ASTROTECH Corp 10-K

Item 1. Business Our Company The terms “Astrotech”, “the Company”, “we”, “us”, or “our” refer to Astrotech Corporation (Nasdaq: ASTC), a Delaware corporation organized in 1984. Our use of “products” and “devices” refer to the TRACER 1000™, BreathTest-1000™, AGLAB 1000™, and Pro-Control 1000™ along with related accessories and consumables. 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 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. We are introducing our new line of products that are ultra-portable, on-site, rugged environmental testing instruments, featuring our proprietary ATi Gas Chromatography Column (“GC”) and ATi Mass Spectrometer Technology (“MS”) to 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. Our Board of Directors (the “Board”) recently approved strategic initiatives focused on future lunar resource development, autonomous lunar industrial infrastructure, Moon-based advanced computing, semiconductor manufacturing, lunar power generation and power infrastructure, mining, chemical manufacturing, product transportation and equipment leasing opportunities on the Moon (our “Lunar Initiatives”). As part of the initiative, Astrotech intends to evaluate and potentially develop infrastructure technologies that could support future semiconductor processing, advanced computing systems, and quantum computing manufacturing operations on the lunar surface. Astrotech believes the convergence of abundant solar energy, extreme lunar thermal conditions, reduced gravity, autonomous robotics, and access to strategic lunar materials such as Si-28 and 3 He may ultimately make the Moon an attractive long-term platform for advanced computational infrastructure and next-generation quantum manufacturing systems. Our Business Units 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 AMS Technology. ● 1 st Detect Corporation (“1 st Detect”) is a manufacturer of explosive trace detectors (“ETDs”) and narcotic trace detectors (“NTDs”) developed for use in security and detection at airports, border checkpoints, cargo hubs, infrastructure security, correctional facilities, military bases, and law enforcement centers. 1 st Detect holds an exclusive AMS Technology license from ATI for air passenger and cargo security applications as well as narcotics detection. ● AgLAB, Inc. (“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the distillation processes. AgLAB holds an exclusive AMS Technology license from ATI for applications in the agriculture industry which require analyzing complex chemical compounds found in organic plant material and extracts. ● BreathTech Corporation (“BreathTech”) is a breath analysis tool designed 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. ● Pro-Co ntrol, Inc. (“Pro-Control”) is focused on applying the AMS Technology in industrial process control applications. The mass spectrometer and process are designed to test, measure and increase reaction intermediates, purity and percent yields in industrial processes. Pro-Control holds an exclusive AMS Technology license from ATI for the distillation of chemicals outside of the agriculture industry. ● EN-SCAN, Inc. (“EN-SCAN”) is developing advanced environmental testing and monitoring solutions built around rugged, portable gas chromatography-based systems. EN-SCAN’s current platform integrates a proprietary micro-electro-mechanical preconcentrator (“MEMS”), MEMS micro gas chromatographic column, and a photoionization detector to provide rapid, on-site detection of volatile organic compounds for industrial, environmental, and regulatory applications. These systems are designed to support compliance monitoring, industrial hygiene, and environmental safety by enabling fast identification of contamination sources and migration pathways. EN-SCAN utilizes the proprietary ATi Gas Chromatograph and AMS Technology license from ATI to deliver gold standard analytical feedback for soil, water, and air assessments. EN-SCAN plans to expand its analytical capabilities by incorporating mass spectrometry into future product generations, further enhancing compound identification and broadening application scope. ● Lunar Power and Light Corporation (“LP&L”) is a recently approved strategic initiative focused on future lunar resource development, autonomous lunar industrial infrastructure, Moon-based advanced computing, semiconductor, manufacturing, lunar power generation and power infrastructure, mining, chemical manufacturing, product transportation and equipment leasing opportunities on the Moon. As part of the initiative, Astrotech intends to evaluate and potentially develop infrastructure technologies that could support semiconductor processing, advanced computing systems, and quantum computing manufacturing operations on the lunar surface. 6 Table of Contents 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 five wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1st Detect for use in security and detection applications, to AgLAB for use in the agriculture application, to BreathTech for use in breath analysis applications, Pro-Control for use in production applications, and EN-SCAN for use in industrial and environmental applications. 1 st Detect Corporation 1st Detect, a licensee of ATI for security and detection applications, has developed the TRACER 1000™, the world’s first MS based ETD approved by the European Civil Aviation Conference ( “ ECAC”) and the U.S. Transportation Security Administration ( “ 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. 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 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. We obtained ECAC certification in 2019 which allows us to sell the TRACER 1000 to airport and cargo security customers in the European Union (“EU”) and certain other countries. We are currently selling the TRACER 1000 to customers who accept ECAC certification. As of June 30, 2026, we have deployed the TRACER 1000 in approximately 37 locations in 16 countries throughout United States of America, Europe and Asia. In June 2024, the TSA approved 1st Detect's TRACER 1000 for the Air Cargo Security Technology List, which advanced the TRACER 1000 to Stage II testing, and permits air cargo companies in the United States to use our equipment in their operations. During Stage II testing, we are conducting field trials with the TSA. If field trials are successful, the TRACER 1000 will be added to the "qualified" list which provides long-term designation for permitted air-cargo screening use. We have 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. We are currently accepting orders for the TRACER 1000 ETD and NTD which are listed in the United States General Services Administration ( “ GSA”) IT Schedule 70 under Contract No. GS-35F-250GA with SRI Group LLC, Special Item Number 334290 in April 2024. The TRACER 1000 ETD and NTD are high-performance laboratory-grade instruments designed for the field capable of rapid detection of trace levels of explosive and narcotic compounds in seconds. The TRACER 1000 ETD and NTD both 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. IT Schedule 70 is a long-term contract issued by the GSA to commercial technology vendors that allows sales to the United States federal government, one of the largest buyers of goods and services in the world. 7 Table of Contents 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 our 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. Production and processing of hemp and cannabis is a huge, worldwide industry. In the U.S., for example, the wholesale value of the cannabis crop from just the U.S. states permitting adult-use and medical cannabis exceeds $6 billion annually. We believe growth in the U.S. and in the worldwide market is likely fed in part by the growing acceptance of medicinal cannabis products and anticipated legislative changes in various jurisdictions worldwide. We also believe this growth is due in part to the passage of the 2018 Farm Bill, which legalized hemp production in the U.S. As the CBD and hemp market continues to grow, there has been an influx of new companies entering the CBD and THC supply chains, ranging from large corporations to small startups. These companies comprise AgLAB’s target market. The competition within the supply chain is fierce, with companies investing heavily in research and development to create innovative products and differentiate themselves from their competitors. However, the market remains highly fragmented, with many products of varying quality and efficacy, making it challenging for consumers to navigate. Overall, the CBD and hemp market in the U.S. is a rapidly growing industry with significant potential for continued expansion. As more research is conducted and regulations are established, we believe it is likely that the market will become more standardized and regulated, leading to increased consumer confidence and demand. Stakeholders in the industry are likely to face challenges as it matures, including increased competition and potential regulatory hurdles. Management believes the AgLAB 1000-D2™ will deliver a compelling combination of cost and time savings while enhancing product quality and quantity for distillation processors of hemp and cannabis. The use of the AgLAB 1000-D2™ should reduce waste from current distillation practices and result in a significantly improved product. Due in large part to our proprietary technology, we believe it is the only provider of a mass spectrometry system that gives it a distinct advantage in the industry. Sales efforts for the AgLAB 1000-D2 are currently underway. The AgLAB MVP is an innovative process control system proven to increase the potency of ending-weight yields and increase revenue for distillation customers. The AgLAB MVP process provides real-time data, allowing distillers to adjust parameters to optimize the quality and quantity of each batch of oil. During our field trials of the AgLAB MVP, we were able to improve ending-weights yields by 20% or more. We believe these ongoing field trials demonstrate the solution can be a valuable tool for cannabis and hemp oil processors worldwide. 8 Table of Contents BreathTech Corporation BreathTech, an exclusive licensee of ATI for use in breath analysis applications, has developed 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. We believe that new tools to quickly identify the presence of a VOC metabolite could play an important role in detecting and containing airborne diseases. In conjunction with the CCF JDA, BreathTech entered into an Investigator-Initiated Study Agreement (“CCF IISA”) with The Cleveland Clinic Foundation (“Cleveland Clinic”), effective March 31, 2021, to expand the application of breath analysis by collecting and studying the gaseous portion of exhaled breath for markers of lung and systemic diseases. The pilot study concluded and the CCF IISA terminated in accordance with its terms on February 7, 2025. We currently have no active or anticipated studies with Cleveland Clinic under the CCF JDA. In addition, we have satisfied all payment obligations under the CCF JDA. We believe additional studies would be required to continue exploration of technologies which may provide non-invasive methods of monitoring and studying lung and systematic diseases. We believe commercialization of this application with the AMS Technology would require many years and significant investment due to regulatory requirements. As such, we have determined to deploy capital instead to our other subsidiaries. We are also exploring how the advancements and knowledge derived from our research on the BreathTech use case can be applied in our other existing and potential new business units. Pro-Control, Inc. Pro-Control has an exclusive license with ATI 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 qualitative and quantitative spectral data needed to control the production parameters (temperatures, flow, speed, and pressure) to improve 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. EN-SCAN, Inc. EN-SCAN manufactures and sells a line of instruments built for environmental testing using its proprietary ATi GC and AMS Technology for outdoor field work for on-site, real-time air, water, and soil analysis providing instant feedback for accurate contamination source location and migration. With a focus on real-time monitoring, EN-SCAN is expected to enable organizations to make data-driven decisions while reducing testing costs and time delays. The EN-SCAN lineup includes EN-SCAN Handheld GC, EN-SCAN Fenceline Monitor, and EN-SCAN Rugged Lab GC-MS. Each of these three testing solutions are designed for specific applications. The EN-SCAN product line includes ultra-portable rugged environment testing instruments, featuring our proprietary ATi Gas Chromatograph Column and ATi Mass Spectrometer Technology through our wholly owned subsidiary, EN-SCAN, Inc. Our customers gain access to real-time results and on-demand reporting, enabling continuous monitoring and immediate response in critical applications. Lunar Power and Light Corporation Our Board recently approved our Lunar Initiatives. As part of our Lunar Initiatives, we intend to evaluate and potentially develop infrastructure technologies that could support future semiconductor processing, advanced computing systems, and quantum computing manufacturing operations on the lunar surface. We believe the convergence of abundant solar energy, extreme lunar thermal conditions, reduced gravity, autonomous robotics, and access to strategic lunar materials such as Si-28 and 3 He may ultimately make the Moon an attractive long-term platform for advanced computational infrastructure and next-generation quantum manufacturing systems. Each of our Lunar Initiatives is in a very early stage and subject to all of the risks inherent in the establishment of a new business venture. Currently, there are no commercial operations of any kind on the lunar surface. Our Lunar Initiatives are in the explorative planning and design stages and have not yet been proven to be technically, financially, or commercially viable, and may ultimately be unsuccessful. To date, no formal business plan or capital budget has been approved relating to any of our Lunar Initiatives and no final products, sites, capacities, routes, launch schedules, service dates or project costs have been determined. We do not have any binding power-purchase agreement, customer or vendor commitments, strategic-partner agreement, financing commitment or launch contract. We do not currently have any lunar or space operations and do not currently have employees with the technical expertise necessary to fully develop the Lunar Initiatives. Implementation will depend on technical validation, ability to attract and retain employees with technical expertise, customer demand, partnerships, lunar transportation, sufficient financing and other factors. These efforts require substantial and ongoing investments of financial, technical and human resources over extended time horizons, including, but not limited to, research and development, testing, infrastructure, and mission execution. The technologies, systems and operational capabilities required for each of these Lunar Initiatives involve significant technical complexity and are subject to design, engineering, and performance risks, many of which may only become apparent as development and testing progress. We currently do not have the technical expertise or operational capabilities to execute on any of our Lunar Initiatives. Many of these technologies, systems and operational capabilities are novel and untested, and we expect to incur significant capital expenditures over a period of years before our Lunar Initiatives, including related products and services, and other strategic initiatives, including in-orbit, lunar, and interplanetary industrialization efforts, may become commercially scalable or profitable, which may never occur. The markets we intend to enter are expected to attract significant competition from commercial entities and government-sponsored programs, many of which have substantially greater financial, technical, manufacturing, marketing and personnel resources than we do. Because our Lunar Initiatives remain in the explorative planning and design stage, we have not yet demonstrated the technical feasibility of our planned offerings, potential customer base or generated any revenue from the Lunar Initiatives, and we may be unable to compete effectively against entities that are further advanced in their lunar programs. Our failure to compete effectively could have a material adverse effect on our business, financial condition and results of operations. The capital expenditures we expect to incur to evaluate, pursue and develop our Lunar Initiatives will be significant, and we currently do not have the cash or resources to do so. Our Lunar Initiatives will require substantial capital expenditures to design, develop, expand, and maintain our technologies and infrastructure to support development of such potential operations. These expenditures include, but are not limited to, costs associated with research and development, construction and expansion of production capabilities, acquisition of property and equipment, and ongoing maintenance and upgrades to ensure reliability and competitiveness. The Company’s ability to obtain financing that will be needed to fund our Lunar Initiatives will depend, in part, upon factors beyond the Company’s control, and there can be no assurance that appropriate financing will be available to the Company in amounts necessary to fund any of our Lunar Initiatives or on commercially viable terms or at all. Accordingly, our Lunar Initiatives, and the related intended business and operations, may not prove to be successful in the future, if at all. For additional information regarding the risks of our Lunar Initiatives, see Part I, Item 1A. “Risk Factors.” Our Strategy 1 st Detect Corporation The TRACER 1000 is the first MS-ETD certified by ECAC and approved by TSA for air cargo. We believe the TRACER 1000 significantly outperforms currently deployed competitive trace detection solutions based on IMS technology, specifically related to false alarm rate, probability of detection, and unit up-time. Many of our sales to-date have come from the cargo security industry where false alarms can cause expensive delays and facility shutdowns as the false alarms are cleared, preventing the mission critical continuous flow of time sensitive packages. We have also expanded into the airport passenger screening market with sales to a distributor who services a major international airport in Asia and another who services airports in Romania. We are currently accepting orders for the TRACER 1000 ETD and NTD. The TRACER 1000 NTD is a high-performance laboratory instrument capable of rapid detection of trace levels of narcotic and explosive compounds in seconds. The TRACER 1000 provides 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. 9 Table of Contents We currently market the TRACER 1000 to countries that accept ECAC certification or TSA approval for air cargo. The markets needing explosives and narcotics trace detection with a broader range of compounds and better accuracy include the following: ● Passenger Airports ● Cargo Airports ● Event Venues ● Embassies ● Military Bases ● Government Office Buildings ● Courthouses ● Border Checkpoints ● Law Enforcement Agencies ● Critical Infrastructure Security Checkpoints On May 11, 2026, we announced the TRACER 1000 system has achieved ECAC/EU G1 approval, meeting the highest European standards for aviation security. This approval reflects compliance with the ECAC and European Commission requirements for trace detection systems, supporting enhanced security for airline passengers. On June 8, 2026, we announced that the 1 st Detect TRACER 1000 system has received the ECAC certification for wand swabbing, approved for use in screening both passengers and cargo in aviation security operations. The system satisfies the ECAC Explosives Detection Standard and Standard G1 under Concept of Operations Revision 38 which opens the customer base to include airports that require wand swabbing. On June 16, 2026, we announced that the Board authorized our management to pursue a potential sale process of 1 st Detect, developer of the TRACER 1000 mass spectrometry-based explosives and narcotics trace detection platform. We are evaluating a potential sale of 1 st Detect to provide additional capital for the announced strategic initiatives we are committed to building. We continue to showcase the TRACER 1000 NTD and ETD at the trade events in the U.S. AgLAB Inc. Initial interest for the AgLAB-1000 series has come from the hemp and cannabis industry. Many derivative hemp and cannabis products are being manufactured using cannabinoids present in the plant, primarily THC for cannabis and CBD for hemp. Extraction and distillation equipment is used to remove the cannabinoids from the raw plant matter to create an oil that is used in many manufactured products. AgLAB has launched the first of several planned products that have been designed to assist in the distillation processes by maximizing the final product quality and yield. Current efforts are focused on the U.S. market, but international markets present attractive future growth opportunities as the number of countries with legal recreational or medicinal use continues to expand. We believe agricultural companies engaged in these supply chain activities will benefit from the increased use of MS: ● Plant material harvesting ● Ingredient processing ● Oil distillation ● Contaminate detection ● Inspection and certification ● Formulation and packaging BreathTech Corporation The BreathTest-1000 product is being designed to provide an inexpensive, non-invasive screening device for compromised conditions including a bacterial or viral infection that can offer results on-site in a very short period of time. We believe there is strong value for this easy to use screener in high density and critical locations, especially with heightened concern about airborne diseases continuing to pose new or reemerging threats. Most currently available tests either take too long or are invasive and painful. We expect the market need for a quick and painless test will continue to be significant in the following target markets: ● Hospitals ● Military ● Nursing homes ● Sporting events ● Airlines ● Performing arts venues ● Hotels ● Convention and conference centers ● Cruise lines ● Schools Pro-Control, Inc. As part of our growth plan, we have leveraged technology and processes developed by AgLAB to launch a new family of “process control” methods and solutions, which are the focus of Pro-Control. The presence of MS directly on production floors and ultimately integrated directly into manufacturing lines provides the opportunity for manufacturers to increase yields by reducing waste and increasing quality by ensuring consistent purity. Markets which we believe are likely to adopt Pro-Control’s products and services include: ● Petroleum refining ● Industrial chemical manufacturing ● Food processing ● Nutraceutical manufacturing ● Pharmaceutical manufacturing 10 Table of Contents EN-SCAN, Inc. The ultra-portable rugged GC enables continuous on-site monitoring and immediate response in critical applications. The EN-SCAN product lineup includes three key products: EN-SCAN Handheld GC, EN-SCAN Fenceline Monitor, and EN-SCAN Rugged Lab GC-MS. We expect these products to provide innovative portable environmental testing solutions that empower industries and organizations to accurately monitor and manage environmental challenges in real-time with immediate results. We believe the following markets will utilize this product lineup: ● Environmental equipment rental ● Industrial hygienists ● Environmental consulting firms ● Chemical plants ● Refineries On May 21, 2026, we announced the commercial launch of the Labrador HH-GC, a rugged, field-portable gas chromatograph engineered to bring laboratory-grade VOC analysis directly to the point of investigation. The Labrador HH-GC places actionable analytical intelligence directly into the hands of field operators, enabling faster decisions and accelerated remediation timelines. LP&L Corporation As part of our lunar power and resource development initiatives, Astrotech intends to evaluate and potentially develop infrastructure technologies that could support future semiconductor processing, advanced computing systems, and quantum computing manufacturing operations on the lunar surface. Astrotech believes the convergence of abundant solar energy, extreme lunar thermal conditions, reduced gravity, autonomous robotics, and access to strategic lunar materials such as Si-28 and 3 He may ultimately make the Moon an attractive long-term platform for advanced computational infrastructure and next-generation quantum manufacturing systems. Our Initiatives intend to explore five potential strategic categories: ● Lunar power generation focused on installing solar power, long-generation energy storage, recharge stations and associated transmission lines; ● Rover rental and equipment leasing to potential government and commercial customers; and ● Mining and material handling, potentially involving AI-directed excavation and transport of lunar regolith; ● AI-directed chemical manufacturing, integrating our GC-MS data with autonomous process control. ● Product transportation, including moving raw and finished materials on the lunar surface; Products and Services Our products are considered mass spectrometry and gas chromatography equipment. Mass Spectrometry Mass spectrometry is an analytical technique used to measure the mass-to-charge ratio of ions. It is commonly employed to identify the composition of a sample by generating a mass spectrum that provides detailed information about the sample's molecular structure, chemical properties, and purity. MS is considered a superior method for identifying molecules due to several advantages. We believe our business units are demonstrating these advantages in multiple use cases in our target markets. Speed and specificity are two of the most relevant advantages we highlight during customer conversations. MS can detect and measure minute quantities of a substance making it ideal for trace analysis. It provides precise mass-to-charge (m/z) ratios, which are characteristic of specific molecules or fragments, allowing for accurate identification and differentiation of compounds with similar structures. MS offers rapid analysis, which is especially valuable in manufacturing, security, environmental, and forensic applications where timely results are crucial. MS can analyze a wide range of molecules, from small organic compounds to large biomolecules like proteins and nucleic acids. Other separation techniques can be coupled with MS, such as gas chromatography (“GC-MS”) or liquid chromatography, to enhance the analysis of complex mixtures and provide additional separation before detection. The innate capabilities of MS and its ability to incorporate multiple sample intake methods allows us to continually expand and adapt the libraries used by our business units for the identification of compounds of interest in new applications of our AMS Technology. MS is widely used in various industries, including pharmaceuticals, biotechnology, environmental analysis, and materials science, for quality control, research, and development purposes. Historically, these purposes have required high rates of precision which has increased the size, cost, and complexity of legacy MS equipment. Our core AMS Technology originated from a device specifically designed and manufactured for installation in the International Space Station (“ISS”) to monitor the quality of the air circulating within the ISS. 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 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. We have translated the compact, lightweight, and low voltage requirements of the ISS into our current products targeting a much broader array of government agency adoption as well as the variety of industries that can benefit from on-site and in-line MS. 1 st Detect was the first subsidiary successful at licensing, developing, and selling the AMS Technology. Similar to 1 st Detect, each of our business units is developing and delivering MS devices focused on an industry specific use case of the AMS Technology. We also provide our customers with consumable products that are necessary to successfully operate our devices. Routine maintenance and warranty programs are also available to our customers. 11 Table of Contents Gas Chromatography Gas chromatography is used to separate, analyze and quantify compounds that can be vaporized without decomposition. A compound passes through a column and interacts causing them to travel at different rates and thereby separating them. These separated compounds can be detected, recorded, and studied. The separation is determined by the volatility of the compound. GC is a cornerstone application in many scientific and industrial fields. This application offers a wide range of use cases such as real-time fence-line monitoring at chemical plants, rapid disaster response, contamination tracking and emergency safety assessments. GC is used in various industries, including oil & gas, manufacturing, industrial hygienists and environmental consulting firms. Our on-site, portable technology is designed to deliver real-time, on-site data for immediate analysis. The combined GC and MS technology with rugged, portable design delivers lab-grade accuracy in the most demanding environments. These products address the rapidly growing demand for on-site, real-time air, water, and soil analysis. Customers, Sales, and Marketing 1 st Detect Corporation Marketing efforts at 1 st Detect are currently focused on the variety of markets that are seeking: ● Increased uptime in detection equipment ● Expanding library of detectable explosive and narcotic compounds and threats Examples of these markets include foreign airports, commercial companies in aviation and cargo security, law enforcement agencies, and security organizations responsible for the protection of sensitive facilities. We employ both direct sales and channel sales through distributors. We now have units deployed in 37 locations in 16 countries. AgLAB Inc. AgLAB uses direct and channel sales. The lease program that we initiated this year with SC Labs is an example of a channel sales program. We do plan to engage with additional channel partners, largely companies with existing distribution channels in the hemp and cannabis market, to help sell our products to target customers. BreathTech Corporation We believe commercialization of BreathTech Corporation with the AMS Technology would require many years and significant investment due to regulatory requirements. As such, we have determined to deploy capital instead to our other subsidiaries. Pro-Control, Inc. Currently, Pro-Control uses only direct sales with proof of concept and trial engagements being conducted with companies in close proximity to our Austin, Texas headquarters. We intend to use regional sales teams assigned to geographic territories with a density of manufacturing. There is a high density of food, petrochemical, chemical, and industrial companies within a few hours driving radius of Austin. EN-SCAN, Inc. EN-SCAN appeals to a wide range of industries including environmental consulting firms, government agencies, industrial facilities, and academic institutions. These users benefit from the portability, ruggedness, and precision of EN-SCAN’s devices, which eliminate the need for off-site lab testing and streamline compliance and remediation efforts. To enhance customer experience, EN-SCAN can offer training programs, data integration support, and a centralized portal for device management and analytics. 12 Table of Contents Competition 1 st Detect Corporation Competition for the TRACER 1000 comes primarily from IMS-based ETDs. We have several competitors that sell IMS-based ETDs whose companies are much larger than us, with well-established sales forces and offering a wider range of security products; however, based on industry discussions and our field trials we believe the TRACER 1000 has a number of attributes that are superior to competing products. 1 st Detect’s TRACER 1000 ● Near-zero false alarms ● Limitless library expansion ● High uptime and robustness ● Fast cleardown and near zero false alarms increase throughput ● Confirmatory technology AgLAB Inc. The currently available technology that we believe to be the only direct competition to our MS-based system is high-performance liquid chromatography. We believe the AgLAB-1000 series of products offers a more customer-friendly interface, quicker results, and, once the AgLAB-1000-D1 is launched, the ability to provide closed loop process control, ensuring maximum yield and product quality. BreathTech Corporation The BreathTest-1000 product is designed to screen for VOC metabolites in a person’s breath and which could indicate the person may have a compromised condition. Given that breath samples are quick, inexpensive, and painless, we anticipate that the BreathTest-1000 could help screen for signs of disease. We do not see this as competing with traditional tests but supplementing and improving medical care. Pro-Control, Inc. Manufacturers may deploy the legacy, sophisticated MS equipment available from a number of global OEM’s or send samples to laboratories for off-site testing. In either instance, the time from sample extraction to results will be measured in hours or days. The AMS Technology used by Pro-Control simplifies MS, thereby enabling more users to take advantage of its capabilities with cycle times measured in minutes. We intend for this approach to create new markets where MS has not been adopted in the past due to the complexities presented by the offerings from legacy OEM’s. These OEM’s include ABB, Siemens, Emerson, Thermo Fisher Scientific, Endress and Hauser, Perkin Elmer, Mettler Toledo, PAC LP, Horiba Process Analyzers, and AMETEK. Customers may have MS adopted but are not using it for process adjustment closer to the manufacturing process, but instead for offline quality control and adjustments to the finished product. In these instances, the analytical capabilities are located in central analytical labs and our intention is to place this testing capability in the hands of the operations personnel to get as close to real time analysis as possible on the factory floor. EN-SCAN, Inc. Competitors may include those that are established providers of environment testing equipment, especially those that offer portable GC-MS devices. EN-SCAN differentiates itself through its proprietary ATi Gas Chromatograph and AMS Technology, on-site, rugged design tailored for harsh field conditions, and a product lineup that spans handheld, fenceline, and rugged lab-grade instruments. Its emphasis on real-time, on-site analysis and cost efficiency positions in the environmental testing market. LP&L Corporation The commercial lunar and space industries are characterized by rapid and disruptive technological change, evolving industry standards, the emergence of new and well-funded competitors, and frequent new product and service introductions. The markets we intend to enter are expected to attract significant competition from commercial entities and government-sponsored programs, many of which have substantially greater financial, technical, manufacturing, marketing and personnel resources than we do. Such markets are rapidly evolving and intensely competitive, and we face competition from a range of established and emerging companies, including large, well-capitalized technology companies and aerospace firms, including foreign competitors. Many of our current and potential competitors have significantly greater resources and more advanced operational capabilities than we do. For example, Space Exploration Technologies Corp. (“SpaceX”) is substantially better capitalized than us and possesses substantial vertical integration across launch, spacecraft manufacturing and mission operations, which provides it with significant cost and schedule advantages that could enable it to offer competing lunar infrastructure services at lower prices or on faster timelines than we are able to achieve. Other competitors, including Blue Origin, Intuitive Machines and international space agencies, are also pursuing lunar surface operations and may establish infrastructure or secure customer commitments before we are able to deploy our planned systems. Because our Lunar Initiatives remain in the explorative planning and design stage, we have not yet demonstrated the technical feasibility of our planned offerings, potential customer base or generated any revenue from our Lunar Initiatives, and we may be unable to compete effectively against entities that are further advanced in their lunar programs. In addition, the award processes for government programs such as Appendix A: Lunar Enabling Infrastructure Accelerator (“Appendix A Program”) and NASA’s Commercial Lunar Payload Services 2 program (“CLPS2 Program”) are highly competitive, subject to extensive evaluation criteria, and influenced by factors beyond our control, including government budgetary constraints, shifting policy priorities, the number and quality of competing proposals, and the discretion of the awarding agency. 13 Table of Contents Research and Development Astrotech Technologies, Inc. We invest considerable resources into our internal research and development (“R&D”) functions. Much of our R&D investment is devoted to the cross-platform AMS Technology as the R&D team continually works to develop new derivative products, improve system functionality and reliability, optimize design, reduce cost, and streamline and simplify the software and user experience. Each market, however, typically requires unique sample introduction technology, library development, and customized adjustments to the user interface. 1 st Detect Corporation While 1 st Detect’s TRACER 1000 is fully commercialized, we continue to invest in library development which resulted in the launch of our narcotics detector. We continue to develop our library to further enhance our offering. AgLAB Inc. The AgLAB-1000 series uses the core AMS Technology and is continuing its development of its product line to include other valuable products specific to the hemp and cannabis industry. When complete, the AgLAB-1000-D1 will be an inline process control unit meaning it will be integrated directly into the distillation equipment. BreathTech Corporation The BreathTest-1000 employs the core AMS Technology. BreathTech R&D activities are being devoted to sample introduction and library development, which is needed to identify the specific compounds present in the breath that are indicative of the presence of a compromised condition including infections. Pro-Control, Inc. Pro-Control is in the early stages of using the core AMS Technology. It is refining its product line to include other valuable products and developing its library for chemical manufacturers. En-Scan, Inc. EN-SCAN is selling a new line of instruments built for environmental testing using its proprietary ATi GC and AMS Technology for outdoor field work for on-site, real-time air, water, and soil analysis providing instant feedback for accurate contamination source location and migration. EN-SCAN’s commitment to innovation is reflected in its active R&D efforts. These R&D advancements not only strengthen EN-SCAN’s competitive edge but also open new opportunities in customer engagement, sales growth, and marketing differentiation. 14 Table of Contents Certain Regulatory Matters We are subject to United States federal, state, and local laws and regulations designed to protect the environment and to regulate the discharge of materials into the environment. We are also beholden to certain regulations designed to protect our domestic technology from unintended foreign exploitation and regulate certain business practices. We believe that our policies, practices, and procedures are properly designed to prevent unreasonable risk of environmental damage and consequential financial liability. Our operations are also subject to various regulations under federal laws regarding the international transfer of technology, as well as to various federal and state laws related to business operations. In addition, we are subject to federal contracting procedures, audit, and oversight. Compliance with environmental laws and regulations and technology export requirements has not had and, we believe, will not have in the future, material effects on our capital expenditures, earnings, or competitive position. Federal regulations that impact our operations include, but are not limited to, the following: Foreign Corrupt Practices Act . The Foreign Corrupt Practices Act establishes rules for U.S. companies doing business internationally. Compliance with these rules is achieved through established and enforced corporate policies, documented internal procedures, and financial controls. Iran Nonproliferation Act of 2000 . This act authorizes the President of the United States to take punitive action against individuals or organizations known to be providing material aid to weapons of mass destruction programs in Iran. Federal Acquisition Regulations . Goods and services provided by us to U.S. Government agencies are subject to Federal Acquisition Regulations (“FAR”). These regulations provide rules and procedures for invoicing, documenting, and conducting business under contract with such entities. The FAR also subjects us to audit by federal auditors to confirm such compliance. Truth in Negotiations Act . The Truth in Negotiations Act was enacted for the purpose of providing full and fair disclosure by contractors in the conduct of negotiations with the U.S. Government. The most significant provision included in the Truth in Negotiations Act is the requirement that contractors submit certified cost and pricing data for negotiated procurements above a defined threshold. Export Administration Act . This act provides authority to regulate exports, to improve the efficiency of export regulation, and to minimize interference with the ability to engage in commerce. Export Administration Regulations. The Export Administration Regulations govern whether a person or company may export goods from the U.S., re-export goods from a foreign country, or transfer goods from one person or company to another in a foreign country. Medical Device Regulation FDA Premarket Clearance and Approval Requirements. Unless an exemption applies, each medical device, to be lawfully commercially distributed in the U.S., requires either FDA clearance of a 510(k) premarket notification submission, granting of a de novo request, or premarket application (“PMA”) approval. Under the Federal Food Drug and Cosmetic Act (“FDCA”), administered by the FDA, medical devices are classified into one of three classes, Class I, Class II, or Class III, depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory controls needed to ensure its safety and effectiveness. Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s general controls for medical devices, which include compliance with the applicable portions of the Quality Management System Regulation (“QMSR”), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Some Class I devices may require premarket notification to the FDA. Class II devices are moderate risk devices and are subject to the FDA’s general controls, and certain special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries, and FDA guidance documents. While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification demonstrating that the device is “substantially equivalent” to either a device that was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976 were enacted, or another commercially available device that was cleared to through the 510(k) or de novo process. 15 Table of Contents Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, life-supporting or some implantable devices, or devices that have a new intended use, or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA. For a device that is Class III by default (because it is a novel device that was not previously classified and has no predicate), the device manufacturer may request that FDA reclassify the device into Class II or Class I via a de novo request. 510(k) Marketing Clearance. To obtain 510(k) clearance, a premarket notification submission must be submitted to the FDA demonstrating that the proposed device is “substantially equivalent” to a predicate device. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I (e.g., via the de novo classification process), or a device that was previously cleared through the 510(k) process. The FDA’s 510(k) review process usually takes from three to six months but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. If the FDA agrees that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to market the device. After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, a de novo request or PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo or a PMA in the first instance, but the FDA can review that decision and disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA may take a wide range of enforcement actions, including, but not limited to, issuing a warning letter, withdrawing existing 510(k) clearance(s), and/or requesting a recall of the modified device. In addition, the manufacturer must cease marketing of the modified device until FDA has cleared or approved a new 510(k), de novo or PMA for the change, if ever. Also, in these circumstances, the manufacturer may be subject to significant regulatory fines or penalties. De Novo Process. If a previously unclassified new medical device does not qualify for the 510(k) pre-market notification process because no predicate device to which it is substantially equivalent can be identified, the device is automatically classified into Class III. The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA. Prior to the enactment of the Food and Drug Administration Safety and Innovation Act (“FDASIA”) in July 2012, a medical device could only be eligible for de novo classification if the manufacturer first submitted a 510(k) pre-market notification and received a determination from the FDA that the device was not substantially equivalent. FDASIA streamlined the de novo classification pathway by permitting (under Section 513(f)(2) of the FDCA) manufacturers to request de novo classification directly without first submitting a 510(k) pre-market notification to the FDA and receiving a not substantially equivalent determination. FDASIA sets a review time for FDA of 120 days following receipt of the de novo application, but FDA does not always meet this timeline and has publicly only committed to a review of 150 days for 50% of applications. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed. If the FDA agrees with the down-classification, the de novo applicant will then receive authorization to market the device, and a classification regulation will be established for the device type. The device can then be used as a predicate device for future 510(k) submissions by the manufacturer or a competitor. In October 2021, FDA enacted regulations implementing the above-referenced FDCA provisions governing the de novo reclassification process. 16 Table of Contents Premarket Approval Process. Class III devices require submission through the PMA process before they can be marketed. The PMA process is more demanding than the 510(k) premarket notification process. Under the PMA pathway, the manufacturer must demonstrate that the investigational device is safe and effective for the target indication(s) for use, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials conducted under a valid investigational device exemption (“IDE”). The PMA must also contain, among other things, a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA submission, the FDA determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years. An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA will generally conduct a preapproval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QMSR. The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA application constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). The FDA may approve a PMA application with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. Clinical Trials. Clinical trials are almost always required to support de novo or a PMA and are sometimes required to support a 510(k) submission. All clinical investigations of investigational devices to determine safety and effectiveness must be conducted in accordance with the FDA’s IDE regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA notifies the manufacturer that the investigation may not begin or is subject to a clinical hold. If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board ("IRB") for each clinical site. The IRB is responsible for the initial and continuing review of the IDE and may pose additional requirements for the conduct of the trial. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. An IDE supplement must be submitted to and approved by the FDA before a sponsor or investigator may make a change to the investigational plan. 17 Table of Contents During a clinical trial, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping, and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements. Additionally, after a trial begins, we, the FDA, or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Post-market Regulation. After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include (among others): ● establishment registration and device listing with the FDA; ● state licensure requirements for the manufacturing and distribution of medical devices; ● FDA’s QMSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; ● FDA labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, provide adequate directions for use, and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; ● FDA regulations and guidance pertaining to clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; ● FDA’s medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ● FDA’s correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● FDA regulations requiring Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; ● FDA post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device; ● the federal Physician Sunshine Act and various state and foreign laws on reporting remunerative relationships with health care professionals, teaching hospitals, and other applicable entities; ● the federal Anti-Kickback Statute (and similar state laws) prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as Medicare or Medicaid. A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; and ● the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government. The government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statute. 18 Table of Contents We may be subject to similar foreign laws that may include applicable post-marketing requirements such as safety surveillance. With respect to any medical devices that we may commercialize in the U.S. in the future, our manufacturing processes, or those of any contract manufacturer that we engage, will be required to comply with the applicable portions of the QMSR, which cover the methods and the facilities, controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use. The QMSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls. The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ● warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; ● recalls, withdrawals, or administrative detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production (due to violations of the QMSR or other applicable regulations) refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; ● withdrawing 510(k) clearances or PMA approvals that have already been granted; ● refusal to grant export or import approvals for our products; or ● criminal prosecution. Regulation of Medical Devices in the EEA Medical devices placed on the market in the European Economic Area ("EEA") must meet the relevant essential requirements laid down in Annex I of Directive 93/42/EEC concerning medical devices ("the Medical Devices Directive"). The most fundamental essential requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others. In addition, the device must achieve the performances intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various standards applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical equipment and product standards for certain types of medical devices. There are also harmonized standards relating to design and manufacture. While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter. Compliance with a standard developed to implement an essential requirement also creates a rebuttable presumption that the device satisfies that essential requirement. To demonstrate compliance with the essential requirements laid down in Annex I to the Medical Devices Directive, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification. Conformity assessment procedures require an assessment of available clinical evidence, literature data for the product, and post-market experience in respect of similar products already marketed. Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-declare the conformity of its products with the essential requirements (except for any parts which relate to sterility or metrology), a conformity assessment procedure requires the intervention of a Notified Body. Notified bodies are often separate entities and are authorized or licensed to perform such assessments by government authorities. The notified body would typically audit and examine a product’s technical dossiers and the manufacturers’ quality system. If satisfied that the relevant product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE Mark to the device, which allows the device to be placed on the market throughout the EEA. Once the product has been placed on the market in the EEA, the manufacturer must comply with requirements for reporting incidents and field safety corrective actions associated with the medical device. 19 Table of Contents In order to demonstrate safety and efficacy for their medical devices, manufacturers must conduct clinical investigations in accordance with the requirements of Annex X to the Medical Devices Directive, Annex 7 of the Active Implantable Medical Devices Directive, and applicable European and International Organization for Standardization standards, as implemented or adopted in the EEA member states. Clinical trials for medical devices usually require the approval of an ethics review board and approval by or notification to the national regulatory authorities. Both regulators and ethics committees also require the submission of serious adverse event reports during a study and may request a copy of the final study report. On April 5, 2017, the European Parliament passed the Medical Devices Regulation (Regulation 2017/745), which repeals and replaces the E.U. Medical Devices Directive and the Active Implantable Medical Devices Directive. Unlike directives, which must be implemented into the national laws of the EEA member States, the regulations would be directly applicable, i.e., without the need for adoption of EEA member State laws implementing them, in all EEA member States and are intended to eliminate current differences in the regulation of medical devices among EEA member States. The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The Medical Device Regulation will become applicable in May 2021. The new regulations: ● strengthen the rules on placing devices on the market and reinforce surveillance once they are available; ● establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the market; ● improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; ● set up a central database to provide patients, healthcare professionals, and the public with comprehensive information on products available in the E.U.; ● strengthened rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market. In the EU, member states are responsible for enforcing the EU’s medical device rules and for ensuring that only compliant medical devices are placed on the market or put into service in their jurisdictions. They have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant devices. They also have the power to bring enforcement action against companies or individuals for breaches of the device rules. Non-compliance may also result in Notified Bodies revoking any certificate of conformity that they have issued for a device or the manufacturer’s quality system. We are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: ● design, development, and manufacturing; ● product standards; ● product safety; ● product safety reporting; ● marketing, sales, and distribution; ● packaging and storage requirements; ● labeling requirements; ● content and language of instructions for use; ● clinical trials; 20 Table of Contents ● record keeping procedures; ● advertising and promotion; ● recalls and field corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● import and export restrictions; ● tariff regulations, duties, and tax requirements; ● registration for reimbursement; and ● necessity of testing performed in country by distributors for licensees. The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements. Federal, State, and Foreign Fraud and Abuse and Physician Payment Transparency Laws. In addition to the applicable FDA regulations governing the research, development, manufacture, marketing and sale of our products, if approved and commercialized, we may become subject to various federal and state healthcare laws and regulations. These laws and regulations are intended to, among other things, prevent fraud and abuse in the healthcare industry, promote transparency in interactions among healthcare industry participants, and protect government healthcare programs from improper expenditures. Applicable healthcare laws and regulations may include, but are not limited to, the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward referrals of items or services reimbursable by a federal healthcare program; the federal False Claims Act, which imposes liability for knowingly presenting, or causing to be presented, false or fraudulent claims for payment to the federal government; the Civil Monetary Penalties Law, which authorizes the imposition of penalties for a variety of prohibited conduct involving federal healthcare programs; the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”), which establishes certain requirements relating to healthcare fraud and abuse as well as the privacy and security of protected health information; the federal Physician Payments Sunshine Act, which requires manufacturers of certain healthcare products to report payments and other transfers of value provided to physicians, teaching hospitals, and certain other healthcare providers; and analogous state and foreign laws and regulations relating to anti-kickback and fraud and abuse practices, false claims, transparency and reporting obligations, and other healthcare compliance matters. These laws and regulations may affect a wide range of business activities, including research and development activities, clinical research activities, product commercialization efforts, sales and marketing programs, interactions with healthcare professionals and healthcare organizations, and arrangements with distributors and other third parties. 21 Table of Contents Many foreign countries have similar laws relating to healthcare fraud and abuse. Foreign laws and regulations may vary greatly from country to country. For example, the advertising and promotion of our products is subject to E.U. directives concerning misleading and comparative advertising and unfair commercial practices, as well as other EEA Member State legislation governing the advertising and promotion of medical devices. These laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. Data Privacy and Security Laws . In the future, we may also be subject to various federal, state, and foreign laws that govern the collection, use, storage, processing, disclosure, and protection of personal and other sensitive information including certain protected health information. Such laws and regulations may include, among others, the E.U. General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”) and similar state privacy laws, HIPAA, and analogous state laws, many of which may apply more broadly than HIPAA in the U.S. Such laws and regulations are evolving and may impose significant compliance obligations, restrictions on our business practices, and increased costs. Failure to comply with applicable data privacy and security requirements could result in regulatory investigations, enforcement actions, litigation, reputational harm, and other adverse effects on our business, financial condition, and results of operations. 22 Table of Contents Healthcare Reform. The U.S. and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products, if approved and commercialized, profitably. Among policy makers and payors in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. Current and future legislative proposals, on both a national and state level, to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products, if approved and commercialized. The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our medical products, to the extent any are authorized for commercialization in the United States. We expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure. US Government Regulation of the Cannabis Industry While we do not generate any revenue from the direct sale of cannabis products, we offer our services and solutions to cultivators operating within the cannabis industry. Marijuana is a Schedule I controlled substance and is illegal under federal law. Even in those states in which specific uses of marijuana have been legalized, such as medical marijuana or for adult recreational purposes, its use remains a violation of federal laws, subject to the narrow exception carved out by the 2018 Farm Bill. A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The Department of Justice defines Schedule I controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the Controlled Substances Act with respect to marijuana, persons that are charged with distributing, possessing with intent to distribute, or growing cannabis in violation of federal law could be subject to fines and terms of imprisonment, the maximum being life imprisonment and a $50 million fine. Any unfavorable change in the federal government’s enforcement of current federal laws could cause significant financial damage to the industry. While we do not intend to directly harvest, manufacture, distribute or sell cannabis or cannabis products, we may be detrimentally affected by a change in enforcement by the federal or state governments. 23 Table of Contents In the past, the Obama administration took the position that it was not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana. The Trump administration revised this policy but made no major changes in enforcement. Although President Biden stood for decriminalization and descheduling during his campaign, his administration has not formulated an explicit policy on cannabis. The Biden administration has implemented pardons for past federal cannabis possession convictions and encouraged governors to do the same. Also, in May 2021 the Drug Enforcement Administration approved licensed facilities to grow cannabis for the purpose of medical research, and on December 2, 2022, President Biden signed the Medical Marijuana and Cannabidiol Research Expansion Act. This act is “the first standalone marijuana-related bill approved by both chambers of the United States Congress” and allows medical marijuana research. The act requires the Drug Enforcement Administration to register researchers and suppliers of cannabis for medical research in a timely manner, who will then be able to legally manufacture, distribute, dispense and possess the substance. It also creates a mechanism for FDA approval of drugs derived from the cannabis plant and “protects doctors who may now discuss the harms and benefits of using cannabis and cannabis derivatives.” It also requires the Department of Health and Human Services to investigate the medical utility of cannabis and barriers that exist to conducting research, and requires the U.S. Attorney General to conduct an annual review to ensure that cannabis is being adequately produced for research purposes. In January 2023, the FDA stated that given the growing cannabidiol (CBD) products market, it had convened a high-level internal working group to explore potential regulatory pathways for CBD products and is prepared to find a new regulatory pathway for CBD to balance individuals’ desire for access to CBD products with the regulatory oversight needed to manage risks. In May 2024, the U.S. Department of Justice and the Drug Enforcement Administration published a proposed rule to move marijuana from Schedule I to Schedule III under the Controlled Substances Act. On December 18, 2025, President Trump issued an executive order directing the Attorney General to take all necessary steps to expeditiously move marijuana from Schedule I to Schedule III under the Controlled Substances Act. As of the date of this Annual Report on Form 10-K, no final rule has been adopted, and the status and timing of any final rulemaking action remain uncertain. Notwithstanding the actions of the current or prior administrations, it should be expected that the Department of Justice will continue to enforce the Controlled Substances Act with respect to cannabis under established principles in setting their law enforcement priorities to prevent: ● the distribution of cannabis products, such as marijuana, to minors; ● criminal enterprises, gangs and cartels receiving revenue from the sale of cannabis; ● the diversion of cannabis products from states where it is legal under state law to states where it is not legal under state law; ● the use of state-authorized cannabis activity as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; ● violence and the use of firearms in the cultivation and distribution of cannabis products; ● driving while impaired and the exacerbation of other adverse public health and safety consequences associated with cannabis product usage; ● the growing of cannabis on public lands; and ● cannabis possession or use on federal property. Since the use of marijuana is illegal under federal law, most federally chartered banks will not accept deposit funds from businesses involved with marijuana. Consequently, businesses involved in the marijuana industry generally bank with state-chartered banks and credit unions to provide banking to the industry. In 2014, Congress passed a spending bill containing a provision (the Rohrabacher-Farr amendment and sometimes referred to as the Rohrabacher-Blumenauer Amendment) blocking federal funds and resources allocated under the federal appropriations bills from being used to “prevent such States from implementing their own State medical marijuana laws.” The Rohrabacher-Blumenauer Amendment, however, did not codify any federal protections for medical marijuana patients and producers operating within state law. The Justice Department maintains that it can still prosecute violations of the federal cannabis laws and continue cases already in the courts. However, state laws do not supersede the prohibitions set forth in the federal drug laws. The Rohrabacher-Blumenauer Amendment must be re-enacted every year. In order to participate in either the medical or the adult use aspects of the cannabis industry, all businesses and employees must obtain licenses from the state and, for businesses, local jurisdictions as well. As an example, Colorado issues four types of business licenses including cultivation, manufacturing, dispensing, and testing. In addition, all owners and employees must obtain an occupational license to be permitted to own or work in a facility. All applicants for licenses undergo a background investigation, including a criminal record check for all owners and employees. 24 Table of Contents Colorado has also enacted stringent regulations governing the facilities and operations of cannabis businesses that are involved with the plant and its products. All facilities are required to be licensed by the state and local authorities and are subject to comprehensive security and surveillance requirements. In addition, each facility is subject to extensive regulations that govern its businesses practices, which includes mandatory seed-to-sale tracking and reporting, health and sanitary standards, packaging and labeling requirements, and product testing for potency and contaminants. Laws and regulations affecting the medical marijuana industry are constantly changing, which could detrimentally affect our proposed operations. Local, state and federal medical marijuana and hemp laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. It is also possible that regulations may be enacted in the future that will be directly applicable to our business. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business. Regulatory Compliance and Risk Management We maintain compliance with regulatory requirements and manage our risks through a program of compliance, awareness, and insurance, which includes maintaining certain insurances and a continued emphasis on safety to mitigate any risks. Employees As of June 30, 2026, we employed 28 employees, none of which were covered by any collective bargaining agreements. Website For more information on the Company’s business operations, please visit our company website at www.astrotechcorp.com. An investment in our securities involves a high degree of risk. This annual report contains a discussion of the risks applicable to an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in this annual report. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities. 25 Table of Contents