What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-09-28 compared with 2022-09-15 · 410 added, 367 removed, 1061 unchanged (42% of the section changed)

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This number does not include beneficial or other owners for whom common stock may be held in “street”

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.

The last reported sale price of our common stock as reported by The Nasdaq Capital Market on September 26, 2023 was $10.10 per share.

Issuer Purchase s 

of Equity Securities

The table below sets forth the information required by Item 703(b) of Regulation S-K with respect to any purchases made by or on behalf of the Company or any “affiliated purchaser,”

as defined in §

240 10b-18(a)(3) of the Exchange Act, of shares of our common stock.

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (1)

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

February 1 through February 28, 2023

March 1 through March 31, 2023

April 1 through April 30, 2023

May 1 through May 31, 2023

June 1 through June 30, 2023

(1) On November 9, 2022, the Company’s Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $1.0 million of the Company’s common stock beginning November 17, 2022 and continuing through and including November 17, 2023.

No repurchases were made pursuant to the share repurchase program prior to February 2023.

On June 16, 2023, in connection with entry into the ATM Agreement, the Company terminated its existing share repurchase program, effective immediately, in order to comply with Regulation M under the Exchange Act.

The shares could have been repurchased from time to time in the open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.

The timing, as well as the number and value of shares repurchased under the program, could have been determined by the Company at its discretion and would have depended on a variety of factors, including management’s assessment of the intrinsic value of the Company’s common stock, the market price of the Company’s common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations.

Sales of Unregistered Securities

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“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:

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.

Our efforts are focused on commercializing our platform mass spectrometry technology through our wholly-owned subsidiaries.

Astrotech Technologies, Inc.

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1 st  Detect holds an exclusive AMS Technology license from ATI for air passenger and cargo security applications.

(“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”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the 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.

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ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1st 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.

Long recognized as the gold standard in chemical detection, mass spectrometry has historically been too costly, bulky, and cumbersome. In contrast, the AMS Technology has been designed to be inexpensive, smaller, and easier to use when compared to traditional mass spectrometers. 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 18 granted patents 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 1st 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.

1 st Detect Corporation

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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.

We are currently selling the TRACER 1000 to customers who accept ECAC certification. 

As of June 30, 2023, we have deployed the TRACER 1000 in approximately 29 locations in 14 countries throughout Europe and Asia. On May 8, 2023, the Company announced that it has accepted a purchase order from a Romanian based company focused on research and innovation in the security and telecommunications space. 

The Company is required to deliver 17 TRACER 1000 explosive trace detectors over the remainder of calendar year 2023.

In the United States, we are working with the U.S.

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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.

series of mass spectrometers for use in the hemp and cannabis markets with initial focus on optimizing yields in the distillation process.

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.

The AMS Technology provides a significant competitive advantage due to its small size, rugged design, quick analysis, and ease of use. AgLAB has continued to conduct field trials to demonstrate that the AgLAB 1000-D2™

can be used in the distillation process to significantly improve the processing yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil during distillation.

The AgLAB 1000-D2 uses the Maximum Value Process solution (“MVP”) to analyze samples in real-time and help the equipment operator to determine the ideal settings required to maximize yields. As part of our growth plan, we also plan to launch a family of “process control” methods and solutions that we believe could be valuable additions to many nutraceutical and pharmaceutical distillation processing plants.

During the first quarter of fiscal year 2023, we began our first production run of the AgLAB 1000-D2 and sales efforts are currently underway.

On May 9, 2023, we announced the results from ongoing field trials of the AgLAB MVP solution, which we believe demonstrate that it can be a valuable tool for cannabis and hemp oil processors worldwide.

During our field trials, we were able to improve ending-weights yields by an average of 30%.

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.

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.

BreathTech, an exclusive licensee of ATI for use in breath analysis applications, 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 compromised condition including but not limited to a  bacterial or viral infection.

The Company believes that 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.

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 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.

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

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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.

Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of Accounting Standards Codification (“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.

Astrotech has multiple revenue sources such as product and related consumable sales, recurring maintenance & extended warranty services, lease revenue, repairs and training.

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, 2023, the Company had four material customers that comprised substantially all of its $750 thousand in revenue.

During the fiscal year ended June 30, 2022, the Company recognized revenue from two material customers for total revenue of $869 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 once all performance obligations have been met, in advance of the time when contracts give us 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, the Company 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.

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.

The Company records shipping and handling fees that it charges to its customers as revenue and related costs as cost of revenue.

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 that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price.

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 to it including its 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.

Impairment of Long-lived Assets

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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.

We offer our customers warranties on the products that we sell.

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

We periodically adjust this provision based on historical experience and anticipated expenses, which could impact our cost of revenue and gross margin.

We charge 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.  

Results of Operations for the Years Ended June 30, 2023 and 2022

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Cost of revenue

Gross margin percentage

Operating expenses

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Research and development

Disposal of corporate lease

Total operating expenses

Loss from operations

Other income and expense, net

Gain from extinguishment of debt - PPP loan

Income tax benefit

Net unrealized losses, net of zero tax expense

Net unrealized losses

Total comprehensive loss

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.

Total revenue decreased by $119 thousand, or 13.7%, to $750 thousand for the fiscal year ended June 30, 2023, compared to $869 thousand for the fiscal year ended June 30, 2022.

All of the fiscal years 2023 and 2022 revenue was comprised of sales related to our TRACER 1000 units, as well as ongoing sales of consumables and recurring maintenance services for the TRACER 1000. The decrease was due to less new units sold compared to the prior year.

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.

Cost of revenue decreased $233 thousand, or 34.4%, for the fiscal year ended June 30, 2023, compared to the year ended June 30, 2022, due to the decrease in sold units. Gross profit increased $114 thousand, or 59.4%, and gross margin increased to 41% during the fiscal year ended June 30, 2023, compared to the year ended June 30, 2022, due to a higher proportion of recurring revenue.

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.

Our operating expenses increased $2.6 million, or 29.3%, during the fiscal year ended June 30, 2023, compared to the fiscal year ended June 30, 2022.

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.

Selling, General and Administrative Expenses  – Our selling, general and administrative expenses decreased by $231 thousand, or 3.8%, for the year ended June 30, 2023, compared to the year ended June 30, 2022.

This is due to a decrease in bonus compensation to officers, partially offset by increase in Delaware franchise tax and legal fees on various matters.

• 

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.

Research and development expenses increased $2.8 million, or a little over double the previous year. This was largely driven by increases in expenses related to cross-platform improvements to our technology, field trials and further development and refinement of our AgLAB product, increased headcount to further support the development of our mass spectrometry offering, contracting an additional clinical research firm to accelerate the collection of samples for building the BreathTech library, and increased depreciation related to equipment and facility expenses. 

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.

Other income and expense, net for the year ended June 30, 2023 was $1.4 million compared to other expense, net of $265 thousand for the year ended June 30, 2022.

The increase was dr iven by more income earned on short-term, capital-preservation investments as interest rates have increased and a reduction of interest expense from the payment of related party notes.

Income Taxes –

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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.

On June 16, 2023, we entered into an at-the-market offering agreement (the “ATM Agreement”) with H.C.

Wainwright (“Wainwright”).

Pursuant to the terms of the ATM Agreement, we were permitted to offer and sell, from time to time through Wainwright, shares of our common stock having an aggregate offering price of up to $5,982,724.

On June 26, 2023, we delivered notice to Wainwright to terminate the ATM Agreement, effective June 27, 2023.

Prior to termination, we had not sold any shares of our common stock pursuant to the ATM Agreement. 

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.

If we are unable to raise additional funds through equity offerings, debt financing, equity financing or engaging in a strategic partnership, we may be required to delay, limit, or reduce our expansion efforts.

Consolidated Balance Sheet

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Property and equipment, net

Operating leases, right-of-use asset, net

Operating lease right-of-use assets, net

Other assets, net

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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.

Current assets decreased $10.2 million as of June 30, 2023, compared to June 30, 2022, as a result of cash used for continuing operating expenses, increasing our R&D equipment, share buy back program and the Delaware Litigation Settlement payment.

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.

Property and equipment increased $1.6 million as of June 30, 2023, compared to June 30, 2022, due to purchases of R&D equipment and internal use software 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 lease right-of-use assets, net 

Operating lease right-of-use assets increased $100 thousand as of June 30, 2023, compared to June 30, 2022, due to the new lease expansion in Austin.

Other assets, net 

Other assets was consistent with the prior year.

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.

Current liabilities was consistent with the prior year.

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.

Other long-term liabilities were consistent with the prior year.

The following is a summary of the change in our cash and cash equivalents:

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Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash used in financing activities

Net change in cash and cash equivalents

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At June 30, 2022, we held cash and cash equivalents of $26.4 million and our net working capital was approximately $52.3 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.

Cash and cash equivalents decreased by approximately $12.2 million during the year ended June 30, 2023, due to funding our continuing operating expenses, purchases of short-term time deposit investments, purchases of R&D equipment and expansion of our facility, share buyback program and the Delaware Litigation Settlement payment.

Operating Activities

Net cash used in operating activities was $7.6 million for the year ended June 30, 2023, compared to cash used in operating activities of $6.8 million for the year ended June 30, 2022.

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.

This increase was caused by an increase in operating expenses, increase in inventory as we secure hard to source electrical components, payment of the Stein Action settlement, partially offset by an increase in accounts payable and depreciation related to the increase in R&D equipment.

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.

Net cash used in investing activities for the year ended June 30, 2023 increased $3.2 million, compared to the year ended June 30, 2022.

The increase in cash used in investing activities was due to purchasing of short-term time deposit investments, internal use software, and R&D equipment and expansion of our R&D facility in Austin.

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.

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.

Cash used in financing activities was $776 thousand for the year ended June 30, 2023, and $2.1 million for the year ended June 30, 2022.

This was due to repayment of related party debt (see below).

Related-party 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 1st 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.

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.

Contractual Obligations and Commitments

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Finance lease commitments (2)

Debt obligations (3)

(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. 

(1) Consists of payments due for our leases of research and development space in Austin, Texas that expires April 2025. 

(2) Consists of payments due for our leases of three pieces of equipment that expire between December 2024 and May 2028.

Off-Balance Sheet Arrangements

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We have audited the accompanying consolidated balance sheet of Astrotech Corporation and subsidiaries (the "Company") as of June 30, 2023 and 2022, 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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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.

The Company records revenue from contracts with customers that contain various performance obligations.

Generally, the performance obligations identified are related to product sales, training, associated consumables, and future maintenance.

The value allocated to each performance obligation is recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met.

A presumption of fraud risk exists related to revenue recognition and judgment is exercised by the Company in determining revenue recognition for each performance obligation within customer agreements.

The related audit effort to evaluate revenue recognition for customer agreements required auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

We gained an understanding of internal controls related to revenue recognition.

We evaluated management's significant accounting policies for reasonableness.

We selected a sample of revenue recognized and performed the following procedures:

We gained an understanding of internal controls related to revenue recognition including management’s controls related to the evaluation of performance obligations and the allocation of the total contract consideration to these performance obligations.

We evaluated management’s revenue recognition policies and practices including the reasonableness of management’s judgments and assumptions relating to the timing of revenue recognition of those performance obligations.

We performed the following procedures on all product sales and on a sample of training, consumables and maintenances revenue:

● 

Reviewed the Company's revenue recognition policy for compliance with ASC 606

Tested revenue contracts and underlying support to evaluate appropriateness of management’s revenue recognition.

● 

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.

San Francisco, California

Tested the completeness and accuracy of management’s calculation of revenue and associated timing of revenue recognized.

Dallas, Texas

We have served as the Company's auditor since 2019.

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Accounts receivable

Cost and estimated revenue in excess of billings

Contract asset

Inventory, net:

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Finished goods

Income tax receivable

Prepaid expenses and other current assets

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Property and equipment, net

Operating leases, right-of-use asset, net

Operating lease right-of-use assets, net

Other assets, net

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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

280,898 shares of Series D issued and outstanding at June 30, 2023 and 2022, respectively

Common stock, $ 0.001 par value, 250,000,000 shares authorized at June 30, 2023 and 2022 respectively;

1,692,045 and 1,685,595 shares issued at June 30, 2023 and 2022 respectively;

1,681,729 and 1,685,595 outstanding at June 30, 2023 and 2022, respectively

190,643  

190,642  

Treasury shares, 10,316 shares and no shares at June 30, 2023 and 2022, respectively

( 119 )  

Additional paid-in capital

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Research and development

Disposal of corporate lease

Total operating expenses

11,366  

Loss from operations

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Other income and expense, net

Gain on extinguishment of debt - PPP loan

Loss from operations before income taxes

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Basic and diluted

47,702  

21,984  

Basic and diluted net loss per common share:

Net loss per common share

$ ( 5.95 )  

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Available-for-sale securities:

Net unrealized losses, net of zero tax expense

Net unrealized loss

( 254 )  

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$ ( 23 )  

Net change in available-for-sale marketable securities

$ 61,207  

Issuance of shares, net of offering issuance costs of $ 5,685

39,585  

63,413  

Net change in available-for-sale marketable securities

( 1,176 )  

Stock-based compensation

Cancelation of restricted stock

( 71 )  

Cancellation of restricted stock

( 8,330 )  

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53,236  

61,207  

Net change in available-for-sale marketable securities, net of zero tax

Net change in available-for-sale marketable securities

( 254 )  

Stock-based compensation

Cancelation of restricted stock

Restricted stock issuance

Purchase of treasury stock

( 10 )  

( 119 )  

( 9,642 )  

Balance at June 30, 2023

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Cash flows from operating activities:

Adjustments to reconcile net loss from operations to net cash used in operating activities:

$ ( 9,642 )  

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

Depreciation and amortization

Gain from extinguishment of debt - PPP loan

Loss on impairment of long-lived assets

Amortization of operating lease right-of-use assets

Interest on financing leases

Loss on disposal of asset

Changes in assets and liabilities:

Accounts receivable

Cost and estimated revenue in excess of billings

( 169 )  

Contract asset

Inventory, net

( 477 )  

Income tax receivable

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Other assets and liabilities

Income taxes payable

Operating lease liabilities

( 130 )  

Net cash used in operating activities

( 7,625 )  

Cash flows from investing activities:

Purchases of security investments

Purchases of property and equipment

( 1,844 )  

Purchases of short-term investments

( 5,140 )  

Proceeds from short-term investments

Net cash used in investing activities

( 3,844 )  

Cash flows from financing activities:

Purchase of treasury shares

( 119 )  

Repayment of related-party debt

Repayments on lease financing

Proceeds from issuance of stock, net of offering issuance costs

Net cash (used in) provided by financing activities

( 500 )  

Repayments on finance lease liabilities

( 157 )  

Net cash used in financing activities

$ ( 776 )  

Net change in cash and cash equivalents

$ ( 12,245 )  

Cash and cash equivalents at beginning of period

26,453  

35,936  

Cash and cash equivalents at end of period

$ 14,208  

$ 26,453  

Supplemental disclosures of cash flow information:

Cash paid for interest

Acquisition of equipment through finance lease

Acquisition of equipment through financing lease

Operating right-of-use assets and associated liabilities

Income taxes paid

See accompanying notes to consolidated financial statements.

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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.

On November 22, 2022, the Company put into effect a 1 -for- 30  reverse stock split of all the Company’s issued and outstanding shares of Common Stock. 

All historical per share data, number of shares outstanding, and other common stock equivalents for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

See Footnote 8 for additional information.

Business Overview

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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.

because the Company’s subsidiaries represent Company brands that leverage the same core technology rather than independent operating segments.

Astrotech Technologies, Inc.

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(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.

The AMS Technology has been designed to be comparatively inexpensive, small, and easy to use.  AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms.

The intellectual property includes 18  granted patents 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.

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("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.

ATI contracts with various vendors to assist with the further development of our mass spectrometer products including the manufacturability and reliability of our systems. 

Detect Corporation

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.

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As of June 30, 2023, 

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.

the Company has deployed the TRACER 1000 in approximately 29  locations in 14  countries throughout Europe and Asia.

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”

If approved, the TRACER 1000 will be approved for cargo sales in the United States. 

Transportation Security Administration (“TSA”) towards air cargo certification. If approved, the TRACER 1000 will be approved for cargo sales in the United States. 

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.

series of mass spectrometers for use in the hemp and cannabis markets with initial focus on optimizing yields in the distillation process.

The AgLAB product line is a derivative of the Company’s core AMS Technology. 

During the first quarter of fiscal year 2023, we began our first production run of the AgLAB 1000 - D2™

and sales efforts are currently underway. 

On May 9, 2023, we announced the results from ongoing field trials of the AgLAB MVP solution.

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.

BreathTech, an exclusive licensee of ATI for use in breath analysis applications, 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 compromised condition including but not limited to a bacterial or viral infection. 

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 focuses 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.

Summary of Significant Accounting Policies

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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.

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, warranty provision 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”

Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of Accounting Standards Codification ("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.

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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.

This necessitates deferral of all or a portion of revenue recognition until assurance of collection.

During the fiscal year ended June 30, 2023 , the Company had four  material customers that comprised substantially all of its $ 750 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.

June 30, 2022 , the Company had two material customers that consisted substantially all of the $ 869 thousand.

Revenue was recognized at a point in time consistent with the guidelines in Topic 606.

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 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 recognizes revenue and corresponding accounts receivable according to Topic 606  and, at times, recognizes revenue once all performance obligations have been met, in advance of the time when contracts give us 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.

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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.

During fiscal years 2023  and 2022 , the Company conducted business in 

eleven  countries.  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.

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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 

Transaction gains and losses, which were included in the Company’s consolidated statements of operations and comprehensive loss, amounted to a loss of approximately $ 3 thousand for the fiscal year ended June 30, 2023  and a loss of approximately $ 13 thousand for the fiscal year ended 

June 30, 2022 .

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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.

Cash equivalents are comprised primarily of money market 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.

The carrying value of the Company’s accounts receivable, net of an allowance for doubtful accounts, if any, 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.

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Repairs and maintenance are expensed when incurred.

Internal Use Software

The Company has adopted the provisions of ASC 

350 - 40 , 

Internal-Use  

Software , and therefore the costs incurred in the preliminary stages of development are expensed as incurred.

The Company capitalizes all direct external costs related to software developed or obtained for internal use when management commits to funding the project, the preliminary project stage is completed and when technological feasibility is established.

Once a new functionality or improvement is released for operational use, the asset is moved from the property and equipment category “capital improvements in progress”

(“CIP”) to a property and equipment asset subject to depreciation.

Capitalization of costs ceases when the project is substantially complete and ready for its intended use.

Depreciation is applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service. 

Impairment of Long-Lived Assets

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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.

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. There was no impairment of long lived assets recorded for fiscal years ended June 30, 2023, and 2022.

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. 

Recoverability of long-lived assets is dependent on a number of conditions, including uncertainty about future events and demand for our services. Due to the disposal of an asset, the Company recorded a loss of long-lived assets of $ 25 thousand for the fiscal year ended June 30, 2023, which is included in loss on disposal of asset in the accompanying Consolidated Statements of Cash Flows.

Fair Value of Financial Instruments

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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.

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.

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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.

equity. During fiscal year 2023, Astrotech repurchased from the open market $ 119 thousand in treasury stock now held by the Company.

Accounting Pronouncements

In November 2021, FASB issued ASU No.

2021 - 10, “Government Assistance (Topic 832 )”

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021 - 10, “Government Assistance (Topic 832 )”

(“ASU 2021 - 10”

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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.

The adoption of this did not have a material impact on its financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In July 2023, the FASB issued ASU 

2023 - 03,  “Presentation of Financial Statements (Topic 

205 ), Income Statement—Reporting Comprehensive Income (Topic 220 ), Distinguishing Liabilities from Equity (Topic 480 ), Equity (Topic 505 ), and Compensation—Stock Compensation (Topic 718 )” pursuant to SEC Staff Accounting Bulletin No.

120, which adds interpretive guidance for public companies to consider when entering into share-based payment transactions while in possession of material non-public information.

The effective date of this update is for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The Company does not expect the adoption to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016 - 13,  

Measurement of Credit Losses on Financial Instruments . ASU 2016 - 13  requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables.

The standard will become effective for the Company for financial statements periods beginning after December 

15, 2022.We do not believe this will have a material impact on the Company’s consolidated financial statements.

( 3 ) Investments

9 unchanged sentences

( 418 )  

Time Deposits

( 10 )  

1 unchanged sentence

$ ( 1,453 )  

June 30, 2021  

$ 27,919  

June 30, 2022

Available-for-Sale

Adjusted  

Unrealized  

(In thousands)

8 unchanged sentences

$ 26,173  

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.

We have certain financial instruments on our consolidated balance sheets related to interest-bearing time deposits.

Time deposits with maturities of less than 90 days, if any, from the purchase date are included in “Cash and Cash Equivalents.”

Time deposits with maturities from 91 - 360 days, if any, are included in “Short-term investments.”

Time deposits with maturities of more than 360 days, if any, are included in “Long-term investments.” As of June 

30, 2023  and June 30, 2022, the Company had no long-term investments.

For more information about the fair value of the Company’s financial instruments, see Note 

The following table presents the carrying amounts of certain financial instruments as of June 

30, 2023 and June 30, 2022:

Carrying Value

Short-Term Investments

Long-Term Investments

(In thousands)

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Money Market Funds

Mutual Funds - Corporate & Government Debt

18,965  

19,191  

ETFs - Corporate & Government Debt

Time deposits

Maturities from 1-90 days

Maturities from 91-360 days

$ 27,919  

$ 26,173  

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 (the “R&D facility”) that includes a laboratory, a small production shop, and offices for staff.

The lease commenced on June 1, 2021 and had a lease term of 36 months. On November 11, 2022, the Company signed a lease extension agreement for the R&D facility, extending the term of the lease through April 30, 2025.

The Company’s total contractual base rent obligation for the eleven -month extension is approximately $ 95  thousand. 

On November 22, 2022, Astrotech entered into a sublease agreement for an additional facility directly adjacent to the R&D facility (the “subleased facility”).

The subleased facility consists of approximately 3,900 square feet and will provide the space needed as the Company launches its AgLAB products and continues its R&D efforts at ATI and BreathTech.

The sublease commenced on December 1, 2022, and has a lease term of 29 months. The Company’s total contractual base rent obligation for the subleased facility is approximately $ 156 thousand. 

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.

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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.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The amortization expense for financed lease assets for the years ended June 30, 2023 and 2022 totaled $ 101 thousand and $ 61 thousand, respectively.

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. 

The balance sheet presentation of the Company’s operating and finance leases is as follows:

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June 30, 2023

June 30, 2022

Operating lease assets

Operating leases, right-of-use assets, net

Operating lease right-of-use assets, net

Financing lease assets

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Imputed interest

( 17 )  

( 24 )  

Present value of net minimum lease obligations

Lease liabilities - current

( 148 )  

( 168 )  

Lease liabilities - non-current

6 unchanged sentences

Financing leases

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.

Cash payments for operating leases for the years ended June 30, 2023 and 2022 totaled $ 130 thousand and $ 86 thousand, respectively.

Cash payments for financing leases for the years ended June 30, 2023 and 2022 totaled $ 157 thousand and $ 95 thousand, respectively.

( 5 ) Property and Equipment, net

3 unchanged sentences

$ 2,805  

$ 1,371  

Capital improvements in progress

Gross property and equipment

Accumulated depreciation and amortization

Accumulated depreciation

( 1,001 )  

1 unchanged sentence

$ 2,670  

$ 1,098  

Depreciation and amortization expense of property and equipment was $ 366 thousand for the year ended June 30, 2023 and $ 148 thousand for the year ended 

June 30, 2022 .

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. 

Total depreciation and amortization expense includes finance lease right-of-use asset amortization of $ 101 thousand and $ 61 thousand for the years ended June 30, 2023 and 2022, respectively.

( 6 ) Fair Value Measurement

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Available-for-Sale Securities

Short-Term Investments

Mutual Funds - Corporate & Government Debt

3 unchanged sentences

ETFs - Corporate & Government Debt

Time Deposits:

Total Available-for-Sale Investments

$ 27,919  

1 unchanged sentence

$ 1,996  

$ 27,919  

June 30, 2022

2 unchanged sentences

Available-for-Sale Securities

Short-Term Investments

Mutual Funds - Corporate & Government Debt

3 unchanged sentences

ETFs - Corporate & Government Debt

Total Available-for-Sale Investments

$ 26,173  

2 unchanged sentences

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).

( 7 ) Related-party Debt

On September 5, 2019, the Company entered into a private placement transaction with Thomas B.

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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. 

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.

( 8 ) Stockholders ’

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”).

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.

) 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.

) 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.

) 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.

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 .

On November 22, 2022, the Company filed a third amendment (the “Amendment”) to the Company’s Certificate of Incorporation (as amended, the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect a 1 -for- 30  reverse stock split of all of the Company’s issued and outstanding shares of Common Stock. The Amendment provided that, at the effective time of the Reverse Stock Split, every 30 shares of the Company’s issued and outstanding Common Stock were automatically combined into one validly issued, fully paid and non-assessable share of Common Stock, without effecting a change to the par value per share.

The Reverse Stock Split affected all shares of the Company’s Common Stock outstanding immediately prior to the effective time of the Reverse Stock Split, as well as the number of shares of Common Stock available for issuance under the Company’s equity incentive plans.

In addition, the Reverse Stock Split effected a reduction in the number of shares of Common Stock issuable upon the exercise of stock options and warrants outstanding immediately prior to the effectiveness of the Reverse Stock Split with a corresponding increase in exercise price per share.

The Reverse Stock Split also triggered a proportionate adjustment to the number of shares of Common Stock issuable upon the conversion of our Series D convertible preferred stock, par value of $ 0.001 per share (“Series D Preferred Shares”).

Preferred Stock

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The holder of Series D Preferred Shares has the option to convert said shares to common stock at the holder’s discretion.

Share Repurchase Program

On November 9, 2022, the Company’s Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $ 1.0 million of the Company’s common stock beginning November 17, 2022, and continuing through and including November 17, 2023.

The shares may be repurchased from time to time in the open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.

The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s common stock, the market price of the Company’s common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations.

The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice.

The Company expects to fund the repurchases with available working capital.

During the year ended June 30, 

2023, 10,316  shares of the Company’s common stock were repurchased at an aggregate cost of $ 118,532 .

On December 21, 2022, the Company’s Board of Directors adopted a limited duration stockholder rights plan (the “Rights Plan”) expiring December 20, 2023 and declared a dividend of one preferred share purchase right for each outstanding share of common stock to stockholders of record on January 5, 2023 to purchase from the Company one one -thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.001 per share, of the Company for an exercise price of $ 58.00 once the rights become exercisable, subject to the terms of and adjustment as provided in the related rights agreement.

A summary of the common stock warrant activity for the year ended June 30, 2023 is presented below:

6 unchanged sentences

$ 72.10  

$ 3,747  

Canceled or expired

6 unchanged sentences

$ 3,747  

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.

The following represents a summary of the warrants outstanding at each of the dates identified:

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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.

December 5, 2022, the Company effectuated a reverse stock split of its shares of common stock, par value $ 0.001 per share (the “Common Stock”), whereby every thirty ( 30 ) pre-split shares of Common Stock were exchanged for one ( 1 ) post-split share of the Company's Common Stock (the “Reverse Stock Split”).

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would otherwise have held a fractional share of the Common Stock received a cash payment in lieu thereof.

Numbers presented in these consolidated financial statements have been adjusted to reflect the Reverse Stock Split.

The Reverse Stock Split was primarily intended to bring the Company into compliance with the minimum bid price requirements for maintaining its listing on The Nasdaq Stock Market LLC (“Nasdaq”). On December 19, 2022, the Company received written notice from the Listing Qualifications Department of Nasdaq stating that, because the Company’s Common Stock had a closing bid price at or above $ 1.00 per share for a minimum of 10 consecutive business days, the Company had regained compliance with the minimum bid price requirement of $ 1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 

5550 (a)( 2 ), and that the matter is now closed.

( 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.

For the fiscal year ended June 30, 2023 , the Company had four  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.

June 30, 2022  was also generated by two customers. 

Additionally, the material amount of the company's receivables was compromised by two companies in both fiscal years.

The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (the “FDIC”).

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( 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, 2023 and 2022 was as follows:

(In thousands)

Exercise Price

Outstanding at June 30, 2021

$ 157.50  

29,200  

Canceled or expired

( 4,099 )  

148.80  

Outstanding at June 30, 2022

34,284  

$ 40.50  

Canceled or expired

( 3,080 )  

139.29  

Outstanding at June 30, 2023

38,166  

$ 27.34  

The aggregate intrinsic value of options exercisable at June 30, 2023  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, 2023 was $ 0 .

Outstanding  

Contractual  

Exercise  

Exercisable  

Exercise  

Range of exercise prices

(In thousands)

Life (years)  

$10.38 –

1 unchanged sentence

$ 17.99  

$ 19.20  

$55.50 –

$159.00 –

168.82  

$10.38 –

1 unchanged sentence

$ 27.34  

12,404  

$ 46.77  

Compensation costs recognized related to vested stock option awards during the years ended June 30, 2023 and 2022 were $ 189 thousand and $ 37 thousand, respectively.

3 unchanged sentences

The Company’s restricted stock activity for the years ended June 30, 2023 and 2022 , was as follows: 

(In thousands)

Grant-Date  

Outstanding at June 30, 2021

1 unchanged sentence

$ 61.50  

40,000  

( 23,090 )  

Canceled or expired

3 unchanged sentences

$ 39.00  

( 26,742 )  

Canceled or expired

2 unchanged sentences

50,671  

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.

$ 33.43  

Compensation costs recognized related to vested restricted stock awards during the years ended June 30, 2023 and 2022 were $ 1.3 million and $ 1.5 million, respectively.

At June 30, 2023 , there was $ 1.3 million of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 

Stock-based Compensation in Operating Expenses

The Company’s stock-based compensation by category for the years ended June 30,2023 and 2022 was as follows:

(in thousands)

June 30, 2023

June 30, 2022

Selling, Administration and General

$ 1,457  

$ 1,503  

Research & Development

 $ 1,498  

 $ 1,535  

Fair Value of Stock-Based Compensation

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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.

As of June 30, 2023 and 2022 , the Company had established a full valuation allowance against all of its net deferred tax assets. The Company also has $ 1 thousand of prepaid income taxes on the balance sheet at June 30, 2023.

For the fiscal years ended June 30, 2023 and 2022 , the Company incurred losses from operations in the amount of $ 9.6 million and $ 8.3 million, respectively.

There is no effective tax rate for the fiscal years 2022 or 

There is no current state tax expense.

There is no effective tax rate for the fiscal years 2023  or 

There is materially 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.

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Income Tax Expense and Effective Tax Rate

The components of income tax benefit from operations are as follows:

Year Ended June 30,

(In thousands)

State and local

Total current tax benefit

State and local

Total deferred tax benefit

Total tax benefit

The company has no tax benefit, current or deferred, as of the years ended June 30, 2023 and 2022.

A reconciliation of the reported income tax benefit to the amount that would result by applying the U.S.

8 unchanged sentences

( 1,838 )  

Loan forgiveness - PPP loan

Stock-based compensation

15 unchanged sentences

Lease liability - current and non-current

Unrealized loss on securities

IRC Section 174 R&D Expense Capitalization

Accrued expenses and other timing

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As of June 30, 2023, the Company provided a full valuation allowance of approximately $ 21.0  million against its net deferred tax assets.

The valuation allowance increased by approximately $1.5  million for the year ended June 30, 2022 .

The valuation allowance increased by approximately $ 1.7  million for the year ended June 30, 2023, $305 thousand of which relates to unrealized loss on securities charged to other comprehensive income.

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, 2023, the Company had net operating loss carryforwards of approximately $ 83.5  million with approximately $ 37.8  million ($ 7.9  million, tax effected) for federal income tax purposes that are available to offset future regular taxable income set to expire between the years of 2024  and 2037.

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The Company has federal research and development income tax credit carryovers of $ 1.1  million as of June 30, 2023.

These credits will expire between the years 2035  and 2042.

These credits will expire between the years 2035 and 2043.

At June 30, 2023, the Company also has accumulated state net operating loss carryforwards of approximately $ 7.4 million ($ 0.4 million, tax effected) that are available to offset future state taxable income.

24 unchanged sentences

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):

Reconciliation and the components of basic and diluted net loss per share are as follows (in thousands):

Year Ended June 30,

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weighted average common stock outstanding

47,702  

21,984  

Basic and diluted net loss per common share:

1 unchanged sentence

All unvested restricted stock awards for the years ended June 30, 2023 and 2022 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 

Options to purchase 38,166 shares of common stock at exercise prices ranging from $ 10.38  to $ 175.50  per share outstanding for the year ended June 30, 2023 and options to purchase 34,284  shares of common stock at exercise prices ranging from $ 19.20  to $ 175.50  per share outstanding for the year ended 

June 30, 2022 were not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.

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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.

For the years ended June 30, 2023 and 2022 , the Company made matching contributions of $ 59  thousand and $ 57  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.

16 unchanged sentences

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. 

Thereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presented the settlement to the Court for approval. On February 13, 2023, the Court approved the settlement, awarded the Plaintiff’s attorneys’

fees and expenses of $ 290,000 paid prior to the end of fiscal year 2023, and entered a final order and judgment dismissing the Delaware Action with prejudice.

The parties to the settlement recognize that entry into the settlement does not constitute an admission of liability, wrongdoing, or any matter of fact or law.

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”

( 15 ) Impact of COVID- 19 Pandemic

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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.

50 % of the deferred amount has been paid as of December 31, 2021, and the remainder was paid before December 31, 2022.

The deferred payroll taxes are recorded within accrued liabilities on the consolidated balance sheets.

1 unchanged sentence

( 16 ) 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.

Management has reviewed subsequent events through September 26, 2023.

On July 31, 2023, the Company Board of Directors approved and adopted amendments to the Bylaws of the Company related to the new universal proxy rules under Rule 14a - 19 of the Securities Exchange Act of 1934, among other things.  

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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.

There have been no changes in our internal controls over financial reporting that occurred during the fiscal quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Other Information

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.

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 2023 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, 2023 (the “2023 Proxy Statement”), in accordance with General Instructions G(3) of Form 10-K.

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.

The information required by Item 10 will be contained in, and is hereby incorporated by reference to, the 2023 Proxy Statement.

Executive Compensation

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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.

The information required by Item 12 will be contained in, and is hereby incorporated by reference to, the 2023 Proxy Statement.

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.

The information required by Item 13 will be contained in, and is hereby incorporated by reference to, the 2023 Proxy Statement.

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.

The information required by Item 14 will be contained in, and is hereby incorporated by reference to, the 2023 Proxy Statement.

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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).

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).

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).

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).

Third 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 November 23, 2022)

Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on August 1, 2023)

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).

Description of Securities.

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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)

Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, dated as of December 21, 2022 (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 21, 2022).

Security Agreement, dated September 5, 2019, by and among the Company, certain of the Company’

38 unchanged sentences

s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 17, 2015).

Letter dated August 7, 2023 from Armanino LLP to the Securities and Exchange Commission (incorporated by reference to Exhibit 16.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on August 7, 2023).

Astrotech Corporation and Subsidiaries — Subsidiaries of the Registrant

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/s/ Thomas B.

Chairman of the Board and Chief Executive Officer 

(Principal Executive Officer)

Date: September 15, 2022

Chief Executive Officer, Chief Technology Officer and Chairman of the Board

Date September 28, 2023

/s/ Jaime Hinojosa

Jaime Hinojosa

Chief Financial Officer, Treasurer and Secretary

Chief Financial Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)

2 unchanged sentences

/s/ Thomas B.

Chairman of the Board and Chief Executive Officer

Chief Executive Officer, Chief Technology Officer,

September 28, 2023

(Principal Executive Officer)

 and Chairman of the Board

/s/ Daniel T.

5 unchanged sentences

September 28, 2023

/s/ Bob McFarland

September 28, 2023

Bob McFarland

/s/ Jaime Hinojosa

4 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 5. Market for Registrant’s Common Equity