What changed in this filing

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Item 1A. Risk Factors

2023-09-28 compared with 2022-09-15 · 106 added, 40 removed, 424 unchanged (26% of the section changed)

15 unchanged sentences

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.

As of June 30, 2022, we had an accumulated deficit of approximately $215.7 million and reported a net loss of $8.3 million for the fiscal year 2022.

As of June 30, 2023, we had an accumulated deficit of approximately $225.4 million and reported a net loss of $9.6 million for the fiscal year 2023.

We are unable to predict the extent of any future losses or when we will become profitable, if at all.

If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline.

Our business units are in development stage.

Our business units are in the development stage.

They have earned limited revenues and it is uncertain whether they will earn any revenues in the future or whether any of them will ultimately be profitable.

140 unchanged sentences

dollar strengthens, the relative cost of these products and services to customers located in foreign countries would increase, which could adversely affect export sales. In addition, most of our financial obligations must be satisfied in U.S.

Our exposures to changes in foreign currency exchange rates may change over time as our business practices evolve and could result in increased costs or reduced revenue and could adversely affect our cash flow.

Our exposure to changes in foreign currency exchange rates may change over time as our business practices evolve and could result in increased costs or reduced revenue and could adversely affect our cash flow.

Changes in the relative values of currencies occur regularly and may have a significant impact on our operating results.

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Existing and future warranties place us at the risk of incurring future repair and/or replacement costs.

Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold.

Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in the cost of goods sold.

We periodically adjust this provision based on historical experience and anticipated expenses.

1 unchanged sentence

We exercise judgment in estimating the expected product warranty costs, using data such as the actual and projected product failure rates, estimated repair costs, freight, material, labor and overhead costs. While we believe that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates as well as significantly higher sales and the introduction of new products could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in our products could result in actual expenses that are below those currently estimated.

As of June 30, 2022, we had accrued a balance of $50 thousand relating to product warranty provision, representing a surplus of estimated warranty expenses over actual expenses for the fiscal year 2022.

As of June 30, 2023, and 2022, we had accrued a balance of $88 thousand and $50 thousand relating to product warranty provision, representing a surplus of estimated warranty expenses over actual expenses for the fiscal years.

Substantial amounts of warranty claims could have a material adverse effect on our business, financial condition and results of operations.

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We cannot guarantee that the FDA will review our data in a timely manner, or that the FDA will accept the data when reviewed.

The FDA may decide that our data are insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application.

The FDA may decide that our data is insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application.

In addition, the FDA may revoke an Emergency Use Authorization where it is determined that the underlying health emergency no longer exists or warrants such authorization, and we cannot predict how long, if ever, an Emergency Use Authorization would remain in place.

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If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, results of operations and financial condition.

The AgLAB line of business is subject to heightened regulatory scrutiny and may experience additional uncertainty, difficulties, and risks due to its involvement with cannabis and/or businesses or activities relating to cannabis, particularly to the extent such businesses or activities are found to violate the federal Controlled Substances Act ( “

The success of AgLAB’s business strategy depends, in large part, on the constantly evolving legal and regulatory landscape of the cannabis industry.

The political environment surrounding the cannabis industry in general can be volatile and the regulatory framework remains in flux.

To our knowledge, there are approximately 38 states that have legalized cannabis in some form, and additional states have pending legislation regarding the same;

however, the risk remains that applicable federal and/or state laws governing cannabis-related activities and products may have a drastic impact on the industry as a whole, adversely impacting our business, results of operations, financial condition or prospects.

The cannabis industry may come under the scrutiny or further scrutiny by the FDA, SEC, DEA, DOJ, state attorneys general, and various other federal and/or state or non-governmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale or use of cannabis for medical or non-medical purposes in the United States.

It is impossible to determine the extent of the impact of any new laws, regulations, or initiatives that may be proposed, or whether any proposals will become law.

The regulatory uncertainty surrounding the cannabis industry may adversely affect our business prospects.

Further, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis will protect our relevant current or future endeavors in the cannabis space, given the complex interplay between state and federal laws in this space.

Additionally, there can be no assurances that any laws that would potentially protect cannabis-related operations will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.

If the federal government begins to enforce federal laws relating to cannabis in states where the manufacture, sale, and/or use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, our business, results of operations, financial condition and prospects would be materially adversely affected.

It is also important to note that local and city ordinances may strictly limit and/or restrict disbursement of cannabis in a manner that will make it extremely difficult or impossible to transact business that is necessary for the continued operation of the cannabis industry.

Federal actions against individuals or entities engaged in the cannabis industry or a repeal of applicable cannabis related legislation could adversely affect us and our business prospects.

Due to the nature of AgLAB’s business and the fact that related contracts may involve cannabis and activities that may not be legal or may be subject to substantial uncertainty regarding their legality under U.S.

federal law and in certain states and localities, we may face difficulties in enforcing certain contracts in federal courts (as well as courts in states with comparatively stringent or restrictive cannabis laws).

The inability to enforce one or more contracts, as applicable, could have a material adverse effect on our business prospects.

Our ancillary participation in the cannabis industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by various federal, state, or local governmental authorities against us or our investments.

Litigation, complaints, and enforcement actions involving either us or our investments could consume considerable amounts of financial and other corporate resources, which could have an adverse effect on our future cash flows, earnings, results of operations and financial condition.

Our AgLAB business ’

growth is highly dependent on the U.S.

hemp and cannabis  

New regulations causing licensing shortages and future regulations may create other limitations that decrease the demand for our products.

General  

regulations at  

state and federal in the future may adversely impact our business.

Although we do not grow, sell or distribute cannabis products, our products are closely tied to the hemp and cannabis industry and could subject us to regulatory, financial, operational and reputational risks and challenges.

The base of cannabis growers in the U.S.

has grown over the last few decades since the legalization of cannabis for medical uses in states such as California, Colorado and Washington.

cannabis market is still in its infancy and early adopter states such as California, Colorado and Washington represent a large portion of historical industry revenues.

cannabis cultivation market is expected to be one of the fastest growing industries in the U.S.

over the coming years.

cannabis cultivation market does not grow as expected, our business, financial condition and results of operations could be impacted.

The California cannabis cultivation market is expected to be one of the fastest growing industries in California over the coming years.

If the California cannabis cultivation market does not grow as expected, our business, financial condition and results of operations could be impacted.

Marijuana remains illegal under U.S.

federal law, as it is listed as a Schedule I substance under the United States Controlled Substances Act of 1970 (the “CSA”).

Notwithstanding laws in various states permitting certain cannabis activities, all cannabis activities, including possession, distribution, processing and manufacturing of cannabis in violation of federal law and investment in, and financial services or transactions involving proceeds of, or promoting such activities remain illegal under various U.S.

federal criminal and civil laws and regulations, including the CSA, as well as laws and regulations of several states that have not legalized some or any cannabis activities to date.

Compliance with applicable state laws regarding cannabis activities does not protect us from federal prosecution or other enforcement action, such as seizure or forfeiture remedies, nor does it provide any defense to such prosecution or action.

Cannabis activities conducted in or related to conduct in multiple states may potentially face a higher level of scrutiny from federal authorities.

Penalties for violating federal drug, conspiracy, aiding, abetting, bank fraud and/or money laundering laws may include prison, fines, and seizure/forfeiture of property used in connection with cannabis activities, including proceeds derived from such activities.

Legislation and regulations pertaining to the use and cultivation of hemp and cannabis are enacted on both the state and federal government level within the United States.

As a result, the laws governing the cultivation and use of hemp and cannabis may be subject to change.

Any new laws and regulations limiting the use or cultivation of hemp and cannabis and any enforcement actions by state and federal governments could indirectly reduce demand for our products and may impact our current and planned future operations.

There can be no assurance that changes in regulation of the industry and more rigorous enforcement by federal authorities will have a detrimental effect on us..

Evolving federal and state laws and regulations pertaining to the use or cultivation of hemp and cannabis, as well active enforcement by federal or state authorities of the laws and regulations governing the use and cultivation of hemp and cannabis may indirectly affect our business, our revenues and our profits.

The public’s perception of hemp and cannabis may significantly impact the cannabis industry’s success.

Both the medical and adult-use of hemp and cannabis are controversial topics, and there is no guarantee that future scientific research, publicity, regulations, medical opinion, and public opinion relating to cannabis will be favorable.

The hemp and cannabis industry is an early-stage business that is constantly evolving with no guarantee of viability.

Among other things, such a shift in public opinion could cause state jurisdictions to abandon initiatives or proposals to legalize cultivation and sale of cannabis or adopt new laws or regulations restricting or prohibiting the cultivation of hemp and cannabis where it is now legal, thereby limiting the potential customers who are engaged in the hemp and cannabis industry.

Demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop.

We cannot predict the nature of such developments or the effect, if any, that such developments could have on our business.

As the possession and use of marijuana is illegal under the CSA, it is possible that our manufacture and sale of equipment that is used to cultivate marijuana or marijuana products may be deemed to be aiding and abetting illegal activities.

Federal practices could change with respect to providers of equipment potentially usable by cultivators in the medical and recreational cannabis industry, which could adversely impact us.

Cannabis growers use equipment that we offer for sale.

While we are not aware of any threatened or current federal or state law enforcement actions against any supplier of equipment that might be used for cannabis growing, law enforcement authorities, in their attempt to regulate the illegal use of cannabis, may seek to bring an action or actions against us, including but not limited to a claim of aiding and abetting, or being an accessory to, another’s criminal activities or that our products are considered “drug paraphernalia.”

The federal aiding and abetting statute, U.S.

Code Title 18 Section 2(a), provides that anyone who “commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.”

Code Title 21 Section 863, the term “drug paraphernalia”

means “any equipment, product or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance.”

Any drug paraphernalia involved in any violation of Section 863 shall be subject to seizure and forfeiture upon the conviction of a person for such violation.

While Section 863(f) contains an exemption for any person authorized by local, state or federal law to manufacture, possess, or distribute such items, any such action may force us to cease operations and our investors could lose value associated with their investment.

A risk exists that our activities could be deemed to be facilitating the selling or distribution of cannabis in violation of the CSA, or to constitute aiding or abetting, or being an accessory to, a violation of the CSA.

There is also a risk that our products could be considered drug paraphernalia and could be subject to seizure.

We believe, however, that such risks are relatively low.

Federal authorities have not focused their resources on such tangential or secondary violations of the CSA, nor have they threatened to do so, with respect to the sale of equipment that might be used by cannabis cultivators, or with respect to any supplies marketed to participants in the medical and recreational cannabis industry.

We are unaware of such a broad application of the CSA or the seizure of drug paraphernalia by federal authorities, and we believe that such an attempted application would be uncustomary.

If the federal government were to change its practices or were to expend its resources investigating and prosecuting providers of equipment that could be usable by participants in the medical or recreational cannabis industry, such action could have a materially adverse effect on our operations, our customers, or the sales of our products.

As a result of such an action, we may be forced to cease operations within the cannabis industry and our investors could lose value associated with their investment.

We may become subject to FDA or ATF regulation with respect to our AgLab business.

Marijuana remains a Schedule I controlled substance under U.S.

If the federal government reclassifies marijuana to a Schedule II, Schedule III, Schedule IV, or Schedule V controlled substance or declassifies it as a controlled substance, it is possible that the FDA would seek to regulate cannabis under the FDCA.

The FDA is responsible for ensuring public health and safety through regulation of food, drugs, supplements, and cosmetics, among other products, through its enforcement authority pursuant to the FDCA.

The FDA’s responsibilities include regulating the ingredients as well as the marketing and labeling of drugs sold in interstate commerce.

Because marijuana is federally illegal to produce and sell, and because it has few federally recognized medical uses, the FDA has historically deferred enforcement related to cannabis to the DEA;

however, the FDA has enforced the FDCA with regard to hemp-derived products, especially CBD derived from hemp.

The FDA has consistently asserted its authority to regulate CBD derived from hemp and currently prohibits the introduction or delivery for introduction into interstate commerce of any ingestible product (intended for human consumption) containing CBD, though, notably, to-date, its enforcement efforts in this area have been limited to products making therapeutic claims to treat, prevent, and/or mitigate one or more conditions or diseases.

On January 26, 2023, the FDA reiterated its longstanding position (since the passage of the 2018 Farm Bill), announcing that, despite much speculation to the contrary, it would not seek to regulate CBD as a lawful dietary supplement.

If FDA changes its current position in the future or if Congress enacts new legislation under which FDA is expressly authorized and directed to do so, the FDA may issue rules and regulations, including good manufacturing practices related to the growth, cultivation, harvesting, processing, and production of hemp products.

Clinical trials may be needed to verify the efficacy and safety of such products.

It is also possible that the FDA would require facilities where medical-use cannabis is grown to register with the FDA and comply with certain federally prescribed regulations.

If some or all these regulations are imposed, the impact they would have on the hemp and cannabis industry is unknown, including the costs, requirements and possible prohibitions that may be enforced.

If we are unable to comply with the potential regulations or registration requirements prescribed by the FDA, it may have a detrimental effect on our business, prospects, revenue, results of operation and financial condition.

It is also possible that the federal government could seek to regulate cannabis under the U.S.

Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”).

The ATF may issue rules and regulations related to the use, transport, sale and advertising of cannabis or cannabis products.

The hemp and cannabis industry could face strong opposition from other industries.

We believe that established businesses in other industries may have a strong economic interest in opposing the development of the hemp and cannabis industry.

Hemp and cannabis may be seen by companies in other industries as an attractive alternative to their products, including recreational marijuana as an alternative to alcohol, and medical marijuana as an alternative to various commercial pharmaceuticals.

Many industries that could view the emerging hemp and cannabis industry as an economic threat are well established, with vast economic and United States federal and state lobbying resources.

It is possible that companies within these industries could use their resources to attempt to slow or reverse legislation legalizing cannabis.

Any inroads these companies make in halting or impeding legislative initiatives that would be beneficial to the hemp and cannabis industry could have a detrimental impact on our clients and, in turn on our operations.

There may be difficulty enforcing certain of our commercial agreements and contracts.

Courts will not enforce a contract deemed to involve a violation of law or public policy.

Because marijuana remains illegal under U.S.

federal law, parties to contracts involving the state legal cannabis industry have argued that the agreement was void as federally illegal or against public policy.

Some courts have accepted this argument in certain cases, usually against the company trafficking in cannabis.

While courts have enforced contracts related to activities by state-legal cannabis companies, and the trend is generally to enforce contracts with state-legal cannabis companies and their vendors, there remains doubt and uncertainty that we will be able to enforce our commercial agreements with cannabis industry participants in court for this reason.

We cannot be assured that we will have a remedy for breach of contract in such cases, which would have a detrimental impact on our business.

A drop in the retail price of hemp and cannabis products may negatively impact our business.

The fluctuations in economic and market conditions that impact the prices of commercially grown hemp and cannabis, such as increases in the supply of hemp and cannabis and decreases in demand for hemp and cannabis, could have a negative impact on our clients that are hemp and cannabis producers, and therefore could negatively impact our business.

We may be subject to constraints on and differences in marketing our products under varying state laws.

There are and may continue to be restrictions on sales and marketing activities imposed by government regulatory bodies that could hinder the development of our business and operating results.

Restrictions may include regulations that specify what, where and to whom product information and descriptions may appear and/or be advertised.

Marketing, advertising, packaging, and labeling regulations also vary from state to state, potentially limiting the consistency and scale of consumer branding communication and product education efforts.

The regulatory environment in the U.S.

limits our ability to compete for market share in a manner similar to other industries.

If we are unable to effectively market our products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for our products, our sales and operating results could be materially, adversely affected.

We are subject to differing tax rates in several jurisdictions in which we operate, which may adversely affect our business, financial condition, results of operations and prospects.

17 unchanged sentences

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future. On February 2, 2022, the intra-day sales price of our common stock fluctuated between a reported low sale price of $0.62 and a reported high sales price of $0.72. Throughout the fiscal year 2022, the closing sales price of our common stock has fluctuated between a reported low sales price of $0.43 and a reported high sales price of $1.31.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future. On August 25, 2022, the intra-day sales price of our common stock fluctuated between a reported low sale price of $13.80 and a reported high sales price of $16.20. Throughout the fiscal year 2023, the closing sales price of our common stock has fluctuated between a reported low sales price of $9.28 and a reported high sales price of $16.20.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects. The stock market in general and the market for companies such as ours in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

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interests in the Company and could depress our stock price.

Our Certificate of Incorporation authorizes 250,000,000 shares of common stock, of which 50,567,864 were outstanding as of June 30, 2022, and our Board is authorized to issue additional shares of our common stock.

Our Certificate of Incorporation authorizes 250,000,000 shares of common stock, of which 1,681,729 were outstanding as of June 30, 2023, and our Board is authorized to issue additional shares of our common stock.

In addition, our Certificate of Incorporation authorizes 2,500,000 shares of “blank check preferred stock.” Shares of “blank check preferred stock”

24 unchanged sentences

Our common stock is currently listed for trading on the Nasdaq Capital Market.

We must satisfy the Nasdaq Capital Market’s continued listing requirements, risk delisting, which would have a material adverse effect on our business.

We must satisfy the Nasdaq Capital Market’s continued listing requirements or risk delisting, which would have a material adverse effect on our business.

A delisting of our common stock from the Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock.

In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.

On December 21, 2021, we received a deficiency letter from Nasdaq indicating that, based upon the closing bid price of our common stock over the preceding 30 consecutive business days, we 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 we 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 our 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.

We determined that we would not be in compliance with the minimum Bid Price Requirement by June 20, 2022.

As a result, we notified Nasdaq and applied for an extension of the compliance period, as permitted under the original notification.

In the application, we indicated that we 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 our 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, we received notification from Nasdaq that the date to achieve compliance has been extended an additional 180 days until December 19, 2022 (the “Second Compliance Period”).

We plan to carefully assess potential actions to regain compliance during the Second Compliance Period.

To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of ten consecutive business days during the Second Compliance Period.

If we fail to regain compliance on or prior to December 19, 2022, our stock will be delisted by Nasdaq, unless we timely appeal 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.

There continues to be no immediate effect on the listing of our common stock, which continues to trade on the Nasdaq Capital Market under the symbol “ASTC.”

However, there can be no assurance that we will be able to regain compliance with the Bid Price Requirement under Nasdaq Listing Rule 5550(a)(2).

If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc.

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The COVID-19 pandemic had numerous negative consequences for our business, including a reduction in demand for certain of our security screening products and services caused by a significant reduction in airline passenger traffic.

To slow and limit the transmission of COVID-19, governments across the world imposed air travel restrictions and businesses and individuals canceled air travel plans.

To slow and limit the transmission of COVID-19, governments across the world have imposed air travel restrictions and businesses and individuals canceled air travel plans.

These restrictions and cancelations reduced demand for security screening products and related services at airport checkpoints globally as the number of airline passengers requiring screening fell.

16 unchanged sentences

Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.

The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

In February of 2022, Russian military forces invaded Ukraine, resulting in conflict and disruption in the region.

The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.

This conflict has led and may continue to lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, higher inflation, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

As a result of the invasion and ongoing military conflict, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have implemented and may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.

Such sanctions, and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, supply chain disruptions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations, and could also aggravate the other risk factors that we identify herein.

Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, services, and data.

28 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors