to the Amended Notes for the years ended June 30, 2022 and 2021 totaled $ 95  thousand and $ 275  thousand, respectively.   On September 5, 2022, the 2019 Note matured and was paid in full. See Note 17 for more information.   On April 14, 2020, the Company entered into a $ 542 thousand Paycheck Protection Program Promissory Note and Agreement (the “PPP Promissory Note”) with a commercial bank under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company received full forgiveness of the PPP Promissory Note in April 2021.      ( 8 ) Stockholders ’ Equity   Offerings of Common Stock   On October 21, 2020, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell 7,826,086 shares (the “Public Offering Shares”) of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), at an offering price of $ 2.30 per share (the “Public Offering”).   62 Table of Contents   The Public Offering resulted in gross proceeds of approximately $ 18.0 million before deducting the placement agent’s fees and related offering expenses.   Pursuant to an engagement agreement dated July 23, 2020, as amended, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as the Company’s exclusive placement agent in connection with the Public Offering. The Company issued to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants No. 1” ) to purchase up to 469,565 shares of Common Stock, which represents 6.0 % of the Public Offering Shares sold in the Public Offering. The Placement Agent’s Warrants No. 1 have an exercise price of $ 2.875 per share, which represents 125 % of the per share offering price of the Public Offering Shares, and a termination date of October 21, 2025. The Placement Agent’s Warrants No. 1 had a fair value per share of $ 2.01 as of the date of issuance.   On October 28, 2020, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “October Registered Offering”), 2,887,906 shares (the “October Registered Offering Shares”) of the Company’s Common Stock, at an offering price of $ 2.15  per share.   The October Registered Offering resulted in gross proceeds of approximately $ 6.2 million before deducting the placement agent’s fees and related offering expenses.   Pursuant to an engagement agreement dated July 23, 2020, as amended, the Company engaged the Placement Agent to act as the Company’s exclusive placement agent in connection with the October Registered Offering. The Company also issued to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants No. 2” ) to purchase up to 173,274 shares of Common Stock, which represents 6.0 % of the October Registered Offering Shares sold in the October Registered Offering. The Placement Agent’s Warrants No. 2 have an exercise price of $ 2.6875 per share, which represents 125 % of the per share offering price of the October Registered Offering Shares, and a termination date of October 28, 2025. The Placement Agent’s Warrants No. 2 had a fair value per share of $ 1.80 as of the date of issuance.   On February 11, 2021, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “February Registered Offering”), 2,845,535 shares (the “February Registered Offering Shares”) of the Company’s Common Stock, par value $ 0.001 per share, at an offering price of $ 3.25 per share.   The February Registered Offering resulted in gross proceeds of approximately $ 9.25 million before deducting the placement agent’s fees and related offering expenses.   Pursuant to an engagement agreement, dated July 23, 2020, as amended, the Company engaged the Placement Agent to act as the Company’s exclusive placement agent in connection with the February Registered Offering. The Company has issued to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants No. 3” ) to purchase up to 170,732 shares of Common Stock, which represents 6.0 % of the February Registered Offering Shares sold in the February Registered Offering. The Placement Agent’s Warrants No. 3 have an exercise price of $ 4.0625 per share, which represents 125 % of the per share offering price of the February Registered Offering Shares and a termination date of February 11, 2026. The Placement Agent’s Warrants had a fair value per share of $ 2.94 as of the date of issuance.   On April 7, 2021, the Company entered into an amended and restated underwriting agreement (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC (the “Underwriter”) to issue and sell, in an underwritten, firm-commitment public offering (the “Offering”), 21,639,851 shares of the Company’s Common Stock. The offering price to the public in the Offering was $ 1.50 per share of Common Stock and the Underwriter agreed to purchase the shares from the Company pursuant to the Underwriting Agreement at a price of $ 1.395 per share, representing an underwriting discount of seven percent ( 7.0 %). Pursuant to the Underwriting Agreement, the Company also granted the Underwriter an option to purchase, for a period of 30 days from the date of the Underwriting Agreement, up to an additional 3,245,977 shares of Common Stock. On April 12, 2021, the Underwriter exercised the option in full.   The Offering resulted in aggregate gross proceeds, including the option exercise, of approximately $ 37.3 million, before deducting underwriting discounts and commissions and estimated offering expenses.   Pursuant to the Underwriting Agreement, the Company issued warrants (the “Underwriter Warrants”) to the Underwriter (in its capacity as the underwriter of the Offering) or its designees to purchase shares of Common Stock in an amount equal to 6.0 % of the aggregate number of shares sold in the Offering, or 1,493,150 shares of Common Stock in the aggregate, at an exercise price of $ 1.875 per share. The Underwriter Warrants will expire on April 7, 2026.   63 Table of Contents   At-the-Market Agreements   On December 18, 2020, the Company entered into an at-the-market offering agreement (the “Wainwright ATM Agreement”) with H.C. Wainwright & Co., LLC as agent, pursuant to which the Company may offer and sell, from time to time through H.C. Wainwright, shares of the Company’s Common Stock, having an aggregate offering price of up to $ 3,582,614 . During the second quarter of fiscal 2021, the Company sold 1,139,323 shares of Common Stock pursuant to the Wainwright ATM Agreement. In connection with the sales of these shares of Common Stock, the Company received gross proceeds of approximately $ 3.6 million. The weighted-average sale price per shares was $ 3.14 .   Preferred Stock   The Company has issued 280,898 shares of Series D convertible preferred stock (“Series D Preferred Shares”), all of which were issued and outstanding as of June 30, 2022. Series D Preferred Shares are convertible to common stock on a one -to- one basis. Series D Preferred Shares are not callable by the Company. The holder of the preferred stock is entitled to receive, and we shall pay, dividends on shares equal to and in the same form as dividends actually paid on shares of common stock when, and if, such dividends are paid on shares of common stock. No other dividends are paid on the preferred shares. Preferred shares have no voting rights. Upon liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, the preferred shares have preference over common stock. The holder of Series D Preferred Shares has the option to convert said shares to common stock at the holder’s discretion.   Warrants   A summary of the common stock warrant activity for the year ended June 30, 2022 is presented below:       Shares     Weighted Average Exercise     Aggregate Fair Market Value at Issuance     Weighted Average Remaining Contractual Life       (In thousands)     Price     (In thousands)     (in years)   Outstanding at June 30, 2020     86     $ 5.14     $ 194       4.74   Issued     2,307       2.30       3,553       4.63   Exercised     —       —       —       —   Canceled or expired     —       —       —       —   Outstanding at June 30, 2021     2,393     $ 2.40     $ 3,747       4.63   Issued     —       —       —       —   Exercised     —       —       —       —   Canceled or expired     —       —       —       —   Outstanding at June 30, 2022     2,393     $ 2.40     $ 3,747       3.60     The Company has made an immaterial error correction to the table above to reflect the correct weighted average exercise price and weighted average remaining contractual term reported as of June 30, 2021. Management evaluated the materiality of the error, both quantitatively and qualitatively, and concluded that it was not material to the consolidated financial statements of any period presented. There was no change to the consolidated balance sheets or consolidated statements of operations and comprehensive loss for the previous fiscal year.   64 Table of Contents   The following represents a summary of the warrants outstanding at each of the dates identified:                     Number of Shares Underlying                     Warrants                     (In thousands)                     For the period ended June 30,   Issue Date   Classification   Exercise Price   Expiration Date   2022     2021   March 26, 2020   Equity   $ 6.25   March 25, 2025     25       25   March 30, 2020   Equity   $ 4.6875   March 27, 2025     61       61   October 23, 2020   Equity   $ 2.88   October 21, 2025     470       470   October 28, 2020   Equity   $ 2.6875   October 28, 2025     173       173   February 16, 2021   Equity   $ 4.06   February 11, 2026     171       171   April 12, 2021   Equity   $ 1.875   April 7, 2026     1,493       1,493   Total Outstanding               2,393       2,393     Nasdaq Compliance   On December 21, 2021, the Company received a deficiency letter from Nasdaq indicating that, based upon the closing bid price of the Company’s common stock over the preceding 30 consecutive business days, the Company did not meet the minimum bid price of $ 1.00 per share (the “Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550 (a)( 2 ). The letter indicated that the Company had a period of 180 calendar days, or until June 20, 2022 ( the “First Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810 (c)( 3 )(A) by having the Company’s common stock meet a closing bid price of at least $ 1.00 for a minimum of ten consecutive business days during the First Compliance Period.   The Company determined that it would not be in compliance with the minimum Bid Price Requirement by June 20, 2022. As a result, the Company notified Nasdaq and applied for an extension of the compliance period, as permitted under the original notification. In the application, the Company indicated that it met the continued listing requirement for market value of publicly-held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum closing bid price requirement, and provided written notice of its intention to cure the deficiency during the second compliance period of an additional 180 days by effecting a reverse stock split, if necessary. On June 27, 2022, the Company received notification from Nasdaq that the date to achieve compliance had been extended an additional 180 days until December 19, 2022 ( the “Second Compliance Period”). The Company plans to carefully assess potential actions to regain compliance during the Second Compliance Period.   To regain compliance, the closing bid price of the Company’s common stock must be at least $ 1.00 per share for a minimum of ten consecutive business days during the Second Compliance Period. If the Company fails to regain compliance on or prior to December 19, 2022, the Company’s stock will be delisted by Nasdaq, unless the Company timely appeals for a hearing before a Nasdaq Hearings Panel. The request for a hearing will stay any suspension or delisting action pending the issuance of the decision of the Nasdaq Hearings Panel following the hearing and the expiration of any additional extension granted by the Nasdaq Hearings Panel.   65 Table of Contents     ( 9 ) Business Risk and Credit Risk Concentration Involving Cash   For the fiscal year ended June 30, 2022 , the Company had two customers that substantially comprised all of the Company’s revenue. All of the Company’s revenue for the fiscal year ended  June 30, 2021  was also generated by two customers.   The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (the “FDIC”). The risk of loss attributable to these uninsured balances is mitigated by depositing funds in what the Company believes to be high credit quality financial institutions. The Company has not experienced any losses in such accounts.     ( 10 ) Common Stock Incentive, Stock Purchase Plans, and Other Compensation Plans   2021 Omnibus Equity Plan ( “ 2021 Plan ” )   On May 26, 2021 ( the “Effective Date”), at the 2020 Annual Meeting of Shareholders, the shareholders of the Company voted to adopt the 2021 Plan. We currently maintain the 2011 Stock Incentive Plan and the 2008 Stock Incentive Plan (the “Prior Plans”). However, following the Effective Date, no further awards may be issued under the Prior Plans, but all awards under the Prior Plans that are outstanding as of the Effective Date will continue to be governed by the terms, conditions, and procedures set forth in the Prior Plans and any applicable award agreement. The 2021 Plan provides for (i) 1,500,000 shares of Company common stock; (ii) the number of shares of common stock reserved, but unissued under the Prior Plans; (iii) the number of shares of common stock underlying forfeited awards under the Prior Plans; and (iv) an annual increase on the first day of each calendar year beginning with the first January 1 following the Effective Date and ending with the last January 1 during the initial ten -year term of the 2021 Plan, equal to the lesser of (A) five percent ( 5% ) of the shares of common stock outstanding (on an as-converted basis, which shall include shares of common stock issuable upon the exercise or conversion of all outstanding securities or rights convertible into or exercisable for shares of common stock, including without limitation, preferred stock, warrants or employee options to purchase any shares of common stock) on the final day of the immediately preceding calendar year and (B) such lesser number of shares of common stock as determined by our board of directors (the "Annual Evergreen Shares"). Based on the number of shares of common stock outstanding on December 31, 2021, the maximum increase to the number of Annual Evergreen Shares of common stock that can be issued under the 2021 Plan in 2022 is approximately  2,616,860 shares.   The number of shares available for grant under the 2021 Plan is designed to enable the Company to properly incentivize its employees and management teams over a number of years on a going-forward basis. The 2021 Plan, administered by the Compensation Committee of the Board of Directors, provided for granting of incentive awards in the form of stock, stock options, stock appreciation rights, restricted stock units, and restricted stock to employees, directors, and consultants of the Company.   Stock Option Activity Summary   The Company’s stock option activity for the years ended June 30, 2022 and 2021 was as follows:               Weighted       Shares     Average       (In thousands)     Exercise Price   Outstanding at June 30, 2020     325     $ 5.68   Granted     50       5.00   Exercised     —       —   Canceled or expired     ( 100 )     6.49   Outstanding at June 30, 2021     275     $ 5.25   Granted     876       0.64   Exercised     —       —   Canceled or expired     ( 122 )     4.96   Outstanding at June 30, 2022     1,029     $ 1.35     66 Table of Contents   The aggregate intrinsic value of options exercisable at June 30, 2022  was $ 0 as the fair value of the Company’s common stock is less than the exercise prices of these options. The aggregate intrinsic value of all options outstanding at June 30, 2022 was $ 0 .               Options                                       Outstanding                     Options               Weighted-                     Exercisable               Average     Weighted-             Weighted-       Number     Remaining     Average     Number     Average       Outstanding     Contractual     Exercise     Exercisable     Exercise   Range of exercise prices   (In thousands)     Life (years)     Price     (In thousands)     Price   $0.64 – $2.83     889       9.75     $ 0.66       9     $ 2.15   $5.30 – $5.85     88       4.86       5.55       88       5.55   $6.00 – $6.00     52       0.14       6.00       52       6.00   $0.64 – $6.00     1,029       8.84     $ 1.35       149     $ 5.49     Compensation costs recognized related to vested stock option awards during the years ended June 30, 2022 and 2021 were $ 37 thousand and $ 1 thousand, respectively. At June 30, 2022 , there was $ 507 thousand of total unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a weighted average period of  2.65  years.   Restricted Stock   The Company’s restricted stock activity for the years ended June 30, 2022 and 2021 , was as follows:                Weighted               Average       Shares     Grant-Date       (In thousands)     Fair Value   Outstanding at June 30, 2020     133     $ 3.95   Granted     2,019       2.02   Vested     ( 58 )     1.84   Canceled or expired     ( 71 )     3.57   Outstanding at June 30, 2021     2,023     $ 2.05   Granted     1,200       0.63   Vested     ( 693 )     2.08   Canceled or expired     ( 254 )     2.02   Outstanding at June 30, 2022     2,276     $ 1.30     Compensation costs recognized related to vested restricted stock awards during the years ended June 30, 2022 and 2021 were $ 1.5 million and $ 625 thousand, respectively. At June 30, 2022 , there was $ 2.5 million of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of  2.47 years.   67 Table of Contents   Fair Value of Stock-Based Compensation   Stock-based compensation costs are generally based on the fair value calculated from the Black-Scholes model on the date of the grant of stock options. The fair values of stock options are amortized as compensation expense on a straight-line basis over the vesting period of the grants. The Company recognizes forfeitures as they occur. The assumptions used for the years ended June 30, 2022 and 2021 and the resulting estimates of weighted-average fair value per share of options granted or modified are summarized in the following table:        Year Ended     Year Ended       June 30, 2022     June 30, 2021   Expected dividend yield     —       —   Expected volatility     104.97 %     106.29 % Risk-free interest rates     0.65 %     1.45 % Expected option life (in years)     3.5       3.5   Weighted-average grant-date fair value of options awarded   $ 0.86     $ 2.40       •  The expected dividend yield is based on the Company’s current dividend yield and the best estimate of projected dividend yield for future periods within the expected life of the option, which is currently 0 %.     •  The Company estimated volatility using the historical share price performance over the expected life. Management believes the historical estimated volatility is materially indicative of expectations about future volatility.     •  The estimate of the risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.     •  For the years ended June 30, 2022 and 2021 , the Company used the simplified method of calculating the expected life of the options.     ( 11 )   Income Taxes   The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of June 30, 2022 and 2021 , the Company had established a full valuation allowance against all of its net deferred tax assets.   For the fiscal years ended June 30, 2022 and 2021 , the Company incurred losses from operations in the amount of $ 8.3 million and $ 7.6 million, respectively. There is no effective tax rate for the fiscal years 2022 or  2021. There is no current state tax expense.   FASB ASC 740, "Income Taxes" addresses the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The Company had unrecognized tax benefit of $ 400  thousand as of June 30, 2022 , all of which has been accounted for as contra deferred tax assets.   For the years ended June 30, 2022 and 2021 , the Company’s effective tax rate differed from the federal statutory rate of 21 %, primarily due to prior year deferred true ups and the valuation allowance against its net deferred tax assets.   68 Table of Contents   Income Tax Expense and Effective Tax Rate   The components of income tax benefit from operations are as follows:       Year Ended June 30,   (In thousands)   2022     2021   Current                 Federal   $ —     $ —   State and local     —       —   Total current tax benefit   $ —     $ —   Deferred                 Federal     —       —   State and local     —       —   Total deferred tax benefit   $ —     $ —   Total tax benefit   $ —     $ —     A reconciliation of the reported income tax benefit to the amount that would result by applying the U.S. Federal statutory rate to the loss before income taxes to the actual amount of income tax benefit recognized follows:       Year Ended June 30,   (In thousands)   2022     2021   Expected benefit   $ 1,749     $ 1,596   State tax expense     —       —   Tax credits     166       187   Change in valuation allowance     ( 1,511 )     ( 1,352 ) Loan forgiveness - PPP loan     —       114   Stock-based compensation     ( 306 )     ( 36 ) Prior year true-up     ( 9 )     26   Expiration of net operating loss carryovers     ( 89 )     ( 533 ) Other permanent items     —       ( 2 ) Total income tax benefit   $ —     $ —     Deferred Tax Assets and Liabilities   The Company’s deferred tax assets as of June 30, 2022 and 2021 consist of the following:       Year Ended June 30,   (In thousands)   2022     2021   Deferred tax assets:                 Net operating loss carryforwards   $ 17,202     $ 15,882   Tax credit carryforwards     1,330       1,165   Lease liability - current and non-current     113       62   Accrued expenses and other timing     180       65   Stock-based compensation     579       676   Property and equipment, principally due to differences in depreciation     —       77   Total gross deferred tax assets   $ 19,404     $ 17,927   Less — valuation allowance     ( 19,348 )     ( 17,875 ) Net deferred tax assets   $ 56     $ 52   Deferred tax liabilities:                 Right-of-use assets   $ ( 34 )   $ ( 52 ) Property and equipment, principally due to differences in depreciation     ( 22 )     —   Total gross deferred tax liabilities     ( 56 )     ( 52 ) Net deferred tax assets   $ —     $ —     69 Table of Contents   The Company files consolidated returns for federal, California, Florida, and Texas income and franchise taxes. In assessing the need for a valuation allowance, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will be utilized to offset future tax liabilities. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2022 , the Company provided a full valuation allowance of approximately $ 19.3  million against its net deferred tax assets.   The valuation allowance increased by approximately $1.5  million for the year ended June 30, 2022 . Since the Company reflects a full valuation allowance against its deferred tax assets, there has been no income tax impact from these changes. The Tax Cuts and Jobs Act enacted on December  22, 2017 repealed the alternative minimum tax ("AMT") and any available AMT credit will be refunded according to the guidelines of the Tax Cuts and Jobs Act. The AMT credit is limited to 50% of the available balance each year for tax years 2018 to 2020 and any remaining balance is fully refundable for tax year 2021. The CARES Act enacted on March 27, 2020 included the acceleration of the AMT credit and allows for the acceleration of the refundable AMT credit up to 100% of the AMT credit. As a result, the Company received a $ 429 thousand AMT credit refund in the  2021 tax year. The Company has no further alternative minimum tax refund receivable as of June 30, 2022 .   At June 30, 2022 , the Company had net operating loss carryforwards of approximately $ 80.5  million with approximately $ 38.2  million ($ 8.0  million, tax effected) for federal income tax purposes that are available to offset future regular taxable income set to expire between the years of 2023  and 2037. The Company also had net operating loss carryforwards with indefinite lives of approximately $ 42.3  million ($ 8.9  million, tax effected) for federal income tax purposes that are available to offset future regular taxable income. For net operating losses with indefinite carryforward lives, generated beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the amount of net operating losses to be utilized and deducted by the taxpayer to 80 % of the taxpayer’s taxable income. Utilization of some of these net operating losses is limited due to the changes in stock ownership of the Company associated with the October  2007 Exchange Offer; as such, the benefit from these losses may not be realized.   The Company has federal research and development income tax credit carryovers of $ 1.0  million as of June 30, 2022 . These credits will expire between the years 2035  and 2042.   At June 30, 2022 , the Company also has accumulated state net operating loss carryforwards of approximately $ 7.4 million ($ 0.3 million, tax effected) that are available to offset future state taxable income. These net operating loss carryforwards expire between the years 2026 and 2036. These losses may also be subject to utilization limitations; as such, the benefit from these losses may not be realized.   Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized.   The Company has a temporary credit for business loss carryovers that may be utilized to offset its Texas margin tax. At June 30, 2022 , the credit amount is $ 0.5 million ($ 0.4 million, tax effected). These credits may be used to offset $ 13 thousand of state tax liability each year and will expire in 2027.   Uncertain Tax Positions   The Company had unrecognized tax benefits of $ 400  thousand as of June 30, 2022 , all of which have been accounted for as contra deferred tax assets. A rollforward of the beginning and ending amount of unrecognized tax benefits from  July 1,  2021  to June 30, 2022 is as follows:       Year Ended June 30,   (In thousands)   2022     2021   Fiscal year beginning balance   $ 329     $ —   Additions for tax positions of current period     71       80   Additions for tax positions of prior years     —       249   Decreases for tax positions of prior years     —       —   Fiscal year ending balance   $ 400     $ 329     The Company recognizes interest and penalties related to income tax matters in income tax expense, as incurred. For the years ended June 30, 2022 and 2021 , the Company did not recognize any interest expense for uncertain tax positions.   70 Table of Contents     ( 12 ) Net Loss per Share   Basic loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential common shares include outstanding stock options and stock-based awards.   Reconciliation and the components of basic and diluted net loss per share are as follows (in thousands, except per share data):       Year Ended June 30,       2022     2021   Numerator:                 Net loss   $ ( 8,330 )   $ ( 7,603 ) Denominator:                 Denominator for basic and diluted net loss per share — weighted average common stock outstanding     47,702       21,984   Basic and diluted net loss per common share:                 Net loss   $ ( 0.17 )   $ ( 0.35 )   All unvested restricted stock awards for the years ended June 30, 2022 and 2021 are not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive. Options to purchase 1,028,532  shares of common stock at exercise prices ranging from $ 0.64  to $ 6.00  per share outstanding for the year ended June 30, 2022 and options to purchase 275,503  shares of common stock at exercise prices ranging from $ 1.85  to $ 7.50  per share outstanding for the year ended  June 30, 2021 were not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.     ( 13 ) Employee Benefit Plans   Astrotech has a defined contribution retirement plan, which covers substantially all employees and officers. Effective July 1, 2019, the Company elected to no longer match employees’ contributions to the plan; however, beginning in the third quarter of fiscal year 2021, the Company reinstated the match to employees’ contributions to the retirement plan. For the years ended June 30, 2022 and 2021 , the Company made matching contributions of $ 57  thousand and $ 31 thousand, respectively, to the plan. The Company has the right, but not an obligation, to make additional contributions to the plan in future years at the discretion of the Company’s Board of Directors. The Company has not made any additional contributions for the years ended June 30, 2022 and 2021 .      ( 14 ) Commitments and Contingencies   The Company is subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.   The Company establishes reserves for the estimated losses on specific contingent liabilities, for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss.   Employment Contracts   The Company has entered into an employment contract with a key executive. Generally, certain amounts may become payable in the event the Company terminates the executive’s employment.   71 Table of Contents   Legal Proceedings   On April 15, 2021, a putative stockholder of the Company commenced a class action and derivative lawsuit in the Delaware Court of Chancery, Stein v. Pickens, et al., C.A. No. 2021 - 0322 -JRS (the “Stein Action”), in which it was alleged, among other things, that the Company improperly included broker non-votes in the tabulation of votes counted in favor to approve an amendment to the Company’s Certificate of Incorporation (the “2020 Certificate Amendment”) and, thus the 2020 Certificate Amendment was defective. The Company investigated those allegations and does not believe that the filing and effectiveness of the 2020 Certificate Amendment was either invalid or ineffective. Nevertheless, to resolve any uncertainty, on April 30, 2021, the Company filed a validation proceeding in the Delaware Court of Chancery, In re Astrotech Corporation, C.A. No. 2021 - 0380 -JRS, pursuant to Section 205 of the Delaware General Corporation Law. On October 6, 2021, the Delaware Court of Chancery granted the Company’s request and confirmed and validated the 2020 Certificate Amendment. Thereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presently anticipate presenting the settlement for approval on December 12, 2022.    Further information regarding the Stein Action and the Section 205 Action is provided in the Schedule 14A proxy statement amendment and supplement filed by the Company with the Securities and Exchange Commission on April 29, 2021.      ( 15 ) Segment Information   The Company has determined that it does not meet the criteria of ASC 280 “Segment Reporting” because the Company’s subsidiaries represent Company brands that leverage the same core technology rather than independent operating segments. Furthermore, restatement of prior results is not necessary as they would mirror the consolidated results.   ( 16 ) Impact of COVID- 19 Pandemic   The Company has taken what it believes are necessary precautions to safeguard its employees from the COVID- 19 pandemic. The Company continues to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities. All of the Company’s employees who do not work in a lab setting are currently on a telecommunication work arrangement and have been able to successfully work remotely. The Company’s lab requires in-person staffing, and the Company has been able to continue to operate its lab. There can be no assurance, however, that key employees will not become ill or that the Company will be able to continue to operate its labs.   To date, the Company has seen delays with respect to the TSA certification process and parts of its supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation. In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID- 19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines.   The Company continues to manage production, to secure alternative supplies, and to take other proactive actions. The Company believes that it will be able to pass the inflation caused by raw materials shortages and increased shipping costs to its customers by increasing the price of its instruments. If supply chain shortages become more severe or longer term in nature, the Company’s business and results of operations could be adversely impacted; however, the Company does not expect this issue to materially adversely affect its liquidity position. The long-term impact of the COVID- 19 pandemic on the Company’s business may not be fully reflected until future periods.   CARES Act   On March 27, 2020, the CARES Act was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The most significant relief measures which the Company qualified for are a loan pursuant to the Paycheck Protection Program for which the Company has received full forgiveness, alternative minimum tax credit refunds, employee retention credit, and payroll tax deferral. The payroll tax deferral was effective from the enactment date through December 31, 2020, and the deferred amount will be repaid in  two  installments.  50 % of the deferred amount has been paid as of December 31, 2021, and the remainder will be due by December 31, 2022. The deferred payroll taxes are recorded within accrued liabilities on the consolidated balance sheets.   72 Table of Contents   The Company will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to the Company, and the potential impacts on the business.      ( 17 ) Subsequent Events   As previously discussed in Note 7, on September 3, 2021, the Company entered into the Amended Notes with Mr. Pickens, in connection with the Original Notes, pursuant to which, (a) the principal amount of $ 1.0 million and accrued interest of $ 172 thousand on the 2020 Note was paid in full and the 2020 Note was canceled, and (b) $ 1.0 million of the principal amount and $ 330 thousand of accrued interest on the 2019 Note was paid and the maturity date on the remaining balance of $ 500 thousand of the 2019 Note was extended to September 5, 2022. As such, on September 5, 2022, the 2019 Note matured and the principal amount of $ 500 thousand and accrued interest of $ 55 thousand was paid in full and the 2019 Note was canceled. With the cancelation of the 2019 Note, the Amended Subsidiary Guarantee was terminated and the Subsidiaries' Collateral was released.      Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   None.   Item 9A.     Controls and Procedures   Disclosure Controls and Procedures   We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. Management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022 at the reasonable assurance level.   Management ’ s Annual Report on Internal Controls over Financial Reporting   Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive and financial officers, we conducted an evaluation of the effectiveness of our internal controls over financial reporting as of June 30, 2022, based on the frame-work in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   Based on our evaluation under the COSO Framework, our management concluded that our internal controls over financial reporting were effective as of June 30, 2022.   73 Table of Contents   This annual report does not include an attestation report of our registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by our registered accounting firm pursuant to §989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which exempts the Company from the requirement that it include an attestation report of the Company’s registered public accounting firm regarding internal controls over our management’s assessment of internal controls over financial reporting.   Changes in Internal Controls over Financial Reporting   There have been no changes in our internal controls over financial reporting that occurred during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.   Item 9B.     Other Information   None.   PART III   As set forth below, the information required by Part III (Items 10, 11, 12, 13, and 14) is incorporated herein by reference to the Company’s definitive proxy statement to be used in connection with its 2022 Annual Meeting of Stockholders and which will be filed with the SEC not later than 120 days after the end of the Company’s fiscal year ended June 30, 2022 (the “2022 Proxy Statement”), in accordance with General Instructions G(3) of Form 10-K.   Item 10.      Directors, Executive Officers, and Corporate Governance   The information required by Item 10 will be contained in, and is hereby incorporated by reference to, the 2022 Proxy Statement.   Item 11.    Executive Compensation   The information required by Item 11 will be contained in, and is hereby incorporated by reference to, the 2022 Proxy Statement.   Item   12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   The information required by Item 12 will be contained in, and is hereby incorporated by reference to, the 2022 Proxy Statement.   Item 13.   Certain Relationships and Related Transactions and Director Independence   The information required by Item 13 will be contained in, and is hereby incorporated by reference to, the 2022 Proxy Statement.   Item 14.     Principal Accounting Fees and Services   The information required by Item 14 will be contained in, and is hereby incorporated by reference to, the 2022 Proxy Statement.   74 Table of Contents   PART IV   Item 15.      Exhibits, Financial Statement Schedules   The following documents are filed as part of the report:   Financial Statements.   The following consolidated financial statements of Astrotech Corporation and its wholly-owned subsidiaries and related notes, are set forth herein as indicated below.     Page Report of Armanino LLP, Independent Registered Public Accounting Firm  (PCAOB ID: 32 ) 46 Consolidated Balance Sheets 48 Consolidated Statements of Operations and Comprehensive Loss 49 Consolidated Statement of Changes in Stockholders ’  Equity 50 Consolidated Statement of Cash Flows 51 Notes to Consolidated Financial Statements 52 Exhibits     75 Table of Contents   Exhibit   No.   Description of Exhibit       3.1   Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit  3.1 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on December 28, 2017).       3.2   Certificate of Amendment to the Certificate of Incorporation of Astrotech Corporation (incorporated by reference to Exhibit 3.1 of the Registrant’ s Form 8-K filed with the Securities and Exchange Commission on July 1, 2020).       3.3   Certificate of Amendment to the Certificate of Incorporation of Astrotech Corporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 12, 2021).       3.4   Bylaws of the Registrant (incorporated by reference to Exhibit  3.2 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on December 28, 2017).       3.5   Certificate of Designations of Series A Junior Participating Preferred Stock, as filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit  3.3 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on December 28, 2017).       3.6   Certificate of Designations of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, as filed with the Delaware Secretary of State on April 17, 2019 (incorporated by reference to Exhibit 3.2 of the Registrant’ s Form 8-K filed with the Securities and Exchange Commission on April 23, 2019).       4.1 *   Description of Securities.       4.2   Form of Placement Agent's Warrant, issued on March 27, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant’ s Form 8-K filed with the Securities and Exchange Commission on March 26, 2020).       4.3   Promissory Note due September 5, 2020. (incorporated by reference to Exhibit 4.1 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).       4.4   Form of Placement Agent's Warrant, issued on March 30, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant’ s Form 8-K filed with the Securities and Exchange Commission on March 30, 2020).       4.5   Omnibus Amendment to Promissory Notes, dated August 24, 2020, (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020).       4.6   Form of Placement Agent's Warrant, issued on October 23, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 23, 2020)       4.7   Form of Placement Agent's Warrant, issued on October 30, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 30, 2020)       4.8   Form of Placement Agent's Warrant, dated February 16, 2021 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on February 16, 2021)       4.9   Astrotech Corporation 2021 Omnibus Equity Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on April 5, 2021).       4.10   Form of Underwriter Warrant, dated April 12, 2021 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on April 12, 2021)   76 Table of Contents   4.11   Omnibus Amendment to Secured Promissory Notes, dated September 3, 2021, by and between the Company and Thomas B. Pickens III (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)   10.1   Security Agreement, dated September 5, 2019, by and among the Company, certain of the Company’ s subsidiaries and Thomas B. Pickens III (incorporated by reference to Exhibit 10.1 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on September 11, 2019).       10.2   Subsidiary Guarantee, dated September 5, 2019, made by certain of the Company’ s subsidiaries in favor of Thomas B. Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on September 11, 2019).       10.3   Security Agreement, dated February 13, 2020, by and among the Company, certain of the Company’ s subsidiaries and Thomas B. Pickens III (incorporated by reference to Exhibit 10.1 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).       10.4   Subsidiary Guarantee, dated February 13, 2020, made by certain of the Company’ s subsidiaries in favor of Thomas B. Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant ’ s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).       10.5   Acknowledgment, Consent and Affirmation of Guarantors, dated August 24, 2020 (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)       10.6   Omnibus Amendment to Security Agreements, dated August 24, 2020, by and among the Company, certain of the Company’ s subsidiaries and Thomas B. Pickens III (incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)         10.7   Omnibus Amendment to Subsidiary Guarantees, dated August 24, 2020, made by certain of the Company’ s subsidiaries in favor of Thomas B. Pickens III (incorporated by reference to Exhibit 10.4 of Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)       10.8   Joint Development and Option Agreement, dated October 20, 2020 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 20, 2020)       10.9   Cash Reserve Agreement, dated October 19, 2020 (incorporated by reference to Exhibit 99.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 20, 2020)   77 Table of Contents   10.10   Letter of Agreement, dated March 24, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on March 30, 2021)       10.11   Investigator-Initiated Study Agreement, dated March 31, 2021 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on April 6, 2021)   10.12   Acknowledgement, Consent and Affirmation of Guarantors, dated September 3, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)       10.13   Omnibus Amendment to Security Agreements, dated September 3, 2021, by and among the Company, certain of the Company's subsidiaries and Thomas B. Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)       10.14   Omnibus Amendment to Subsidiary Guarantees, dated September 3, 2021, made by certain of the Company's subsidiaries in favor of Thomas B. Pickens III (incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)       10.15   Amendment to Joint Development and Option Agreement, dated June 8, 2022 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on June 23, 2022).       10.16 †   Employment Agreement, effective October 6, 2008 between SPACEHAB, Incorporated and Thomas B. Pickens, III (incorporated by reference to Exhibit 10.1 of the Registrant’ s Current Report Form 8-K filed with the Securities and Exchange Commission on November 21, 2008).       10.17 †   Form of Indemnification Agreement of Astrotech Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’ s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 17, 2015).       21.1 *   Astrotech Corporation and Subsidiaries — Subsidiaries of the Registrant       23.1 *   Consent of Armanino LLP       31.1 *   Certification of Thomas B. Pickens III, the Company’s Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.       31.2 *   Certification of Jaime Hinojosa, the Company’s Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.       32.1 *   Certification of Thomas B. Pickens III, the Company’s Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.       32.2 *   Certification of Jaime Hinojosa, the Company’s Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.       101.INS   Inline XBRL Instance Document 101.SCH   Inline XBRL Schema Document 101.CAL   Inline XBRL Calculation Linkbase Document 101.DEF   Inline XBRL Definition Linkbase Document 101.LAB   Inline XBRL Labels Linkbase Document 101.PRE   Inline XBRL Presentation Linkbase Document 104   Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)        †   Management contract or compensatory plan arrangement. *   Filed herewith.   Item 16.      Form 10-K Summary   None.   78 Table of Contents   SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) 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.     Astrotech Corporation             By: /s/ Thomas B. Pickens III       Thomas B. Pickens III       Chairman of the Board and Chief Executive Officer  (Principal Executive Officer)     Date: September 15, 2022     By: /s/ Jaime Hinojosa       Jaime Hinojosa       Chief Financial Officer, Treasurer and Secretary       (Principal Financial and Accounting Officer)     Date: September 15, 2022   Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of this registrant in the capacities and on the dates indicated.   /s/ Thomas B. Pickens III   Chairman of the Board and Chief Executive Officer   September 15, 2022 Thomas B. Pickens III   (Principal Executive Officer)               /s/ Daniel T. Russler, Jr.   Director   September 15, 2022 Daniel T. Russler, Jr.                   /s/ Tom Wilkinson   Director   September 15, 2022 Tom Wilkinson                   /s/ Jim Becker   Director   September 15, 2022 Jim Becker                   /s/ Jaime Hinojosa   Chief Financial Officer, Treasurer and Secretary   September 15, 2022 Jaime Hinojosa   (Principal Financial and Accounting Officer)       79