ASTROTECH Corp 10-K

Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Astrotech Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Astrotech Corporation (the “Company”) as of June 30, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for the years ended June 30, 2025 and 2024, 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 audit. 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 audit 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 audit, 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We determined that there are no critical audit matters. RBSM LLP Houston, Texas We have served as the Company's auditor since 2023. September 26, 2025 PCAOB ID Number 587 60 Table of Contents ASTROTECH CORPORATION Consolidated Balance Sheets (In thousands, except share and per share data) June 30, 2025 2024 Assets Current assets Cash and cash equivalents $ 3,100 $ 10,442 Short-term investments 15,108 21,474 Accounts receivable 485 77 Inventory, net: Raw materials 2,194 2,038 Work-in-process 425 66 Finished goods 310 370 Prepaid expenses and other current assets 353 261 Total current assets 21,975 34,728 Property and equipment, net 2,395 2,763 Intangible assets, net 48 - Operating lease right-of-use assets, net 2,225 119 Other assets, net 346 30 Total assets $ 26,989 $ 37,640 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 1,066 $ 373 Payroll related accruals 529 1,174 Accrued expenses and other liabilities 451 754 Lease liabilities, current 405 227 Total current liabilities 2,451 2,528 Accrued expenses and other liabilities, net of current portion 164 232 Lease liabilities, net of current portion 2,274 73 Total liabilities 4,889 2,833 Commitments and contingencies (Note 13) Stockholders’ equity Convertible preferred stock, $ 0.001 par value, 2,500,000 shares authorized; 280,898 shares of Series D issued and outstanding at June 30, 2025 and 2024, respectively - - Common stock, $ 0.001 par value, 250,000,000 shares authorized at June 30, 2025 and 2024 respectively; 1,769,269 and 1,712,045 shares issued at June 30, 2025 and 2024 respectively; 1,758,953 and 1,701,729 shares outstanding at June 30, 2025 and 2024, respectively 190,643 190,643 Treasury shares, 10,316 shares at June 30, 2025 and 2024, respectively ( 119 ) ( 119 ) Additional paid-in capital 83,310 82,480 Accumulated deficit ( 250,870 ) ( 237,020 ) Accumulated other comprehensive loss ( 864 ) ( 1,177 ) Total stockholders’ equity 22,100 34,807 Total liabilities and stockholders’ equity $ 26,989 $ 37,640 See accompanying notes to consolidated financial statements. 61 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) June 30, 2025 2024 Revenue $ 1,049 $ 1,664 Cost of revenue 574 913 Gross profit 475 751 Operating expenses: Selling, general and administrative 7,067 7,241 Research and development 8,142 6,790 Total operating expenses 15,209 14,031 Loss from operations ( 14,734 ) ( 13,280 ) Other income and expense, net 886 1,616 Loss from operations before income taxes ( 13,848 ) ( 11,664 ) Income tax expense ( 2 ) ( 2 ) Net loss $ ( 13,850 ) $ ( 11,666 ) Weighted average common shares outstanding: Basic and diluted 1,665 1,638 Basic and diluted net loss per common share: Net loss per common share $ ( 8.32 ) $ ( 7.12 ) Other comprehensive loss, net of tax: Net loss $ ( 13,850 ) $ ( 11,666 ) Available-for-sale securities: Net unrealized gain 313 276 Total comprehensive loss $ ( 13,537 ) $ ( 11,390 ) See accompanying notes to consolidated financial statements. 62 Table of Contents ASTROTECH CORPORATION Consolidated Statement of Changes in Stockholders’ Equity (In thousands) Preferred Stock Common Stock Class D Number of Shares Outstanding Amount Number of Shares Outstanding Amount Treasury Stock Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balance at June 30, 2023 281 $ - 1,682 $ 190,643 $ ( 119 ) $ 81,002 $ ( 225,354 ) $ ( 1,453 ) $ 44,719 Net change in available-for-sale marketable securities - - - - - - - 276 276 Stock-based compensation - - - - - 1,478 - - 1,478 Restricted stock issuance - - 20 - - - - - - Purchase of treasury stock - - - - - - - - - Net loss - - - - - - ( 11,666 ) - ( 11,666 ) Balance at June 30, 2024 281 $ - 1,702 190,643 ( 119 ) 82,480 ( 237,020 ) ( 1,177 ) 34,807 Net change in available-for-sale marketable securities - - - - - - - 313 313 Stock-based compensation - - - - 830 - - 830 Restricted stock issuance - - 65 - - - - - - Cancellation of restricted stock - - ( 8 ) - - - - - - Net loss - - - - - - ( 13,850 ) - ( 13,850 ) Balance at June 30, 2025 281 $ - 1,759 $ 190,643 $ ( 119 ) $ 83,310 $ ( 250,870 ) $ ( 864 ) $ 22,100 See the accompanying notes to consolidated financial statements. 63 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Cash Flows (In thousands) Years Ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 13,850 ) $ ( 11,666 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 830 1,478 Depreciation 962 731 Amortization of operating lease right-of-use assets 194 143 Interest on financing leases 5 13 Loss on disposal of asset 294 - Changes in assets and liabilities Accounts receivable ( 408 ) 148 Inventory, net ( 455 ) ( 479 ) Accounts payable 693 ( 173 ) Other assets and liabilities ( 1,387 ) 246 Income taxes payable - 1 Repayment of financing liability in connection with internal-use software - ( 14 ) Operating lease liabilities 170 ( 153 ) Net cash used in operating activities ( 12,952 ) ( 9,725 ) Cash flows from investing activities: Purchases of property and equipment ( 833 ) ( 579 ) Purchases of intangible assets ( 50 ) - Proceeds from short-term investments 6,678 6,719 Net cash provided by (used in) investing activities 5,795 6,140 Cash flows from financing activities: Repayment of financing liability in connection with internal-use software ( 91 ) - Repayments on finance lease liabilities ( 94 ) ( 181 ) Net cash used in financing activities ( 185 ) ( 181 ) Net change in cash and cash equivalents $ ( 7,342 ) $ ( 3,766 ) Cash and cash equivalents at beginning of period 10,442 14,208 Cash and cash equivalents at end of period $ 3,100 $ 10,442 Supplemental disclosures of cash flow information: C ash financing activities: Cash paid for interest $ 11 $ 26 Income taxes paid $ - $ 2 Non-cash financing activities: Operating right-of-use interest $ 10 $ - Finance lease expenditures incurred but not paid for as of the end of the period $ 7 $ - Acquisition of equipment/ software through financing lease $ - $ 245 Operating right-of-use assets $ 2,277 $ - Operating right-of-use associated liabilities $ 2,594 $ - See accompanying notes to consolidated financial statements. 64 Table of Contents ASTROTECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended June 30, 2025 and 2024 ( 1 ) Description of the Company and Operating Environment Business Overview The terms “Astrotech”, “the Company”, “we”, “us”, or “our” refer to Astrotech Corporation (Nasdaq: ASTC), a Delaware corporation organized in 1984. We are commercializing the Astrotech Mass Spectrometer Technology™ platform (“AMS Technology”) through application specific, wholly owned subsidiaries. Our mission encompasses the advancement of both mass spectrometry and gas chromatography, two powerful analytical techniques that together enable precise detection and identification of chemical compounds across a wide range of high-demand environments.  We aim to expand access to mass spectrometry by simplifying the complexity of operating these devices within real-time testing environments such as airports, border checkpoints, cargo hubs, infrastructure security, correctional facilities, military bases, law enforcement centers, and industrial locations. We are introducing our new line of products that are ultra-portable, on-site, rugged environmental testing instruments, featuring our proprietary ATi Mass Spectrometer Technology ("MS") and ATi Gas Chromatography Column ("GC") to achieve our mission through simplifying the user interface, ruggedizing the critical components to endure MS/GC field work, and enabling multiple configurations for sample intake options. The Astrotech Mass Spectrometer Technology™ and ATi Gas Chromatograph Column (GC) platforms achieve our mission through simplifying the user interface, automating the complicated calibration process, ruggedizing the critical components to endure MS/GC field work, and enabling multiple configurations for sample intake options.  Astrotech Technologies, Inc. Astrotech Technologies, Inc. (“ATI”) owns and licenses the AMS Technology, the platform MS technology originally developed by 1st Detect. 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 17 patents granted 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 four wholly-owned subsidiaries of Astrotech on an exclusive basis. 1 st Detect Corporation 1st Detect Corporation ( “1 st Detect”), a licensee of ATI for security and detection applications, has developed the TRACER 1000, the world’s first MS based ETD certified by the ECAC and approved by TSA for air cargo. The TRACER 1000 was designed to outperform the ETDs currently used at airports, cargo and other secured facilities, and borders worldwide. The Company believes that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). The Company further believes that some IMS-based ETDs have issues 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. AgLAB Inc. AgLAB Inc. (“AgLAB”), an exclusive licensee of ATI for the use in the agriculture industry to analyze complex chemical compounds found in organic plant material and extracts, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with the initial focus on optimizing yields in the distillation process. The AgLAB product line is a derivative of the Company’s core AMS Technology. AgLAB continues to conduct field trials demonstrating that the AgLAB 1000 - D2™ can be used in the distillation process to significantly improve the 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 assist the equipment operator determining the ideal settings required to maximize yields. BreathTech Corporation BreathTech Corporation (“BreathTech”), an exclusive licensee of ATI for use in breath analysis applications, was in the process of 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 compromised condition. 65 Table of Contents Pro-Control, Inc. The company announced the formation of our new wholly-owned subsidiary, Pro-Control, Inc. (“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. EN-SCAN, Inc. EN-SCAN, Inc. (“EN-SCAN”) is developing advanced environmental testing and monitoring solutions, integrating gas chromatography and mass spectrometry technology in rugged, portable designs. EN-SCAN’s products are expected to support industrial, environmental, and regulatory applications, helping organizations meet compliance requirements and environmental safety. EN-SCAN will use proprietary ATi Gas Chromatograph and AMS Technology license from ATI for instant feedback to accurately detect soil, water, and air contamination source location and migration. ( 2 ) Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The preparation of these consolidated financial statements in conformity to U.S. Generally Accepted Accounting Principles (“GAAP”) for the accounts of Astrotech Corporation and all its wholly owned subsidiaries requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Actual outcomes may differ from these estimates under different assumptions and conditions. 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. 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, 2025 , the Company had four material customers that comprised substantially all of its $ 1.0 million in revenue. During the fiscal year ended June 30, 2024 , the Company had three material customers that consisted substantially all of the $ 1.7 million in revenue. Revenue from product and services sales are recognized when control of the goods is transferred to the customer which occurs at a point in time typically upon shipment to the customer or completion of the service. This standard applies to all contracts with customers. Warranty obligations associated with the sale of our products are assurance-type warranties that are a guarantee of the product’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. Warranty expense is included in cost of sales. 66 Table of Contents 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. Revenue under long-term government contracts is recorded under the percentage of completion method. Revenue, billable under cost-plus-fixed-fee contracts, is recorded as costs are incurred and includes estimated earned fees in the proportion that costs incurred to date bear to total estimated costs. Costs include direct labor, direct materials, subcontractor costs and manufacturing and administrative overhead allowable under the contract. General and administrative expenses allowable under the terms of contracts are allocated per contract, depending on its direct labor and material proportion to total direct labor and material of all contracts. As contracts can extend over one or more accounting periods, revisions in earnings estimated during the course of work are reflected during the accounting period in which the facts become known. The Company does not generally provide an allowance for returns from our government customers because our customer agreements do not provide for a right of return. Practical Expedients. 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. The Company generally offers customers payment terms of 60 days or less. Freight. The Company records shipping and handling fees that it charges to its customers as revenue and related costs as cost of goods sold. Multiple Performance Obligations. Certain agreements with customers include the sale of equipment involving multiple elements in cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. In general, our performance obligations are related to the sale of TRACER- 1000 systems, training, associated consumables which can be delivered in multiple occurrences, and future maintenance. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire amount of consideration is attributed to that obligation. When a contract contains multiple performance obligations the standalone selling price is first estimated using the observable price, which is generally a list price net of applicable discount or the price used to sell the good or service in similar circumstances. In circumstances when a selling price is not directly observable, the Company will estimate the standalone selling price using information available including our market assessment and expected cost plus margin. The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods. The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of site acceptance test, and in the case of after-market consumables and service deliverables, the passage of time. 67 Table of Contents 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 2025 and 2024 , the Company conducted business in multiple foreign 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, were not material for the fiscal years ended June 30,2025 and June 30, 2024. 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, 2025 and 2024 is summarized in the following table: (In thousands) Warranty Provision Balance as of June 30, 2023 $ 88 Accruals for new warranties issued 172 Settlements made ( 76 ) Balance as of June 30, 2024 184 Accruals for new warranties issued 75 Settlements made ( 62 ) Balance as of June 30, 2025 $ 197 Segment Reporting The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. Net sales attributed to customers in the United States and foreign countries for the years ended June 30, 2025 and 2024 were as follows: Revenue by Segment (In thousands) June 30, 2025 June 30, 2024 United States $ 730 $ - Foreign Countries 319 1,664 Total Revenue $ 1,049 $ 1,664 Product Revenue (In thousands) June 30, 2025 June 30, 2024 Product Revenue $ 804 $ 1,576 Grant Revenue 115 - Service Revenue 130 88 Total Revenue $ 1,049 $ 1,664 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, 2025 and 2024 were $ 8.1 million and $ 6.8 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 11. 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. 68 Table of Contents 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, 2025 and 2024 , there was no allowance for doubtful accounts deemed necessary. Allowance for Credit Losses on Financial Instruments In accordance with ASC Topic 326 Credit Losses - Measurement of Credit Losses on Financial Instruments (ASC 326 ), the Company utilizes the current expected credit losses (“ CECL ”) model to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts receivable and deposit, prepayments. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts receivable and deposit, prepayments, and others receivable are written off when deemed uncollectible. The Company has not incurred credit losses in fiscal years 2025 or 2024. Inventory The Company computes inventory cost on a first -in, first -out basis, and inventory is valued at the lower-of-cost or net realizable value. The valuation of inventory also requires the Company to estimate obsolete and excess inventory as well as inventory that is not of saleable quality. The Company provides reserves for discontinued, slow-moving and excess inventory based upon historical demand calculations, forecasted usage, estimated customer requirements and product line updates. As of June 30, 2025, and 2024, inventory reserves were $ 346 thousand and $ 296 thousand, respectively. 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. The Company had an impairment of long-lived assets expense of $ 197 thousand for the year ended June 30, 2025, related to internal use software. There was no impairment of long-lived assets recorded for fiscal years ended June 30, 2024. Assets to be disposed of are reported at the carrying amount. Recoverability of long-lived assets is dependent on a number of conditions, including uncertainty about future events and demand for our services. 69 Table of Contents Fair Value of Financial Instruments Astrotech’s financial instruments consist of cash and cash equivalents, available for sale investments, 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. The Company is required to measure certain assets and liabilities at fair value, either upon initial measurement or for subsequent accounting or reporting. The Company uses fair value extensively, including in the initial measurement of net assets acquired in a business combination and when accounting for and reporting on certain financial instruments. The Company estimates fair value using an exit price approach, which requires, among other things, that it determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of assets and, for liabilities, assuming the risk of non-performance will be the same before and after the transfer. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. When estimating fair value, depending • Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities. • Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence. • Income approach, which is based on the present value of the future stream of net cash flows 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. Leases 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 assets; 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. 70 Table of Contents Stock-Based Compensation The Company grants restricted stock awards, and stock options to certain directors, officers, and employees. The fair value of restricted stock awards is the market price of the Company’s common stock as of the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing model. Determining the fair value of stock option awards at the grant date requires judgment about, among other things, stock volatility, the expected life of the award, and other inputs. Share-based compensation is recorded over the requisite service period, generally defined as the vesting period. The Company records share-based compensation for service-based restricted stock awards and stock options on a straight-line basis over the requisite service period of the entire award. The Company accounts for forfeitures as they occur. The Company issues new shares of common stock to satisfy exercises and vesting of awards granted under its stock plans. Share-based compensation expense is reflected in personnel costs in the consolidated. statements of comprehensive income. The Company accounts for stock-based awards to employees based on the fair value of the award on the grant date. The fair value of stock options is estimated using the expected dividend yields of the Company’s stock, the expected volatility of the stock, the expected length of time the options remain outstanding, and the risk-free interest rates. Changes in one or more of these factors may significantly affect the estimated fair value of the stock options. The Company recognizes forfeitures as they occur. The fair value of awards that are likely to meet goals, if any, are recorded as an expense over the vesting period. For more information, see Note 10. Income Taxes The Company accounts for income taxes under the asset and 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. There were no new additional purchases in fiscal year 2025. Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2023, with retrospective application to all prior periods presented. We adopted this standard in fiscal year 2025. The adoption of this on July 1, 2024 did not have a material impact on its financial statements. In November 2023, the FASB issued Accounting Standards Update 2023 - 07— Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023. We adopted this standard in fiscal year 2025. The Company implemented enhanced annual segment reporting disclosures based on new requirements. 71 Table of Contents ASU 2022 - 04 - Supplier Finance Program (SFP) . This ASU requires that a buyer in an SFP disclose qualitative and quantitative information about its program, including the nature of the SFP and key terms, outstanding amounts as of the end of the reporting period, and presentation in its financial statements. This pronouncement has not impacted the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020 - 06, Debt — Debt with Conversion and Other Options (Subtopic 470 - 20 ), and Derivatives and Hedging—Contracts in an Entity’s Own Equity (Subtopic 815 - 40 ): Accounting for Convertible Instruments and Contracts in an Entity ’ s Own Equity . The amendments in ASU No. 2020 - 06 simplify the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exceptions for contracts in an entity’s own equity. For smaller reporting companies ASU 2020 - 06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect its application to have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023 - 09, “Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures ” which is intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The guidance is effective for annual periods beginning after December 15, 2024. We are assessing the impact of this guidance on our disclosures. In November 2024, the FASB issued Accounting Standards Update 2024 - 03 " Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ) " which requires that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the listed expense categories. 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. These amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027: either ( 1 ) prospectively to financial statements issued for reporting periods after the effective date of this Update or ( 2 ) retrospectively to any or all prior periods presented in the financial statements. The Company expects to enhance disclosures of expenses based on new requirements. In November 2024, the FASB also issued Accounting Standards Update 2024 - 04 "Debt - Debt with Conversion and Other Options (Subtopic 470 - 20 ) “ Induced Conversions of Convertible Debt Instruments ” to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. An entity should assess whether this criterion is satisfied as of the date the inducement offer is accepted by the holder. If, when applying this criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within the one -year period leading up to the offer acceptance date, an entity should compare the terms provided in the inducement offer with the terms that existed one year before the offer acceptance date. The amendments in this Update also clarify that the induced conversion guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is examining the impact this pronouncement may have on the Company’s consolidated financial statements. Other accounting pronouncements issued but not yet effective are not believed by management to be relevant or to have a material impact on the Company’s present or future consolidated financial statements. 72 ( 3 ) Investments The following tables summarize gains and losses related to the Company’s investments: June 30, 2025 Available-for-Sale Adjusted Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Mutual Funds - Corporate & Government Debt $ 10,547 $ - $ ( 668 ) $ 9,879 ETFs - Corporate & Government Debt 5,425 - ( 196 ) 5,229 Total $ 15,972 $ - $ ( 864 ) $ 15,108 June 30, 2024 Available-for-Sale Adjusted Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Mutual Funds - Corporate & Government Debt $ 15,276 $ - $ ( 850 ) $ 14,426 ETFs - Corporate & Government Debt 7,375 - ( 327 ) 7,048 Total $ 22,651 $ - $ ( 1,177 ) $ 21,474 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, 2025, and 2024 , the Company had no long-term investments. For more information about the fair value of the Company’s financial instruments, see Note 6. The following table presents the carrying amounts of certain financial instruments as of June 30, 2025 and 2024 : Carrying Value Short-Term Investments Long-Term Investments (In thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Money Market Funds Mutual Funds - Corporate & Government Debt $ 9,879 $ 14,426 $ - $ - ETFs - Corporate & Government Debt 5,229 7,048 - - Total $ 15,108 $ 21,474 $ - $ - 73 ( 4 ) Leases On April 27, 2021, Astrotech entered into a 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. 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 R&D Facility and the Subleased Facility are collectively referred to herein as the “Donley Facilities.” 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, 2025 and 2024 totaled $ 126 thousand and $ 124 thousand, respectively. On January 20, 2025 , the Company entered into a lease extension to extend the terms of the leases associated with the Donley Facilities effective May 1, 2025 ( “Donley Facilities Lease Extension”). We are currently continuing the lease on a month-to-month basis. The monthly rent for the Donley Facilities will be $ 14,186 during the initial extension period. On January 29, 2025, we entered into a new lease agreement for a facility of approximately 17,628 square feet in Austin, Texas (the “Metric facility”) for a term of 890months, which such term commences July 1, 2025. The Metric facility is intended to support and encompass all Austin based functions. Our total contractual base rent obligation for the Metric facility is approximately $ 3.0 million, less a tenant allowance of $ 317.3 thousand. 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, 2025 June 30, 2024 Assets: Operating lease assets Operating lease right-of-use assets, net $ 2,225 $ 119 Financing lease assets Property and equipment , net 79 366 Total lease assets $ 2,304 $ 485 Liabilities: Current: Operating lease obligations Lease liabilities , current $ 381 $ 138 Financing lease obligations Lease liabilities , current 24 89 Non-current: Operating lease obligations Lease liabilities , non-current 2,225 - Financing lease obligations Lease liabilities , non-current 49 73 Total lease liabilities $ 2,679 $ 300 74 Table of Contents Future minimum lease payments as of June 30, 2025 under non-cancelable leases are as follows (in thousands): For the Year Ended June 30, Operating Leases Financing Leases Total 2026 $ 381 $ 27 $ 408 2027 396 27 423 2028 411 25 436 2029 426 - 426 2030 442 - 442 Thereafter 1,057 - 1,057 Total lease obligations 3,113 79 3,192 Imputed interest ( 507 ) ( 6 ) ( 513 ) Present value of net minimum lease obligations 2,606 73 2,679 Lease liabilities - current ( 381 ) ( 24 ) ( 405 ) Lease liabilities - non-current $ 2,225 $ 49 $ 2,274 Other information as of June 30, 2025 is as follows: Weighted-average remaining lease term (years): Operating leases 7.42 Financing leases 3.00 Weighted-average discount rate: Operating leases 4.80 % Financing leases 6.10 % Cash payments for operating leases for the years ended June 30, 2025 and 2024 totaled $ 170 thousand and $ 166 thousand, respectively. Cash payments for financing leases for the years ended June 30, 2025 and 2024 totaled $ 94 thousand and $ 181 thousand, respectively. ( 5 ) Property and Equipment, net As of June 30, 2025 and 2024 , property and equipment, net consisted of the following: June 30, (In thousands) 2025 2024 Furniture, fixtures, equipment & leasehold improvements $ 3,960 $ 3,613 Software 323 881 Capital improvements in progress 327 1 Gross property and equipment 4,610 4,495 Accumulated depreciation ( 2,215 ) ( 1,732 ) Property and equipment, net $ 2,395 $ 2,763 Total depreciation and amortization expense of property and equipment was $ 962 thousand for the year ended June 30, 2025 and $ 731 thousand for the year ended June 30, 2024 . Depreciation and amortization expense includes finance of $ 126 thousand and $ 124 thousand for the years ended June 30, 2025 and 2024 , respectively. 75 Table of Contents ( 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, 2025 , and June 30, 2024 : June 30, 2025 Carrying Fair Value Measured Using Fair (In thousands) Amount Level 1 Level 2 Level 3 Value Available-for-Sale Securities Short-Term Investments Mutual Funds - Corporate & Government Debt $ 9,879 $ 9,879 $ - $ - $ 9,879 ETFs - Corporate & Government Debt 5,229 5,229 - - 5,229 Total Available-for-Sale Investments $ 15,108 $ 15,108 $ - $ - $ 15,108 June 30, 2024 Carrying Fair Value Measured Using Fair (In thousands) Amount Level 1 Level 2 Level 3 Value Available-for-Sale Securities Short-Term Investments Mutual Funds - Corporate & Government Debt $ 14,426 $ 14,426 $ - $ - $ 14,426 ETFs - Corporate & Government Debt 7,048 7,048 - - 7,048 Total Available-for-Sale Investments $ 21,474 $ 21,474 $ - $ - $ 21,474 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). 76 ( 7 ) Stockholders ’ Equity Common Stock 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 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”). 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. 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, 2025. Series D Preferred Shares are convertible to common stock on a one -to- thirty 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. A previously disclosed, on June 16, 2023, the Company terminated the 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 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. Rights Plan 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. 77 On December 18, 2023, the Company entered into Amendment No. 1 to Rights Agreement between the Company and Equiniti Trust Company, as Rights Agent (the "Amendment"), which extended the Final Expiration Date (as defined in the Rights Plan) to December 20, 2024. On December 12, 2024, the Company entered into Amendment No. 2 to the Rights Agreement between the Company and the Rights Agent, which extends the Final Expiration Date to December 20, 2025, unless the Final Expiration Date is further extended by the Company or the rights subject to the Rights Plan are earlier redeemed or exchanged by the Company in accordance with the terms of the Rights Plan. All other terms and conditions of the Rights Plan remain unchanged. All other terms and conditions of the Rights Plan remain unchanged. Warrants A summary of the common stock warrant activity for the year ended June 30, 2025 is presented below: Shares Weighted Average Exercise Aggregate Fair Market Value at Issuance Weighted Average Remaining Contractual Life (In thousands) Price (In thousands) (in years) Outstanding at June 30, 2023 80 $ 72.10 $ 3,747 2.60 Issued - - - - Exercised - - - - Canceled or expired - - - - Outstanding at June 30, 2024 80 $ 72.10 $ 3,747 1.60 Issued - - - - Exercised - - - - Canceled or expired ( 3 ) 154 ( 194 ) - Outstanding at June 30, 2025 77 $ 69.04 $ 3,553 0.63 The following represents a summary of the warrants outstanding at each of the dates identified: Number of Shares Underlying Warrants (In thousands) For the period ended June 30, Issue Date Classification Exercise Price Expiration Date 2025 2024 March 26, 2020 Equity $ 187.50 March 25, 2025 - 1 March 30, 2020 Equity $ 140.63 March 27, 2025 - 2 October 23, 2020 Equity $ 86.25 October 21, 2025 15 15 October 28, 2020 Equity $ 80.63 October 28, 2025 6 6 February 16, 2021 Equity $ 121.88 February 11, 2026 6 6 April 12, 2021 Equity $ 56.25 April 7, 2026 50 50 Total Outstanding 77 80 78 ( 8 ) Business Risk and Credit Risk Concentration Involving Cash For the fiscal year ended June 30, 2025 , the Company had four customers that substantially comprised all of the Company’s revenue. For the fiscal year ended June 30, 2024 the Company had three customers that substantially comprised all of the Company’s revenue. Additionally, the material amount of the company's receivables was compromised by two companies for the fiscal year ended June 30, 2025 and one company for the fiscal year ended June 30, 2024 . 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. The general insurance limit is $250,000 per separately insured depositor. These balances as of June 30, 2025 are $ 2.6 million across two financial institutions. ( 9 ) 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, 2025 and 2024 was as follows: Weighted Shares Average Exercise Price Outstanding at June 30, 2023 38,166 $ 27.34 Granted 131,840 10.01 Exercised - - Canceled or expired ( 13,378 ) 10.70 Outstanding at June 30, 2024 156,628 $ 14.18 Granted 102,260 9.43 Exercised - - Canceled or expired ( 45,775 ) 12.10 Outstanding at June 30, 2025 213,113 $ 12.35 The aggregate intrinsic value of options exercisable at June 30, 2025 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, 2025 was $ 3 thousand. Options Outstanding Options Weighted- Exercisable Average Weighted- Weighted- Number Remaining Average Number Average Outstanding Contractual Exercise Exercisable Exercise Range of exercise prices Life (years) Price Price $5.50 – $9.69 55,000 9.45 $ 7.41 2,551 $ 9.21 $10.10 – $11.27 79,770 8.24 10.12 27,720 10.14 $11.51 – $19.20 76,402 8.22 14.21 29,422 18.42 $159.00 – $175.50 1,941 1.86 170.33 1,941 170.33 $5.50 – $175.50 213,113 8.49 $ 12.35 61,634 $ 19.10 79 Table of Contents Compensation costs recognized related to vested stock option awards during the years ended June 30, 2025 and 2024 were $ 622 thousand and $ 480 thousand, respectively. At June 30, 2025 , there was $ 858 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 1.9 years. Restricted Stock The Company’s restricted stock activity for the years ended June 30, 2025 and 2024 , was as follows: Weighted Average Shares Grant-Date Fair Value Outstanding at June 30, 2023 50,671 $ 33.43 Granted 20,000 10.10 Vested ( 26,898 ) 45.50 Canceled or expired - - Outstanding at June 30, 2024 43,773 $ 15.36 Granted 65,000 5.90 Vested ( 15,163 ) 14.85 Canceled or expired ( 7,776 ) 10.97 Outstanding at June 30, 2025 85,834 $ 14.11 Compensation costs recognized related to vested restricted stock awards during the years ended June 30, 2025 and 2024 were $ 208 thousand and $ 1.0 million, respectively. At June 30, 2025 , there was $ 641 thousand of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 2.4 years. Stock-based Compensation in Operating Expenses The Company’s stock-based compensation by category for the years ended June 30, 2025 and 2024 was as follows: Year Ended Year Ended (in thousands) June 30, 2025 June 30, 2024 Selling, Administration and General $ 665 $ 1,364 Research & Development 165 114 Total $ 830 $ 1,478 80 Table of Contents Fair Value of Stock-Based Compensation Stock-based compensation costs are generally based on the fair value calculated from the Black-Scholes model on the date of the grant of stock options. The fair values of stock options are amortized as compensation expense on a straight-line basis over the vesting period of the grants. The Company recognizes forfeitures as they occur. The assumptions used for the years ended June 30, 2025 and 2024 and the resulting estimates of weighted-average fair value per share of options granted or modified are summarized in the following table: Year Ended Year Ended June 30, 2025 June 30, 2024 Expected Dividend Yield - - Expected Volatility 100.06 % 99.85 % Risk-Free Interest Rates 4.24 % 4.36 % Expected Option Life (in years) 3.5 3.5 Weighted-average grant-date fair value of options awarded $ 15.80 $ 11.63 • 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, 2025 and 2024 , the Company used the simplified method of calculating the expected life of the options. ( 10 ) Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of June 30, 2025, and 2024, the Company had established a full valuation allowance against all of its net deferred tax assets. For the fiscal years ended June 30, 2025, and 2024, the Company incurred losses from operations in the amount of $ 13.8 million and $ 11.7 million, respectively. The effective tax rate for the fiscal years 2025 and 2024 was 0.01 % and 0.01%, respectively. 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 $ 762 thousand as of June 30, 2025, all of which has been accounted for as contra deferred tax assets. For the years ended June 30, 2025, and 2024, the Company’s effective tax rate differed from the federal statutory rate of 21 %, primarily due to tax credits and the valuation allowance against its net deferred tax assets. 81 Table of Contents Income Tax Expense and Effective Tax Rate The components of income tax benefit/ (expense) from operations are as follows: Year Ended June 30, (In thousands) 2025 2024 Current Federal $ - $ - State and local ( 2 ) ( 2 ) Total current tax expense $ ( 2 ) $ ( 2 ) Deferred Federal - - State and local - - Total deferred tax benefit/ (expense) $ - $ - Total tax expense $ ( 2 ) $ ( 2 ) The $ 2 thousand of current state tax expense in both the June 2025 and 2024 years relate to state minimum taxes. 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) 2025 2024 Expected benefit $ 2,908 $ 2,449 State tax expense ( 2 ) ( 2 ) Tax credits 347 251 Change in valuation allowance ( 3,127 ) ( 2,465 ) Stock-based compensation ( 118 ) ( 271 ) Prior year true-up - 43 Expiration of net operating loss carryovers ( 1 ) - Other permanent items ( 9 ) ( 7 ) Total income expense $ ( 2 ) $ ( 2 ) 82 Table of Contents Deferred Tax Assets and Liabilities The Company’s deferred tax assets as of June 30, 2025 and 2024 consist of the following: Year Ended June 30, (In thousands) 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 20,975 $ 18,900 Tax credit carryforwards 2,166 1,800 Lease liability - current and non-current 563 63 Unrealized loss on securities 182 247 IRC Section 174 R&D Expense Capitalization 2,952 2,107 Accrued expenses and other timing 126 310 Stock-based compensation 112 63 Property and equipment, principally due to differences in depreciation - - Total gross deferred tax assets $ 27,076 $ 23,490 Less - valuation allowance ( 26,482 ) ( 23,444 ) Net deferred tax assets $ 594 $ 46 Deferred tax liabilities: Right-of-use assets $ ( 468 ) $ ( 25 ) Property and equipment, principally due to differences in depreciation ( 126 ) ( 21 ) Total gross deferred tax liabilities ( 594 ) ( 46 ) Net deferred tax assets $ - $ - The Company files consolidated returns for federal, California, Florida, Massachusetts, Oregon and Texas. 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, 2025, the Company provided a full valuation allowance of approximately $ 26.5 million against its net deferred tax assets. The valuation allowance increased by approximately $ 3 million for the year ended June 30, 2025. At June 30, 2025, the Company had net operating loss carryforwards of approximately $ 98.0 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 $ 60.2 million ($ 12.6 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 $ 1.7 million as of June 30, 2025. These credits will expire between the years 2035 and 2045. The Company also has $ 47 thousand of California research and development income tax credit carryovers as of June 30, 2025, which credits never expire. At June 30, 2025, the Company also has accumulated state net operating loss carryforwards of approximately $ 7.5 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, 2025, 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. 83 Table of Contents Uncertain Tax Positions The Company had unrecognized tax benefits of $ 762 thousand as of June 30, 2025 , all of which have been accounted for as contra deferred tax assets. A roll forward of the beginning and ending amount of unrecognized tax benefits from July 1, 2023 to June 30, 2025 is as follows: Year Ended June 30, (In thousands) 2025 2024 Fiscal year beginning balance $ 604 $ 486 Additions for tax positions of current period 157 136 Additions for tax positions of prior years 1 - Decreases for tax positions of prior years - ( 18 ) Fiscal year ending balance $ 762 $ 604 The Company recognizes interest and penalties related to income tax matters in income tax expense, as incurred. For the years ended June 30, 2025 and 2024, the Company did not recognize any interest expense for uncertain tax positions. The Company is no longer subject to U.S. federal and state income tax examination by tax authorities for years before 2020. ( 11 ) 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 potentially dilutive common shares outstanding during the period using the treasury stock method and the if-converted method. Potentially dilutive common shares include outstanding stock options and share-based awards. The following table reconciles the numerators and denominators used in the computations of both basic and diluted net loss per share Year Ended June 30, 2025 2024 Numerator: Net loss $ ( 13,850 ) $ ( 11,666 ) Denominator: Denominator for basic and diluted net loss per share — weighted average common stock outstanding 1,665 1,638 Basic and diluted net loss per common share: Net loss $ ( 8.32 ) $ ( 7.12 ) All unvested restricted stock awards for the years ended June 30, 2025 and 2024 are not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive. Options to purchase 213,113 shares of common stock at exercise prices ranging from $ 5.50 to $ 175.50 per share outstanding for the year ended June 30, 2025 and options to purchase 156,628 shares of common stock at exercise prices ranging from $ 7.47 to $ 175.50 per share outstanding for the year ended June 30, 2024 were not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive. 84 Table of Contents ( 12 ) Employee Benefit Plans Astrotech has a defined contribution retirement plan, which covers substantially all employees and officers. `For the years ended June 30, 2025 and 2024 , the Company made matching contributions of $ 92 thousand and $ 82 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, 2025 and 2024 . ( 13 ) Commitments and Contingencies Legal Proceedings From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions. The Company’s assessment of the likely outcome of litigation matters is based on its judgment of a number of factors including experience with similar matters, past history, precedents, relevant financial and other evidence and facts specific to the matter. Notwithstanding the uncertainty as to the final outcome, based upon the information currently available, management does not believe any matters, individually or in aggregate, will have a material adverse effect on the Company’s financial position or results of operations. 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. ( 14 ) Subsequent Events Management has determined there are no subsequent events to report through September 26, 2025. 85 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.