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Item 5. Market for Registrant’s Common Equity

2024-09-20 compared with 2023-09-28 · 132 added, 1338 removed, 133 unchanged (92% of the section changed)

Market for Registrant ’

s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information, Holders, and Dividends

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We have 250,000,000 shares of common stock authorized for issuance.

As of September 26, 2023, we had 1,682,286 shares of common stock outstanding, which were held by approximately 130 holders of record.

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

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.

As of September 17, 2024, we had 1,701,729 shares of common stock outstanding, which were held by approximately 28 holders of record.

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

The last reported sale price of our common stock as reported by The Nasdaq Capital Market on September 17, 2024 was $8.28 per share.

Sales of Unregistered Securities

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes included below in Item 8 of this Annual Report on Form 10-K.

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Our actual results may differ materially from those anticipated in these forward-looking statements.

Business Overview

Astrotech Corporation (Nasdaq:

ASTC) (“Astrotech,”

the “Company,”

“we,”

“us,”

or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology.

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

Astrotech Technologies, Inc.

(“ATI”) owns and licenses the intellectual property related to the Astrotech Mass Spectrometer Technology™ (the “AMS Technology”).

1 st  Detect Corporation (“1 st  Detect”) is a manufacturer of explosives trace detectors capable of also detecting narcotics.

It was developed for use at airports, cargo and other secured facilities, and borders worldwide.

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

(“AgLAB”) 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 a compromised condition including but not limited to a bacterial or viral infection.

BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications.

Astrotech Technologies, Inc.

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

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.

1 st Detect Corporation

1 st  Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide. We believe that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”).

We further believe that IMS-based ETDs are fraught with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources.

In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern.

Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms.

In contrast, adding additional compounds to the TRACER 1000’s detection library does not degrade its detection capabilities, as it has a virtually unlimited and easily expandable threat library.

In order to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries, we obtained ECAC certification.

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

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.

Transportation Security Administration (“TSA”) towards air cargo certification.

On March 27, 2018, we announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, we announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports.

On November 14, 2019, we announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force to conduct live checkpoint screening at Miami International Airport.

With similar protocols as ECAC testing, we have received valuable feedback from all programs.

Following ECAC certification and our early traction within the cargo market, testing for cargo security continued with the TSA.

With the onset of the COVID-19 pandemic, all testing within the TSA was put on hold;

however, we resumed cargo testing during the summer of 2020, and we subsequently announced on September 9, 2020, that the TRACER 1000 passed the non-detection testing portion of the TSA’s ACSQT.

Due to delays caused by COVID-19, TSA cargo detection testing is ongoing, but has proceeded much more slowly than originally anticipated.

As a result, efforts are primarily focused on our other opportunities.

TSA cargo detection testing is the final step to be listed on the Air Cargo Screening Technology List (“ACSTL”) as an “approved”

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 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 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 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.

Our mission is to expand access to mass spectrometry and its use through the deployment of devices designed specifically for the appropriate levels of precision required in high-volume, real-time testing environments such as airports, border checkpoints, cargo hubs, infrastructure security, correctional facilities, military bases, law enforcement centers, and industrial locations.

The Astrotech Mass Spectrometer Technology™ platform achieves our mission through simplifying the user interface, automating the complicated calibration process, ruggedizing the critical components to endure MS field work, and enabling multiple configurations for sample intake options.

Additional details about our business are provided in Part I, Item 1.

"Business” of this Form 10-K.

Fiscal Year 2024 Business Highlights

As of June 30, 2024, the Company has deployed the TRACER 1000 in approximately 30 locations in 14 countries throughout Europe and Asia.

On November 13, 2023, we announced the acceptance of a significant purchase order for seven of our TRACER 1000™ Explosive Trace Detectors (“ETD”).

On November 28, 2023, we announced the presentation of the AgLAB Maximum Value Process™ (“MVP™”) at MJBizcon.

The MVP™ is an innovative process control system to increase the potency of ending-weight yields and revenue by 20% or more using AgLAB’s proprietary integration of our AMS Technology with testing methods to provide the real-time insights needed by distillers for adjustments to temperature, feed-rate, and pressure.

On December 12, 2023, we announced the formation of our new wholly-owned subsidiary, Pro-Control, and ATI’s entry into an exclusive license with Pro-Control to utilize our AMS Technology for industrial process control applications involving chemical distillation outside of the agriculture industry.

Pro-Control uses advanced mass spectrometer instrumentation to monitor and control the production and operations of manufacturing processes using real-time, in-process samples.

Pro-Control provides the vital spectral qualitative and quantitative data needed to control the production parameters (temperatures, flow, speed, pressure) while significantly improving efficiency.

Pro-Control has introduced its proprietary Pro-Control Maximum Value Processing and the Pro-Control 1000-D2™ mass spectrometer, which in combination are designed to test, measure and increase reaction intermediates, purity and percent yields in industrial processes.

On March 25, 2024, we announced that we began accepting orders for the TRACER 1000 Narcotics Trace Detector (“NTD”).

The TRACER 1000 NTD is a high-performance laboratory instrument capable of rapid detection of trace levels of narcotic compounds in seconds.

Currently, the Company’s Tracer 1000 ETD is now operated in multiple locations throughout the world.

On April 8, 2024, we announced that the TRACER 1000 NTD and ETD which are listed in the U.S.

General Services Administration ("GSA") IT Schedule 70 under Contract No.

GS-35F-250GA with SRI Group LLC, Special Item Number 334290.

The TRACER 1000 NTD and ETD are high-performance laboratory instruments capable of rapid detection of trace levels of narcotic and explosive compounds in seconds.

IT Schedule 70 is a long-term contract issued by the GSA to commercial technology vendors that allows sales to the U.S.

federal government, one of the largest buyers of goods and services in the world.

The TRACER 1000 NTD and ETD provide a ruggedized platform that can be applied across various markets including airports, border security, checkpoint, cargo, and infrastructure security, correctional facilities, military, and law enforcement.

We continue to showcase the TRACER 1000 NTD and ETD at the trade events in the U.S.

On June 13, 2024, AgLAB and SC Laboratories (“SC Labs”) entered into a master lease agreement providing for the joint marketing of the AgLAB 1000-D2™ mass spectrometer and the AgLAB Maximum Value Process™ testing method to SC Labs’ clients.

On June 20, 2024, after a long-term engagement with the TSA beginning in 2018, we announced the U.S.

Transportation Security Administration (“TSA”) approved the TRACER 1000 for the Air Cargo Security Technology List (“ACSTL”).

This action advances the TRACER 1000 to Stage II testing and allows us to sell the TRACER 1000 to air cargo companies in the United States.

In Stage II testing, the Company will begin field trials with the TSA.

If field trials are successful, the TRACER 1000 will be added to the "qualified" list.

The Company has also started the process to pass TSA checkpoint testing.

This process involves Developmental Test and Evaluation in which the Transportation Security Laboratory ("TSL") will test the TRACER 1000 and work with 1st Detect to ensure its readiness to enter certification testing.

The certification test is then completed by the Independent Test & Evaluation department of TSL.

As of the fiscal year 2023 budget the government had over 6,000 ETD units at checkpoint and baggage screening points for which we believe that the TSA would benefit from utilizing our AMS Technology.

Each of these fiscal year 2024 announcements reflect the progress made by our business units in developing and demonstrating relevant solutions to problems faced by companies and agencies operating in our target markets.

The additional applications of the AMS Technology and our growing channel partner relationships create opportunities for us to generate revenue growth in subsequent fiscal years.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S.

GAAP”).

The preparation of these financial statements requires us to make estimates and judgments that directly affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes.

A critical accounting estimate is one that involves a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

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Revenue Recognition

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, 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. 

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

During the fiscal year ended June 30, 2024,, the Company had three material customers that comprised substantially all of its $1.7 million in revenue.

During the fiscal year ended June 30, 2023, the Company recognized revenue from four material customers for total revenue of $750 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 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.

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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.

Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order.

Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order.

The Company does not enter into commitments to provide goods or services that have terms greater than one year.

In limited cases, the Company does require payment in advance of shipping product.

Typically, product is shipped within a few days after prepayment is received.

These prepayments are recorded as contract liabilities on the consolidated balance sheet and are included in accounts payable and accrued liabilities.

As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient to omit disclosures regarding remaining performance obligations.

In cases where the Company is responsible for shipping after the customer has obtained control of the goods, it has elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation.

The Company also applies a practical expedient to expense direct costs of obtaining a contract when incurred because the amortization period would have been one year or less

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.

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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.

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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.

The total revenue was approximately $1.56 million in point in time and $88 thousand over time for 2024 and $750 thousand at point in time and $0 over time for 2023.

All revenue was substantially related to one product category for both 2024 and 2023.

Impairment of Long-lived Assets

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Inventories are stated at the lower of cost or net realizable value.

Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. We reserve or write down inventory for estimated obsolescence, inventory in excess of reasonably expected sales, or unmarketable inventory, in an amount equal to the difference between the cost of inventory and the estimated market value, based upon assumption about future demand and market conditions.

Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis.

We reserve or write down inventory for estimated obsolescence, inventory in excess of reasonably expected sales, or unmarketable inventory, in an amount equal to the difference between the cost of inventory and the estimated market value, based upon assumption about future demand and market conditions.

If actual market conditions are less favorable than those projected, additional inventory adjustments may be required.

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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, 2024 and 2023

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Other income and expense, net

Income tax benefit

Net unrealized losses

Income tax expense

Net unrealized gain (loss)

Total comprehensive loss

Revenue –

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.

Revenue – Total revenue increased by $914 thousand, or 121.9%, to $1.7 million for the fiscal year ended June 30, 2024, compared to $750 thousand for the fiscal year ended June 30, 2023.

Both of the fiscal years 2024 and 2023 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 increase was due to more 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 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 $2.6 million, or 29.3%, during the fiscal year ended June 30, 2023, compared to the fiscal year ended June 30, 2022.

Cost of revenue increased $469 thousand, or 105.6%, for the fiscal year ended June 30, 2024, compared to the year ended June 30, 2023, due to the increase in sold units.

Gross profit increased $445 thousand, or 145.4%, and gross margin increased to 45.1% during the fiscal year ended June 30, 2024, compared to 40.8% for the fiscal year ended June 30, 2023, due to a higher proportion of recurring revenue.

Operating Expenses – Our operating expenses increased $2.7 million, or 23.4%, during the fiscal year ended June 30, 2024, compared to the fiscal year ended June 30, 2023.

Significant changes to operating expenses include the following:

• 

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 $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 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.

Selling, General and Administrative Expenses – Our selling, general and administrative expenses increased by $1.5 million, or 25.4%, for the year ended June 30, 2024, compared to the year ended June 30, 2023.

This is due to an increase in personnel costs, sales-related expenses, public company expenses, and depreciation.

Research and Development Expenses – Research and development expenses increased $1.2 million, or 21.4%.

This was largely driven by increases in personnel count to support the development of our mass spectrometry offering and expenses related to cross-platform improvements to our technology.

Other income and expense, net – Other income and expense, net for the year ended June 30, 2024, was $1.6 million of income compared $1.4 million of income for the year ended June 30, 2023.

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 –

Our income tax benefit did not change for the year ended June 30, 2023, compared to the year ended June 30, 2022. The realization of tax benefits depends on the existence of future taxable income.

Pursuant to ASC 740 “Income Taxes”, a valuation allowance has been established on all of our deferred tax assets.

Income Taxes – Our income tax expense increased $2 thousand for the year ended June 30, 2024, compared to the year ended June 30, 2023.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

During the fiscal year 2021, we successfully completed several public offerings of our common stock, raising net proceeds of approximately $67.6 million which will be used to satisfy our short-term and long-term capital needs. We expect that our short- and long-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense associated with rollout of our AgLAB and BreathTech products to commercial customers, additional research and development expenses associated with expanding our product offerings, and expenses associated with being a public company.

We expect that our short-term and long-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense associated with rollout of our products to commercial customers, additional research and development expenses associated with expanding our product offerings, and expenses associated with being a public company.

Our short-term capital expenditure needs relate primarily to the expansion of our research and development capabilities and optimization of existing business processes.

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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 financing, equity financing or engaging in a strategic partnership, we may be required to delay, limit, or reduce our expansion efforts.

Trends and Uncertainties

During the COVID-19 pandemic we encountered delays with respect to the TSA certification processes for our products and throughout our supply chain, particularly due to the global semiconductor and electronics shortage.

We believe such delays caused product pricing inflation, including increased costs for raw materials and shipping.

In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains uncertain.

We continue to manage production, to secure alternative supplies, and to take other proactive actions.

We believe that we will be able to pass on pricing inflation 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 and do not expect inflation to materially adversely affect our liquidity position.

In addition, the long-term impact of the COVID-19 pandemic on our business may not be fully reflected until future periods.

Consolidated Balance Sheet

Total assets for the year ended June 30, 2023, were $47.7 million compared to total assets of $56.2 million as of the end of fiscal year 2022.

The following table sets forth the significant components of the consolidated balance sheet as of June 30, 2023, compared with June 30, 2022:

Total assets for the year ended June 30, 2024, were $38 million compared to total assets of $48 million as of the end of fiscal year 2023, a decrease of $10.0 million.

The following table sets forth the significant components of the consolidated balance sheet as of June 30, 2024, compared with June 30, 2023:

Years Ended June 30,

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Other assets, net

Liabilities and stockholders’

Liabilities and stockholders’ equity:

Current liabilities

Lease liabilities, net of current portion

Stockholders’

Current assets –

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 $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 was consistent with the prior year.

Other long-term liabilities –

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

Other liabilities, net of current portion

Stockholders’ equity

Current assets – Current assets decreased $10 million as of June 30, 2024, compared to June 30, 2023, as a result of cash used for continuing operating expenses and personnel cost.

Property and equipment, net – Property and equipment, net of depreciation, increased $93 thousand as of June 30, 2024, compared to June 30, 2023 due to the acquisition of third party equipment and the use of additional TRACER 1000 units for research and development.

Operating lease right-of-use assets, net – Operating lease right-of-use assets decreased $143 thousand as of June 30, 2024, compared to June 30, 2023, due to amortization.

Other assets, net – Other assets were consistent with the prior year.

Current liabilities – Current liabilities decreased $137 thousand as of June 30, 2024, compared to June 30, 2023 due the decrease in accounts payables and accrued expenses and other liabilities being partially offset by increases in accruals related to personnel costs.

Other liabilities, net of current portion – Other liabilities, net of current portion increased $14 thousand as of June 30, 2024, compared to June 30, 2023 due to the increases in our warrant reserve and financing obligations in connection with internal-use software were partially offset by the amortization of lease liabilities.

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

3 unchanged sentences

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

1 unchanged sentence

Cash and Cash Equivalents

At June 30, 2023, we held cash and cash equivalents of $14.2 million and our net working capital was approximately $42.1 million.

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 $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.

At June 30, 2024, we held cash and cash equivalents of $10.4 million and our net working capital was approximately $32.2 million.

At June 30, 2023, we held cash and cash equivalents of $14.2 million and our net working capital was approximately $42.1 million.

Cash and cash equivalents decreased by approximately $3.8 million during the year ended June 30, 2024, due to funding our continuing operating expenses, partially offset by the proceeds of short-term investments.

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 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.

Net cash used in operating activities was $9.7 million for the year ended June 30, 2024, compared to cash used in operating activities of $7.6 million for the year ended June 30, 2023.

This increase was caused by increases in recurring operating expenses and accounts payable, partially offset by a decrease in accounts receivables and increase in depreciation.

Investing Activities

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.

Net cash provided by (used in) investing activities for the year ended June 30, 2024, increased $10.0 million to $6.1 million, compared to net cash used in investing activities of $3.8 million in the year ended June 30, 2023.

The increase in cash provided by investing activities was due to the proceeds of short-term investments.

Financing Activities

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).

Cash used in financing activities was $181 thousand for the year ended June 30, 2024, and $776 thousand for the year ended June 30, 2023.

The decrease was due to repayment of related party debt in fiscal year 2023 (see below) and no repurchase of treasury shares in fiscal year 2024

We did not have any material off-balance sheet arrangements as of June 30, 2024.

Related-party Debt

1 unchanged sentence

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”).

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.

1 unchanged sentence

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 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”).

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.

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.

On September 5, 2022, the secured promissory issued by the Company on September 5, 2019 (the “2019 Note”) to Thomas B.

Pickens III, the Chief Executive Officer and Chairman of the Board of Directors of the Company, matured.

On the maturity date, the remaining outstanding principal amount of $500 thousand and accrued interest of $55 thousand on the 2019 Note 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.

Refer to Note 7 of our Annual Report on Form 10-K for 2023 for more detailed information on the 2019 Note.

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.

Contractual Obligations and Commitments

6 unchanged sentences

Finance lease commitments (2)

(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.

(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

We did not have any off-balance sheet arrangements as of June 30, 2024.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Astrotech Corporation

Austin, Texas

Opinion on the Consolidated Financial Statements

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

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. 

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition –

Refer to Note 2 in the Financial Statements

Critical Audit Matter Description

The Company 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 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:

● 

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

● 

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.

September 28, 2023

ASTROTECH CORPORATION

Consolidated Balance Sheets

(In thousands, except share and per share data)

Current assets

Cash and cash equivalents

$ 14,208  

$ 26,453  

Short-term investments

27,919  

26,173  

Accounts receivable

Contract asset

Inventory, net:

Raw materials

Work-in-process

Finished goods

Income tax receivable

Prepaid expenses and other current assets

Total current assets

44,713  

54,950  

Property and equipment, net

Operating lease right-of-use assets, net

Other assets, net

$ 47,675  

$ 56,221  

Liabilities and stockholders’

Current liabilities

Accounts payable

Payroll related accruals

Accrued expenses and other liabilities

Income tax payable

Term note payable - related party

Lease liabilities, current

Total current liabilities

Lease liabilities, net of current portion

Total liabilities

Commitments and contingencies (Note 14)

Stockholders’

Convertible preferred stock, $ 0.001 par value, 2,500,000 shares authorized;

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

81,002  

79,505  

Accumulated deficit

( 225,354 )  

Accumulated other comprehensive loss

( 1,453 )  

Total stockholders’

44,719  

53,236  

Total liabilities and stockholders’

$ 47,675  

$ 56,221  

See accompanying notes to consolidated financial statements.

ASTROTECH CORPORATION

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

Cost of revenue

Operating expenses:

Selling, general and administrative

Research and development

Total operating expenses

11,366  

Loss from operations

( 11,060 )  

Other income and expense, net

Loss from operations before income taxes

( 9,642 )  

Income tax benefit

$ ( 9,642 )  

Weighted average common shares outstanding:

Basic and diluted

Basic and diluted net loss per common share:

Net loss per common share

$ ( 5.95 )  

Other comprehensive loss, net of tax:

$ ( 9,642 )  

Available-for-sale securities:

Net unrealized loss

( 254 )  

Total comprehensive loss

$ ( 9,896 )  

See accompanying notes to consolidated financial statements.

ASTROTECH CORPORATION

Consolidated Statement of Changes in Stockholders’

(In thousands)

Preferred Stock

Number of Shares Outstanding

Treasury Stock Amount

Additional Paid-In Capital

Accumulated Deficit

Accumulated Other Comprehensive Loss

Total Stockholders’

Balance at June 30, 2021

$ 190,641  

$ 77,971  

$ ( 207,382 )  

$ ( 23 )  

$ 61,207  

Net change in available-for-sale marketable securities

( 1,176 )  

Stock-based compensation

Cancellation of restricted stock

( 8,330 )  

Balance at June 30, 2022

190,642  

79,505  

( 215,712 )  

( 1,199 )  

53,236  

Net change in available-for-sale marketable securities

( 254 )  

Stock-based compensation

Restricted stock issuance

Purchase of treasury stock

( 10 )  

( 119 )  

( 9,642 )  

Balance at June 30, 2023

$ 190,643  

$ ( 119 )  

$ 81,002  

$ ( 225,354 )  

$ ( 1,453 )  

$ 44,719  

See the accompanying notes to consolidated financial statements.

ASTROTECH CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

Years Ended June 30,

Cash flows from operating activities:

$ ( 9,642 )  

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

Stock-based compensation

Amortization of operating lease right-of-use assets

Interest on financing leases

Loss on disposal of asset

Changes in assets and liabilities:

Accounts receivable

( 169 )  

Contract asset

Inventory, net

( 477 )  

Income tax receivable

Accounts payable

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 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

( 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 financing lease

Operating right-of-use assets and associated liabilities

Income taxes paid

See accompanying notes to consolidated financial statements.

ASTROTECH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2023 and 2022

( 1 ) Description of the Company and Operating Environment

Astrotech Corporation (Nasdaq:

ASTC) (“Astrotech,”

the “Company,”

“we,”

“us,”

or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology.

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

Segment Information –

The Company has determined that it does not meet the criteria of Accounting Standards Codification (“ASC”) 280 “Segment Reporting”

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

Astrotech Technologies, Inc.

Astrotech Technologies, Inc ("ATI") owns and licenses the Astrotech Mass Spectrometer Technology™

(the “AMS Technology”), the platform mass spectrometry technology originally developed by 1 st  Detect Corporation ( "1 st  Detect").

The AMS Technology has been designed to be comparatively inexpensive, small, and easy to use.  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 1 st Detect for use in the security and detection market, to AgLAB Inc.

("AgLAB") for use in the agriculture market, and to BreathTech Corporation (“BreathTech”) for use in breath analysis applications.

ATI 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

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. 

In order to sell the TRACER 1000 to airport and cargo security customers in the European Union and certain other countries, we obtained ECAC certification.

The Company is currently selling the TRACER 1000 to customers who accept ECAC certification. 

As of June 30, 2023, 

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. 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 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, 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.

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Astrotech Corporation and its wholly-owned subsidiaries that are required to be consolidated.

All intercompany transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation and have had no impact on net income or stockholders' equity.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that directly affect the amounts reported in the Company’s consolidated financial statements and accompanying notes.

Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, 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 Accounting Standards Codification ("ASC") Topic 606 “Revenue from Contracts with Customers”

(“Topic 606”

The methodology used is based on contract type and how products and services are provided.

The guidelines of Topic 606 establish a five -step process to govern the recognition and reporting of revenue from contracts with customers.

The five steps are:

(i) identify the contract with a customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the performance obligations are satisfied.

An additional factor is reasonable assurance of collectability.

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

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.

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.

Product Sales.

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 goods sold.

Multiple Performance Obligations.

 Certain agreements with customers include the sale of equipment involving multiple elements in cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price.

In general, our performance obligations are related to the sale of TRACER- 1000 systems, training, associated consumables which can be delivered in multiple occurrences, and future maintenance.

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

The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service.

When there is only one performance obligation associated with a contract, the entire amount of consideration is attributed to that obligation.

When a contract contains multiple performance obligations the standalone selling price is first estimated using the observable price, which is generally a list price net of applicable discount or the price used to sell the good or service in similar circumstances.

In circumstances when a selling price is not directly observable, the Company will estimate the standalone selling price using information available including our market assessment and expected cost plus margin.

The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods.

Foreign Currency

The Company’s international operations are subject to certain opportunities and risks, including from foreign currency fluctuations and governmental actions.

During fiscal years 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.

Revenues, costs, and expenses are translated at the applicable rate on the date of the transaction.

Translation gains and losses, if any, are calculated on accounts receivable or accounts payable outstanding at the rate applicable at the end of the period.

The Company includes gains and losses resulting from foreign currency transactions in income, while it excludes those resulting from translation of financial statements from income and includes them as a component of accumulated other comprehensive loss when applicable.

Transaction gains and losses, which were included in the Company’s consolidated statements of operations and comprehensive loss, amounted to a loss of approximately $ 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 .

Warranty Provision

Astrotech offers its customers warranties on the products that it sells.

These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment.

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

The Company periodically adjusts this provision based on historical experience and anticipated expenses.

The Company charges actual expenses of repairs under warranty, including parts and labor, to this provision when incurred.

The current obligation for warranty provision is included in accrued expenses and other liabilities in the consolidated balance sheets, whose activity for each of the two fiscal years ended June 30, 2023 and 2022  is summarized in the following table: 

(In thousands)

Warranty Provision

Balance as of June 30, 2021

Warranty claims provided for

Settlements made

Balance as of June 30, 2022

Warranty claims provided for

Settlements made

Balance as of June 30, 2023

Research and Development

Research and development costs are expensed as incurred.

Research and development costs are used to improve system functionality, streamline and simplify the user experience, and extend our capabilities into customer-defined, application-specific opportunities.

Research and development expenses for the fiscal years ended June 30, 2023 and 2022  were $ 5.6 million and $ 2.8 million, respectively.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period.

Diluted net loss per common share is the same as basic net loss per common share as the potential dilutive shares are considered to be anti-dilutive.

For more information, see Note 12.

Cash and Cash Equivalents

The Company considers short-term investments with original maturities of three months or less to be cash equivalents.

Cash equivalents are comprised primarily of money market and mutual fund investments.

Accounts Receivable

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.

If events or changes in circumstances indicate that a specific receivable balance may be unrealizable, further consideration is given to the collectability of those balances, and the allowance is adjusted accordingly.

Receivable balances deemed uncollectible are written off against the allowance.

The Company anticipates collecting all unreserved receivables within one year.

As of June 30, 2023 and 2022 , there was no allowance for doubtful accounts deemed necessary.

The Company computes inventory cost on a first -in, first -out basis, and inventory is valued at the lower-of-cost or net realizable value.

The valuation of inventory also requires the Company to estimate obsolete and excess inventory as well as inventory that is not of saleable quality.

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation.

All furniture, fixtures, and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets, which is generally five years.

Purchased software is typically depreciated over three years. Leasehold improvements are amortized over the shorter of the useful life of the improvement or the term of the lease.

Repairs and maintenance are expensed when incurred.

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

The Company continuously evaluates its long-lived assets for impairment to assess whether the carrying amount of an asset may not be recoverable.

Our evaluation is based on an assessment of potential indicators of impairment, such as an adverse change in the business climate that could affect the value of an asset, current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of an asset, and a current expectation that, more likely than not, an asset will be disposed of before the end of its previously estimated useful life.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. 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. 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

Astrotech’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities.

Management believes the carrying amounts of these assets and liabilities approximates their fair value due to their liquidity.

For more information about the Company’s accounting policies surrounding fair value investments, see Note 6.

Available-for-Sale Investments

Investments that are designated as available-for-sale are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss.

The Company determines the cost of investments sold based on a first -in, first -out cost basis at the individual security level.

The Company also considers specific adverse conditions related to the financial health of, and the business outlook for, the investee which may include industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in the investee’s credit rating.

The Company records other than temporary impairments on marketable equity securities and marketable equity method investments in gains (losses) on equity investments, net of previously recorded gains (losses).

For more information on investments, see Note 3.

The Company determines, at the inception of an arrangement, whether the arrangement is or contains a lease, based on the unique facts and circumstances present.

Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease.

Right-of-use (“ROU”) assets and operating lease liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term.

When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain, at inception, that the Company will exercise that option.

The interest rate implicit in lease contracts is typically not readily determinable;

accordingly, the Company uses its incremental borrowing rate, which is the rate that would be incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment, based upon the information available at the commencement date.

The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation, when determinable, and are recognized in determining its ROU assets.

The Company’s operating leases are reflected in the operating lease, right-of-use asset;

lease liabilities, current;

and lease liabilities, non-current in its consolidated balance sheets.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

As a result of the Company’s adoption of ASU 2016 - 02, it no longer recognizes deferred rent on the consolidated balance sheet.

Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

Variable lease payments are amounts owed by the Company to a lessor that are not fixed, such as reimbursement for common area maintenance costs for our facility lease, and are expensed when incurred.

Financing leases, formerly referred to as capitalized leases, are treated similarly to operating leases except that the asset subject to the lease is included in the appropriate fixed asset category, rather than recorded as a right-of-use asset, and depreciated over its estimated useful life, or lease term, if shorter.

For more information, see Note 4.

Stock-Based Compensation

The Company accounts for stock-based awards to employees based on the fair value of the award on the grant date.

The fair value of stock options is estimated using the expected dividend yields of the Company’s stock, the expected volatility of the stock, the expected length of time the options remain outstanding, and the risk-free interest rates.

Changes in one or more of these factors may significantly affect the estimated fair value of the stock options.

The Company recognizes forfeitures as they occur.

The fair value of awards that are likely to meet goals, if any, are recorded as an expense over the vesting period.

For more information, see Note 10.

The Company accounts for income taxes under the liability method, whereby deferred tax asset or liability account balances are determined based on the difference between the financial statement and the tax bases of assets and liabilities using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In December 2019, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) No.

2019 - 12, which affects general principles within Topic 740, Income Taxes.

The amendments of ASU 2019 - 12 are meant to simplify and reduce the cost of accounting for income taxes.

The FASB has stated that the ASU is being issued as part of its Simplification Initiative, which is meant to reduce complexity in accounting standards by improving certain areas of U.S.

GAAP without compromising information provided to users of financial statements.

The Company adopted this guidance as of June 30, 2022 and the adoption had no impact on the Company’s consolidated financial statements.

Treasury Stock

The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders’

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

Accounting Pronouncements

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

(“ASU 2021 - 10”

), which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.

The new pronouncement requires entities to provide information about the nature of the transaction, terms and conditions associated with the transaction, and financial statement line items affected by the transaction.

ASU 2021 - 10 is effective for fiscal years beginning after December 15, 2021.

The 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

The following tables summarize gains and losses related to the Company’s investments:

June 30, 2023

Available-for-Sale

(In thousands)

Mutual Funds - Corporate & Government Debt

$ 19,990  

$ ( 1,025 )  

$ 18,965  

ETFs - Corporate & Government Debt

( 418 )  

Time Deposits

( 10 )  

$ 29,372  

$ ( 1,453 )  

$ 27,919  

June 30, 2022

Available-for-Sale

(In thousands)

Mutual Funds - Corporate & Government Debt

$ 19,997  

$ ( 806 )  

$ 19,191  

ETFs - Corporate & Government Debt

( 393 )  

$ 27,372  

$ ( 1,199 )  

$ 26,173  

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.

Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate in determining the present value of lease payments.

Significant judgment is required when determining the Company’s incremental borrowing rate.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. 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:

(In thousands)

Classification on the Consolidated Balance Sheet

June 30, 2023

June 30, 2022

Operating lease assets

Operating lease right-of-use assets, net

Financing lease assets

Property and equipment, net

Total lease assets

Operating lease obligations

Lease liabilities, current

Financing lease obligations

Lease liabilities, current

Operating lease obligations

Lease liabilities, non-current

Financing lease obligations

Lease liabilities, non-current

Total lease liabilities

Future minimum lease payments as of June 30, 2023 under non-cancelable leases are as follows (in thousands):

For the Year Ended June 30,

Operating Leases

Financing Leases

Total lease obligations

Imputed interest

( 17 )  

( 24 )  

Present value of net minimum lease obligations

Lease liabilities - current

( 148 )  

( 168 )  

Lease liabilities - non-current

Other information as of June 30, 2023 is as follows:

Weighted-average remaining lease term (years):

Operating leases

Financing leases

Weighted-average discount rate:

Operating leases

Financing leases

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

As of June 30, 2023 and 2022 , property and equipment, net consisted of the following: 

(In thousands)

Furniture, fixtures, equipment & leasehold improvements

$ 2,805  

$ 1,371  

Capital improvements in progress

Gross property and equipment

Accumulated depreciation

( 1,001 )  

Property and equipment, net

$ 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 .

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

ASC Topic 820 “Fair Value Measurement”

(“Topic 820”

) defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements.

Topic 820 is applicable whenever assets and liabilities are measured and included in the financial statements at fair value.

The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The following tables present the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of June 30, 2023 , and 

June 30, 2022 :

June 30, 2023

Fair Value Measured Using

(In thousands)

Available-for-Sale Securities

Short-Term Investments

Mutual Funds - Corporate & Government Debt

$ 18,965  

ETFs - Corporate & Government Debt

Time Deposits:

Total Available-for-Sale Investments

$ 27,919  

$ 25,923  

$ 1,996  

$ 27,919  

June 30, 2022

Fair Value Measured Using

(In thousands)

Available-for-Sale Securities

Short-Term Investments

Mutual Funds - Corporate & Government Debt

$ 19,191  

ETFs - Corporate & Government Debt

Total Available-for-Sale Investments

$ 26,173  

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.

Pickens III, the Chief Executive Officer and Chairman of the Board of Directors of the Company, for the issuance and sale of a secured promissory note to Mr.

Pickens with a principal amount of $ 1.5 million (the “2019 Note”), and on February 13, 2020, the Company entered into a second private placement transaction with Mr.

Pickens for the issuance and sale of a second secured promissory note to Mr.

Pickens with a principal amount of $ 1.0 million (the “2020 Note”

and, collectively with the 2019 Note, the “Original Notes”).

Interest on the Original Notes accrued at 11 % per annum.

The principal amount and accrued interest on the Original Notes originally were to become due and payable on September 5, 2020;

however, on August 24, 2020, the Company and Mr.

Pickens agreed to extend the date of maturity of the Original Notes and payment of accrued interest to September 5, 2021 ( the “Extended Maturity Date”).

The Company had the option to prepay the principal amount and all accrued interest on the Original Notes at any time prior to the Extended Maturity Date.

In connection with the issuance of the Original Notes, the Company, along with 1 st  Detect Corporation and Astrotech Technologies, Inc.

(the “Subsidiaries”), entered into two security agreements, dated as of September 5, 2019 and February 13, 2020 ( collectively, the “Original Security Agreements”), with Mr.

Pickens, pursuant to which the Company and the Subsidiaries granted to Mr.

Pickens a security interest in all of the Company’s and the Subsidiaries’

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”).

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.

( 8 ) Stockholders ’

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

The Company has issued 280,898 shares of Series D convertible preferred stock (“Series D Preferred Shares”), all of which were issued and outstanding as of June 30, 2023.

Series D Preferred Shares are convertible to common stock on a one -to- one basis.

Series D Preferred Shares are not callable by the Company.

The holder of the preferred stock is entitled to receive, and we shall pay, dividends on shares equal to and in the same form as dividends actually paid on shares of common stock when, and if, such dividends are paid on shares of common stock.

No other dividends are paid on the preferred shares.

Preferred shares have no voting rights.

Upon liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, the preferred shares have preference over common stock.

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

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:

Weighted Average Exercise  

Aggregate Fair Market Value at Issuance  

Weighted Average Remaining Contractual Life

(In thousands)

Outstanding at June 30, 2021

$ 72.10  

$ 3,747  

Canceled or expired

Outstanding at June 30, 2022

$ 72.10  

$ 3,747  

Canceled or expired

Outstanding at June 30, 2023

$ 72.10  

$ 3,747  

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

Number of Shares Underlying

(In thousands)

For the period ended June 30,

Classification

Exercise Price

Expiration Date

March 26, 2020

$ 187.50  

March 25, 2025

March 30, 2020

$ 140.63  

March 27, 2025

October 23, 2020

$ 86.25  

October 21, 2025

October 28, 2020

$ 80.63  

October 28, 2025

February 16, 2021

$ 121.88  

February 11, 2026

April 12, 2021

$ 56.25  

April 7, 2026

Total Outstanding

Nasdaq Compliance

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, 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, 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”).

The risk of loss attributable to these uninsured balances is mitigated by depositing funds in what the Company believes to be high credit quality financial institutions.

The Company has not experienced any losses in such accounts.

( 10 ) Common Stock Incentive, Stock Purchase Plans, and Other Compensation Plans

Stock Option Activity Summary

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

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

Life (years)  

$10.38 –

35,495  

$ 17.99  

$ 19.20  

$55.50 –

$159.00 –

168.82  

$10.38 –

38,166  

$ 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.

At June 30, 2023 , there was $ 360 thousand of total unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a weighted average period of 

1.83  years.

Restricted Stock

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

Grant-Date  

Outstanding at June 30, 2021

67,423  

$ 61.50  

40,000  

( 23,090 )  

Canceled or expired

( 8,461 )  

Outstanding at June 30, 2022

75,873  

$ 39.00  

( 26,742 )  

Canceled or expired

( 610 )  

Outstanding at June 30, 2023

50,671  

$ 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

Stock-based compensation costs are generally based on the fair value calculated from the Black-Scholes model on the date of the grant of stock options. The fair values of stock options are amortized as compensation expense on a straight-line basis over the vesting period of the grants.

The Company recognizes forfeitures as they occur.

The assumptions used for the years ended June 30, 2023 and 2022 and the resulting estimates of weighted-average fair value per share of options granted or modified are summarized in the following table: 

June 30, 2023

June 30, 2022

Expected Dividend Yield

Expected Volatility

104.67 %  

Risk-Free Interest Rates

1.59 %  

Expected Option Life (in years)

Weighted-average grant-date fair value of options awarded

$ 20.22  

$ 25.80  

• 

The expected dividend yield is based on the Company’s current dividend yield and the best estimate of projected dividend yield for future periods within the expected life of the option, which is currently 0 %.

• 

The Company estimated volatility using the historical share price performance over the expected life.

Management believes the historical estimated volatility is materially indicative of expectations about future volatility.

• 

The estimate of the risk-free rate is based on the U.S.

Treasury yield curve in effect at the time of grant.

• 

For the years ended June 30, 2023 and 2022 , the Company used the simplified method of calculating the expected life of the options.

( 11 )  

The Company accounts for income taxes under the asset and liability method.

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts.

Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized.

As of June 30, 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 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.

The Company had unrecognized tax benefit of $ 486  thousand as of June 30, 2023 , all of which has been accounted for as contra deferred tax assets.

For the years ended June 30, 2023 and 2022 , the Company’s effective tax rate differed from the federal statutory rate of 21 %, primarily due to prior year deferred true ups and the valuation allowance against its net deferred tax assets.

Income Tax Expense and Effective Tax Rate

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.

Federal statutory rate to the loss before income taxes to the actual amount of income tax benefit recognized follows:

Year Ended June 30,

(In thousands)

Expected benefit

$ 2,025  

$ 1,749  

State tax expense

Change in valuation allowance

( 1,838 )  

Stock-based compensation

( 296 )  

Prior year true-up

Expiration of net operating loss carryovers

( 88 )  

Other permanent items

Total income tax benefit

Deferred Tax Assets and Liabilities

The Company’s deferred tax assets as of June 30, 2023 and 2022 consist of the following:

Year Ended June 30,

(In thousands)

Deferred tax assets:

Net operating loss carryforwards

$ 17,920  

$ 17,202  

Tax credit carryforwards

Lease liability - current and non-current

Unrealized loss on securities

IRC Section 174 R&D Expense Capitalization

Accrued expenses and other timing

Stock-based compensation

Property and equipment, principally due to differences in depreciation

Total gross deferred tax assets

$ 21,198  

$ 19,404  

Less —

valuation allowance

( 21,064 )  

Net deferred tax assets

Deferred tax liabilities:

Right-of-use assets

$ ( 55 )  

Property and equipment, principally due to differences in depreciation

( 79 )  

Total gross deferred tax liabilities

( 134 )  

Net deferred tax assets

The Company files consolidated returns for federal, California, Florida, and Texas income and franchise taxes.

In assessing the need for a valuation allowance, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will be utilized to offset future tax liabilities.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

As of June 30, 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 $ 1.7  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.

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.

The Company also had net operating loss carryforwards with indefinite lives of approximately $ 45.7  million ($ 9.6  million, tax effected) for federal income tax purposes that are available to offset future regular taxable income.

For net operating losses with indefinite carryforward lives, generated beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the amount of net operating losses to be utilized and deducted by the taxpayer to 80 % of the taxpayer’s taxable income. Utilization of some of these net operating losses is limited due to the changes in stock ownership of the Company associated with the October 

2007 Exchange Offer;

as such, the benefit from these losses may not be realized.

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

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.

These net operating loss carryforwards expire between the years 2026 and 2036.

These losses may also be subject to utilization limitations;

as such, the benefit from these losses may not be realized.

Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized.

The Company has a temporary credit for business loss carryovers that may be utilized to offset its Texas margin tax.

At June 30, 2023, the credit amount is $ 0.5 million ($ 0.4 million, tax effected).

These credits may be used to offset $ 13 thousand of state tax liability each year and will expire in 2027.

Uncertain Tax Positions

The Company had unrecognized tax benefits of $ 486  thousand as of June 30, 2023 , all of which have been accounted for as contra deferred tax assets.

A rollforward of the beginning and ending amount of unrecognized tax benefits from 

July 1, 

2021  to June 30, 2023 is as follows:

Year Ended June 30,

(In thousands)

Fiscal year beginning balance

Additions for tax positions of current period

Additions for tax positions of prior years

Decreases for tax positions of prior years

Fiscal year ending balance

The Company recognizes interest and penalties related to income tax matters in income tax expense, as incurred.

For the years ended June 30, 2023 and 2022 , the Company did not recognize any interest expense for uncertain tax positions.

( 12 ) Net Loss per Share

Basic loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method.

Dilutive potential common shares include outstanding stock options and stock-based awards.

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

Year Ended June 30,

$ ( 9,642 )  

Denominator for basic and diluted net loss per share —

weighted average common stock outstanding

Basic and diluted net loss per common share:

$ ( 5.95 )  

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 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.

( 13 ) Employee Benefit Plans

Astrotech has a defined contribution retirement plan, which covers substantially all employees and officers.

Effective July 1, 2019, the Company elected to no longer match employees’

contributions to the plan;

however, beginning in the third quarter of fiscal year 2021, the Company reinstated the match to employees’

contributions to the retirement plan.

For the years ended June 30, 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.

The Company has not made any additional contributions for the years ended June 30, 2023 and 2022 .

( 14 ) Commitments and Contingencies

The Company is subject to various lawsuits and other claims in the normal course of business.

In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.

The Company establishes reserves for the estimated losses on specific contingent liabilities, for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated.

In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss.

Employment Contracts

The Company has entered into an employment contract with a key executive.

Generally, certain amounts may become payable in the event the Company terminates the executive’s employment.

Legal Proceedings

On April 15, 2021, a putative stockholder of the Company commenced a class action and derivative lawsuit in the Delaware Court of Chancery, Stein v.

Pickens, et al., C.A.

2021 - 0322 -JRS (the “Stein Action”), in which it was alleged, among other things, that the Company improperly included broker non-votes in the tabulation of votes counted in favor to approve an amendment to the Company’s Certificate of Incorporation (the “2020 Certificate Amendment”) and, thus the 2020 Certificate Amendment was defective.

The Company investigated those allegations and does not believe that the filing and effectiveness of the 2020 Certificate Amendment was either invalid or ineffective.

Nevertheless, to resolve any uncertainty, on April 30, 2021, the Company filed a validation proceeding in the Delaware Court of Chancery, In re Astrotech Corporation, C.A.

2021 - 0380 -JRS, pursuant to Section 205 of the Delaware General Corporation Law.

On October 6, 2021, the Delaware Court of Chancery granted the Company’s request and confirmed and validated the 2020 Certificate Amendment.

Thereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action 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 ) Impact of COVID- 19 Pandemic

The Company has taken what it believes are necessary precautions to safeguard its employees from the COVID- 19 pandemic.

The Company continues to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities.

All of the Company’s employees who do not work in a lab setting are currently on a telecommunication work arrangement and have been able to successfully work remotely.

The Company’s lab requires in-person staffing, and the Company has been able to continue to operate its lab.

There can be no assurance, however, that key employees will not become ill or that the Company will be able to continue to operate its labs.

To date, the Company has seen delays with respect to the TSA certification process and parts of its supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation.

In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID- 19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines.

The Company continues to manage production, to secure alternative supplies, and to take other proactive actions.

The Company believes that it will be able to pass the inflation caused by raw materials shortages and increased shipping costs to its customers by increasing the price of its instruments.

If supply chain shortages become more severe or longer term in nature, the Company’s business and results of operations could be adversely impacted;

however, the Company does not expect this issue to materially adversely affect its liquidity position.

The long-term impact of the COVID- 19 pandemic on the Company’s business may not be fully reflected until future periods.

On March 27, 2020, the CARES Act was enacted.

The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The most significant relief measures which the Company qualified for are a loan pursuant to the Paycheck Protection Program for which the Company has received full forgiveness, alternative minimum tax credit refunds, employee retention credit, and payroll tax deferral.

The payroll tax deferral was effective from the enactment date through December 31, 2020, and the deferred amount will be repaid in 

two  installments. 

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

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

The Company will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to the Company, and the potential impacts on the business.

( 16 ) Subsequent Events

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.  

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

Management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022 at the reasonable assurance level.

Management ’

s Annual Report on Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

Under the supervision and with the participation of our management, including our principal executive and financial officers, we conducted an evaluation of the effectiveness of our internal controls over financial reporting as of June 30, 2023, based on the frame-work in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”).

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our evaluation under the COSO Framework, our management concluded that our internal controls over financial reporting were effective as of June 30, 2023.

This annual report does not include an attestation report of our registered public accounting firm regarding internal controls over financial reporting.

Management’s report was not subject to attestation by our registered accounting firm pursuant to §989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which exempts the Company from the requirement that it include an attestation report of the Company’s registered public accounting firm regarding internal controls over our management’s assessment of internal controls over financial reporting.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the 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 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 2023 Proxy Statement.

Executive Compensation

The information required by Item 11 will be contained in, and is hereby incorporated by reference to, the 2023 Proxy Statement.

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 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 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 2023 Proxy Statement.

Exhibits, Financial Statement Schedules

The following documents are filed as part of the report:

Financial Statements.

The following consolidated financial statements of Astrotech Corporation and its wholly-owned subsidiaries and related notes, are set forth herein as indicated below.

Report of Armanino LLP, Independent Registered Public Accounting Firm  (PCAOB ID:

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statement of Changes in Stockholders ’

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Exhibit  

Description of Exhibit

Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit 

3.1 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on December 28, 2017).

Certificate of Amendment to the Certificate of Incorporation of Astrotech Corporation (incorporated by reference to Exhibit 3.1 of the Registrant’

s Form 8-K filed with the Securities and Exchange Commission on July 1, 2020).

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).

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).

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).

Description of Securities.

Form of Placement Agent's Warrant, issued on March 27, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant’

s Form 8-K filed with the Securities and Exchange Commission on March 26, 2020).

Promissory Note due September 5, 2020.

(incorporated by reference to Exhibit 4.1 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).

Form of Placement Agent's Warrant, issued on March 30, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant’

s Form 8-K filed with the Securities and Exchange Commission on March 30, 2020).

Omnibus Amendment to Promissory Notes, dated August 24, 2020, (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020).

Form of Placement Agent's Warrant, issued on October 23, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 23, 2020)

Form of Placement Agent's Warrant, issued on October 30, 2020 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 30, 2020)

Form of Placement Agent's Warrant, dated February 16, 2021 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on February 16, 2021)

Astrotech Corporation 2021 Omnibus Equity Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on April 5, 2021).

Form of Underwriter Warrant, dated April 12, 2021 (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on April 12, 2021)

Omnibus Amendment to Secured Promissory Notes, dated September 3, 2021, by and between the Company and Thomas B.

Pickens III (incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)

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’

s subsidiaries and Thomas B.

Pickens III (incorporated by reference to Exhibit 10.1 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on September 11, 2019).

Subsidiary Guarantee, dated September 5, 2019, made by certain of the Company’

s subsidiaries in favor of Thomas B.

Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on September 11, 2019).

Security Agreement, dated February 13, 2020, by and among the Company, certain of the Company’

s subsidiaries and Thomas B.

Pickens III (incorporated by reference to Exhibit 10.1 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).

Subsidiary Guarantee, dated February 13, 2020, made by certain of the Company’

s subsidiaries in favor of Thomas B.

Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant ’

s Form 8-K filed with the Securities and Exchange Commission on February 18, 2020).

Acknowledgment, Consent and Affirmation of Guarantors, dated August 24, 2020 (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)

Omnibus Amendment to Security Agreements, dated August 24, 2020, by and among the Company, certain of the Company’

s subsidiaries and Thomas B.

Pickens III (incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)  

Omnibus Amendment to Subsidiary Guarantees, dated August 24, 2020, made by certain of the Company’

s subsidiaries in favor of Thomas B.

Pickens III (incorporated by reference to Exhibit 10.4 of Registrant's Form 8-K filed with the Securities and Exchange Commission on August 26, 2020)

Joint Development and Option Agreement, dated October 20, 2020 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 20, 2020)

Cash Reserve Agreement, dated October 19, 2020 (incorporated by reference to Exhibit 99.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on October 20, 2020)

Letter of Agreement, dated March 24, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on March 30, 2021)

Investigator-Initiated Study Agreement, dated March 31, 2021 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on April 6, 2021)

Acknowledgement, Consent and Affirmation of Guarantors, dated September 3, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)

Omnibus Amendment to Security Agreements, dated September 3, 2021, by and among the Company, certain of the Company's subsidiaries and Thomas B.

Pickens III (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)

Omnibus Amendment to Subsidiary Guarantees, dated September 3, 2021, made by certain of the Company's subsidiaries in favor of Thomas B.

Pickens III (incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on September 8, 2021)

Amendment to Joint Development and Option Agreement, dated June 8, 2022 (incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed with the Securities and Exchange Commission on June 23, 2022).

10.16 †

Employment Agreement, effective October 6, 2008 between SPACEHAB, Incorporated and Thomas B.

Pickens, III (incorporated by reference to Exhibit 10.1 of the Registrant’

s Current Report Form 8-K filed with the Securities and Exchange Commission on November 21, 2008).

10.17 †

Form of Indemnification Agreement of Astrotech Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’

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

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

Consent of Armanino LLP

Certification of Thomas B.

Pickens III, the Company’s Chief Executive Officer, pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

Certification of Jaime Hinojosa, the Company’s Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

Certification of Thomas B.

Pickens III, the Company’s Chief Executive Officer, pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

Certification of Jaime Hinojosa, the Company’s Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

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Inline XBRL Presentation Linkbase Document

Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 †

Management contract or compensatory plan arrangement.

Filed herewith.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Astrotech Corporation

/s/ Thomas B.

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

(Principal Financial and Accounting Officer)

September 28, 2023

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of this registrant in the capacities and on the dates indicated.

/s/ Thomas B.

Chief Executive Officer, Chief Technology Officer,

September 28, 2023

 and Chairman of the Board

/s/ Daniel T.

September 28, 2023

/s/ Tom Wilkinson

September 28, 2023

Tom Wilkinson

/s/ Jim Becker

September 28, 2023

/s/ Bob McFarland

September 28, 2023

Bob McFarland

/s/ Jaime Hinojosa

Chief Financial Officer, Treasurer and Secretary

September 28, 2023

Jaime Hinojosa

(Principal Financial and Accounting Officer)

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