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What changed in ASTROTECH Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ASTROTECH Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+477 added−426 removedSource: 10-K (2023-09-28) vs 10-K (2022-09-15)

Top changes in ASTROTECH Corp's 2023 10-K

477 paragraphs added · 426 removed · 269 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

74 edited+61 added−23 removed109 unchanged
Biggest changeThe Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and including implementing regulations (collectively, “HIPAA”) also created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Biggest changeThe Civil Monetary Penalty Act of 1981 imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier. 19 Table of Contents The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and including implementing regulations (collectively, “HIPAA”) also created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Clinical trials are almost always required to support de novo or a PMA and are sometimes required to support a 510(k) submission.
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.
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 QSR 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; 14 Table of Contents ● FDA’s medical device reporting ( “MDR”) 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.
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 QSR 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 (“MDR”) 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.
If supply chain shortages become more severe or longer term in nature, our business and results of operations could be adversely impacted; however, we do not expect this issue to materially adversely affect our liquidity position. The long-term impact of the COVID-19 pandemic on our business may not be fully reflected until future periods.
If supply chain shortages become more severe or longer term in nature, our business and results of operations could be adversely impacted; however, we do not expect this issue to materially adversely affect our liquidity position. In addition, the long-term impact of the COVID-19 pandemic on our business may not be fully reflected until future periods.
Due to delays caused by COVID-19, TSA cargo detection testing is ongoing, but has proceeded much more slowly than originally anticipated. As a result, efforts are primarily focused on our other opportunities. TSA cargo detection testing is the final step to be listed on the Air Cargo Screening Technology List (“ACSTL”) as an “approved” device.
Due to delays caused by COVID-19, TSA cargo detection testing is ongoing, but has proceeded much more slowly than originally anticipated. As a result, efforts are primarily focused on our other opportunities. TSA cargo detection testing is the final step to be listed on the Air Cargo Screening Technology List as an “approved” device.
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; ● 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.
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; 18 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.
(“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes.
(“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the distillation processes.
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 that are much larger than us, with well-established sales forces and offering a wider range of security products; however, we believe the TRACER 1000 has a number of attributes that are superior to competing products.
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 Company's are much larger than us, with well-established sales forces and offering a wider range of security products; however, we believe the TRACER 1000 has a number of attributes that are superior to competing products.
Simultaneously, we are exploring how to potentially accelerate our time to market for the BreathTest-1000 via the EUA process, pursuant to the EUA declaration for in vitro diagnostic tests (“IVDs”) that became effective on February 4, 2020, in connection with the public health emergency related to COVID-19.
Simultaneously, we are exploring how to potentially accelerate our time to market for the BreathTest-1000 via the Emergency Use Authorization ("EUA") process, pursuant to the EUA declaration for in vitro diagnostic tests (“IVDs”) that became effective on February 4, 2020, in connection with the public health emergency related to COVID-19.
The majority 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.
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.
As the current generation of IMS technology is replaced, we are working to position the Company as the next-generation solution for the ETD market with the introduction of the world’s first ETD driven by a mass spectrometer.
As the current generation of IMS technology is replaced, we are working to position the Company as the next-generation solution for the ETD market with the introduction of the world’s first ECAC certified ETD driven by a mass spectrometer.
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. We may be subject to similar foreign laws that may include applicable post-marketing requirements such as safety surveillance.
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. 16 Table of Contents We may be subject to similar foreign laws that may include applicable post-marketing requirements such as safety surveillance.
In order for a medical countermeasure, such as an IVD (among others), to be the subject of an EUA, the FDA Commissioner must conclude that, based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing a disease attributable to the agents described above, that the product’s potential benefits outweigh its potential risks and that there is no adequate, approved alternative to the product. 13 Table of Contents Clinical Trials.
In order for a medical countermeasure, such as an IVD (among others), to be the subject of an EUA, the FDA Commissioner must conclude that, based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing a disease attributable to the agents described above, that the product’s potential benefits outweigh its potential risks and that there is no adequate, approved alternative to the product.
With the onset of the COVID-19 pandemic, all testing within the TSA was put on hold; however, we resumed cargo testing during the summer of 2020, and we subsequently announced on September 9, 2020, that the TRACER 1000 passed the non-detection testing portion of the TSA’s ACSQT.
With the COVID-19 pandemic, all testing within the TSA was put on hold; however, cargo testing resumed during the summer of 2020, and the Company subsequently announced on September 9, 2020 that the TRACER 1000 passed the non-detection testing portion of the TSA’s ACSQT.
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 Update As of June 30, 2022, we employed 14 employees, none of which were covered by any collective bargaining agreements.
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 Update As of June 30, 2023, we employed 22 employees, none of which were covered by any collective bargaining agreements.
ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1 st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in breath analysis applications.
ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in breath analysis applications.
On November 14, 2019, we announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, we have received valuable feedback from all programs.
On November 14, 2019, the Company announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, the Company has received valuable feedback from all programs.
In October 2021, FDA enacted regulations implementing the above-referenced FDCA provisions governing the de novo reclassification process. 12 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.
In October 2021, FDA enacted regulations implementing the above-referenced FDCA provisions governing the de novo reclassification process. 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.
Following ECAC certification and our early traction within the cargo market, testing for cargo security continued with the TSA.
Following ECAC certification and the Company’s early traction within the cargo market, testing for cargo security continued with the TSA.
If approved, the TRACER 1000 will be approved for cargo sales in the United States. 6 Table of Contents AgLAB Inc. AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB-1000™ series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes.
If approved, the TRACER 1000 will be approved for cargo sales in the United States. AgLAB Inc. AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with initial focus on optimizing yields in the distillation process.
AgLAB Inc. The AgLAB-1000 series uses the core AMS Technology and is continuing its development of its cannabinoid library. In addition, AgLAB continues to invest in and expand its product line to include other valuable products specific to the hemp and cannabis industry. BreathTech Corporation The BreathTest-1000 employs the core AMS Technology.
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. BreathTech Corporation The BreathTest-1000 employs the core AMS Technology.
AgLAB holds an exclusive AMS Technology license from ATI for agriculture applications. ● BreathTech Corporation (“BreathTech”) is developing a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection. BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications.
AgLAB holds an exclusive AMS Technology license from ATI for agriculture applications. ● BreathTech Corporation (“BreathTech”) is developing a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate a compromised condition including but not limited to a bacterial or viral infection.
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. 16 Table of Contents In the European Union, 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.
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.
Trends and Uncertainties - COVID-19 We are subject to risks and uncertainties as a result of the COVID-19 pandemic. To date, we have seen delays with respect to the TSA certification process and parts of our supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation.
Trends and Uncertainties To date, we have seen delays with respect to the TSA certification process and parts of our supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation.
The intellectual property includes 23 granted patents and one additional patent in process 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.
The intellectual property includes 18 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.
BreathTech Corporation The BreathTest-1000 product that is currently under development is being designed to provide an inexpensive, non-invasive screening device for a variety of diseases, including COVID-19, that can offer results on-site in a very short period of time.
BreathTech Corporation The BreathTest-1000 product that is currently under development 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.
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 QSR 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. 15 Table of Contents 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").
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 QSR 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.
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 .
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 .
We believe there remains a strong market need for a quick, frequent or daily screening test for use in high density and critical locations, especially with additional COVID-19 variants and other diseases continuing to pose new or reemerging threats. Most currently available tests either take too long or are invasive and painful.
We believe there is strong value for this easy to use screener in high density and critical locations, especially with additional COVID-19 variants and other diseases continuing to pose new or reemerging threats. Most currently available tests either take too long or are invasive and painful.
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.
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. 15 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.
We employ both direct sales and channel sales through distributors. We now have units deployed in 20 locations in 11 countries. While we have had some degree of success with sales, much of the pipeline has seen delays caused by the COVID-19 pandemic. AgLAB Inc. Currently, AgLAB uses only direct sales.
We now have units deployed in 29 locations in 14 countries. While we have had some degree of success with sales, the sales cycles are normally long and much of the pipeline has seen delays caused by the COVID-19 pandemic. AgLAB Inc. Currently, AgLAB uses only direct sales.
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.
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.
These laws include, without limitation, foreign, federal, and state anti-kickback and false claims laws, as well as transparency laws regarding payments or other items of value provided to healthcare providers. 17 Table of Contents The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.
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.
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.
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.
If the FDA agrees that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to market the device. 13 Table of Contents 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’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.
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.
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 the following: Foreign Corrupt Practices Act . The Foreign Corrupt Practices Act establishes rules for U.S. companies doing business internationally.
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. 12 Table of Contents Federal regulations that impact our operations include, but are not limited to, the following: Foreign Corrupt Practices Act .
Products and Services 1 st Detect Corporation The TRACER 1000 is the first MS-ETD certified by ECAC. 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.
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.
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 ("MDD"), Annex 7 of the Active Implantable Medical Devices Directive ("AIMDD"), and applicable European and International Organization for Standardization standards, as implemented or adopted in the EEA member states.
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. 17 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 ("MDD"), Annex 7 of the Active Implantable Medical Devices Directive ("AIMDD"), and applicable European and International Organization for Standardization standards, as implemented or adopted in the EEA member states.
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.
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.
We currently market the TRACER 1000 to countries that accept ECAC certification. If we obtain TSA certification and are listed on the ACSTL as an “approved” device, we plan to also market and sell the TRACER 1000 to those countries that accept TSA certification. AgLAB Inc. Initial interest for the AgLAB-1000 series has come from the hemp and cannabis industry.
We currently market the TRACER 1000 to countries that accept ECAC certification. If we obtain TSA certification and are listed on the ACSTL as an “approved” device, we plan to also market and sell the TRACER 1000 to those countries that accept TSA certification. 9 Table of Contents AgLAB Inc.
The timeframe for receiving feedback from a pre-submission request is approximately 70 calendar days but may be shorter or longer.
The pre-submission is a formal mechanism for requesting feedback from the FDA prior to submitting a medical device application. The timeframe for receiving feedback from a pre-submission request is approximately 70 calendar days but may be shorter or longer.
We continue to manage production, to secure alternative supplies where available, and to take other proactive actions. We believe that we will be able to pass the inflation caused by raw materials shortages and increased shipping costs to our customers by increasing the price of our instruments.
We believe that we will be able to pass the inflation caused by raw materials shortages and increased shipping costs to our customers by increasing the price of our instruments.
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.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. 14 Table of Contents 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.
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 infections. We have been in correspondence with the FDA regarding how the FDA will classify the BreathTest-1000 and the classification has not yet been determined.
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 a compromised condition including infections. We have been in correspondence with the U.S.
In the United States, we are working with the U.S. Transportation Security Administration (“TSA”) towards air cargo certification. On March 27, 2018, we announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, we announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports.
On March 27, 2018, the Company announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, the Company announced that the TRACER 1000 entered into testing with the TSA for passenger screening at airports.
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. 19 Table of Contents 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.
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.
New tools to aid in the battle against COVID-19 and other diseases remain of the utmost importance to help more quickly identify that an infection may be present, and BreathTech, in conjunction with Cleveland Clinic, is developing a quick and easy to use device to help determine the presence of infections.
The Company believes that new tools to aid in the battle against COVID-19 and other diseases remain of the utmost importance to help more quickly identify that an infection may be present.
The market need for a quick and painless test is considered significant in the following target markets: ● Hospitals ● Military ● Nursing homes ● Sporting events ● Airlines ● Performing arts venues ● Hotels ● Convention and conference centers ● Cruise lines ● Schools BreathTech is also working to expand the capabilities of the BreathTest-1000 to detect certain bloodstream and bacterial infections.
The market need for a quick and painless test is considered significant in the following target markets: ● Hospitals ● Military ● Nursing homes ● Sporting events ● Airlines ● Performing arts venues ● Hotels ● Convention and conference centers ● Cruise lines ● Schools Products and Services 1 st Detect Corporation The TRACER 1000 is the first MS-ETD certified by ECAC.
The BreathTest-1000 is being designed to detect VOC metabolites in a person’s breath that could indicate they may have an infection using a disposable collection tube. Customers, Sales, and Marketing 1 st Detect Corporation Marketing efforts at 1 st Detect are currently focused on foreign airports and commercial companies in aviation and cargo security.
The BreathTest-1000 is being designed to detect infectious VOC metabolites in a person’s breath. 10 Table of Contents Customers, Sales, and Marketing 1 st Detect Corporation Marketing efforts at 1 st Detect are currently focused on foreign airports and commercial companies in aviation and cargo security. We employ both direct sales and channel sales through distributors.
We believe that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). We further believe that IMS-based ETDs are fraught with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources.
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.
Leveraging their expertise, Sanmina has helped to improve the manufacturability and reliability of our systems. 1 st Detect Corporation 1 st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide.
ATI has contracted with various vendors to assist with the further development of our mass spectrometer products including the manufacturability and reliability of our systems. 1 st Detect Corporation 1st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world’s first mass spectrometry (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”).
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.
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.
General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”), and restrict the use and disclosure of patient health information, such as HIPAA, and analogous state laws, many of which apply more broadly than HIPAA, in the U.S. 18 Table of Contents HIPAA established uniform standards governing the conduct of certain electronic healthcare transactions and requires certain entities, called covered entities (as defined under HIPAA), to comply with standards that include the privacy and security of Protected Health Information (“PHI”).
General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”), and restrict the use and disclosure of patient health information, such as HIPAA, and analogous state laws, many of which apply more broadly than HIPAA, in the U.S.
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. 11 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.
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.
In June 2022, we expanded our existing study that initially focused on COVID-19 with Cleveland Clinic to use the BreathTest-1000 to screen for a variety of diseases spanning the entire body. The project will focus on detecting bloodstream infections, respiratory infections such as influenza types A and B and RSV, carriage of Staphylococcus aureus, and C. diff infections.
In June 2022, the Company expanded its existing study that initially focused on COVID-19 with Cleveland Clinic to use the BreathTest-1000 to screen for a variety of diseases spanning the entire body.
AgLAB has launched the first of several planned products that have been designed to assist in the oil extraction and 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.
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.
In addition, California enacted the CCPA, effective January 1, 2020, which, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the civil monetary penalty paid by the violator. 20 Table of Contents In addition, California enacted the CCPA, effective January 1, 2020, which, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
BreathTech Corporation The BreathTest-1000 is being developed, in conjunction with Cleveland Clinic, to provide an inexpensive, non-invasive screening device for a variety of diseases, including COVID-19 and its variants as well as associated lung diseases.
Currently under development is the AgLAB-1000-D1. When completed, this instrument will be an inline process control unit. BreathTech Corporation The BreathTest-1000 is being developed, in conjunction with Cleveland Clinic, to provide an inexpensive, non-invasive screening device for a variety of diseases, including highly contagious diseases like COVID-19 as well as other compromising conditions.
BreathTech Corporation BreathTech, an exclusive licensee of ATI for use in breath analysis, is developing the BreathTest-1000, a breath analysis tool to screen for VOC metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection.
BreathTech Corporation The BreathTest-1000 product that is currently under development is being designed to screen for VOC metabolites. The VOC metabolites are found in a person’s breath and could indicate they may have a compromised condition including but not limited to a bacterial or viral infection.
Authorization, if granted, may take as little as one month or as long as several months, and there is no guarantee that an EUA will be granted for the BreathTest-1000. 10 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.
Authorization, if granted, may take as little as one month or as long as several months, and there is no guarantee that an EUA will be granted for the BreathTest-1000.
AgLAB recently completed several successful field trials to demonstrate that the AgLAB-1000-D2™ can be used in the distillation process to significantly boost the potency and weight yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil manufacturing.
The AgLAB product line is a derivative of the Company’s core AMS Technology. AgLAB has continued to conduct field trials to demonstrate that the AgLAB 1000-D2™ can be used in the distillation process to significantly improve the processing yields of tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) oil during distillation.
The classification will inform the required FDA premarket submission and review process that will follow. If premarket notification (510(k) submission) is required, we intend to submit a pre-submission request to the FDA. The pre-submission is a formal mechanism for requesting feedback from the FDA prior to submitting a medical device application.
Food and Drug Administration ("FDA") regarding how the FDA will classify the BreathTest-1000 and the classification has not yet been determined. The classification will inform the required FDA premarket submission and review process that will follow. If premarket notification (510(k) submission) is required, we intend to submit a pre-submission request to the FDA.
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 .
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”).
We plan to launch a family of “process control” instruments, methods, and solutions that we believe could be valuable additions to many nutraceutical extraction and distillation laboratories.
As part of our growth plan, we also plan to launch a family of “process control” methods and solutions that we believe could be valuable additions to many nutraceutical and pharmaceutical distillation processing plants. 7 Table of Contents Production and processing of hemp and cannabis is a huge, worldwide 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.
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.
Long recognized as the gold standard in chemical detection, mass spectrometry has historically been considered to be too costly, bulky, and cumbersome. In contrast, the AMS Technology has been designed to be comparatively inexpensive, small, and easy to use. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms.
ATI owns and licenses the AMS Technology, the platform mass spectrometry 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.
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 (“HPLC”).
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 (“HPLC”). 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.
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.
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 are currently selling the TRACER 1000 to customers who accept ECAC certification. We have deployed the TRACER 1000 in approximately 20 locations in 11 countries throughout Europe and Asia.
The Company is currently selling the TRACER 1000 to customers who accept ECAC certification. As of June 30, 2023, the Company has deployed the TRACER 1000 in approximately 29 locations in 14 countries throughout Europe and Asia. In the United States, the Company is working with the U.S. Transportation Security Administration (“TSA”) towards air cargo certification.
AgLAB has launched the AgLAB-1000-D2 which is designed to optimize yield during the distillation process. With the AgLAB-1000-D2, a sample is manually introduced into the system for analysis. Currently under development is the AgLAB-1000-D1. When completed, this instrument will be an inline process control unit that will increase yields with additional possibilities in solvent and pesticide detection.
Leveraging the platform AMS Technology, AgLAB has designed its product line to serve distillers in the hemp and cannabis industry. AgLAB has launched the AgLAB-1000-D2 which is designed to be used to determine the optimal settings to increase yield and potency during the distillation process. With the AgLAB-1000-D2, a sample is manually introduced into the system for analysis.
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.
In the European Union, 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.
We have also recently expanded into the airport passenger screening market with sales to a distributor who services a major international airport in Asia in the second quarter of fiscal year 2022. 8 Table of Contents AgLAB Inc. Leveraging the platform AMS Technology, AgLAB is currently designing its product line to serve applications in the hemp and cannabis markets.
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 also continue to garner much interest in the narcotics capabilities of our system and plan to expand sales efforts in this area. AgLAB Inc.
In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID-19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines.
In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains uncertain. We continue to manage production, to secure alternative supplies, and to take other proactive actions.
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Business Developments On August 3, 2021, AgLAB announced that it has hired Joe Levinthal, a hemp and cannabis industry veteran and an expert in mass spectrometry, as its Chief Science Officer, to help lead AgLAB’s product development team. Mr.
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BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications. Business and Recent Developments On November 23, 2022, the Company announced a Reverse Stock Split. The Board approved the Reverse Stock Split at a ratio of 1-for-30.
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Levinthal brings an extensive background in applying highly complex scientific instrumentation to develop products derived from hemp and cannabis, and he has worked with some of the leading companies in the industry.
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Each 30 shares of the Company’s issued and outstanding common stock was automatically combined into one validly issued, fully paid and non-assessable share of common stock. The split brought the Company into compliance with the minimum bid price requirements for maintaining its listing in The Nasdaq Capital Market.
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On August 25, 2021, 1 st Detect announced that it secured an important landmark purchase order for the TRACER 1000™, representing the first units to be deployed at an airport security checkpoint. On November 17, 2021, we announced that we are actively pursuing strategic and accretive acquisition opportunities for Astrotech Corporation and its subsidiaries.
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On December 21, 2022, the Company announced the adoption of a Rights Agreement with American Stock Transfer & Trust Company, LLC. The Rights Plan is intended to protect the interests of all stockholders and enable all Company stockholders to realize the long-term value of their investment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the FDA disagrees with our determination and requires us to submit new 510(k) notifications, de novo submissions or PMAs for modifications to our previously cleared or approved products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties. 28 Table of Contents Once our BreathTest-1000 or any other device candidate we may develop in the future, if any, is cleared or approved by FDA for marketing in the United States, if ever, we may be liable if the FDA or other U.S. enforcement agencies determine we have engaged in the off ‑ label promotion of such products or have disseminated false or misleading labeling or promotional materials.
Biggest changeIf the FDA disagrees with our determination and requires us to submit new 510(k) notifications, de novo submissions or PMAs for modifications to our previously cleared or approved products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline. Our business units are in development stage. They have earned limited revenues and it is uncertain whether they will earn any revenues in the future or whether any of them will ultimately be profitable.
If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline. Our business units are in the development stage. They have earned limited revenues and it is uncertain whether they will earn any revenues in the future or whether any of them will ultimately be profitable.
Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold. We periodically adjust this provision based on historical experience and anticipated expenses. We charge actual expenses of repairs under warranty, including parts and labor, to this provision when incurred.
Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in the cost of goods sold. We periodically adjust this provision based on historical experience and anticipated expenses. We charge actual expenses of repairs under warranty, including parts and labor, to this provision when incurred.
The market price for our common stock may be influenced by many factors, including the following: ● investor reaction to our business strategy; ● the success of competitive products or technologies; ● our continued compliance with the Nasdaq listing standards; ● regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; ● actions taken by regulatory agencies with respect to our products, manufacturing process or sales and marketing terms; ● the success of our efforts to acquire or in-license additional products or product candidates; ● developments concerning our collaborations or partners; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● declines in the market prices of stocks generally; ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● general economic, industry and market conditions; and 31 Table of Contents ● other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.
The market price for our common stock may be influenced by many factors, including the following: ● investor reaction to our business strategy; ● the success of competitive products or technologies; ● our continued compliance with the Nasdaq listing standards; ● regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; ● actions taken by regulatory agencies with respect to our products, manufacturing process or sales and marketing terms; ● the success of our efforts to acquire or in-license additional products or product candidates; ● developments concerning our collaborations or partners; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● declines in the market prices of stocks generally; 36 Table of Contents ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● general economic, industry and market conditions; and ● other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.
The COVID-19 pandemic had numerous negative consequences for our business, including a reduction in demand for certain of our security screening products and services caused by a significant reduction in airline passenger traffic. To slow and limit the transmission of COVID-19, governments across the world imposed air travel restrictions and businesses and individuals canceled air travel plans.
The COVID-19 pandemic had numerous negative consequences for our business, including a reduction in demand for certain of our security screening products and services caused by a significant reduction in airline passenger traffic. To slow and limit the transmission of COVID-19, governments across the world have imposed air travel restrictions and businesses and individuals canceled air travel plans.
Our reliance on these suppliers subjects us to a number of risks that could harm our business, including: ● interruption of supply resulting from modifications to or discontinuation of a supplier’s operations; ● trade disputes or other political conditions or economic conditions; 24 Table of Contents ● delays in the manufacturing operations of our suppliers, or in the delivery of parts and components to support such manufacturing operations, due to the impact of public health issues, endemics or pandemics, such as COVID-19; ● delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component; ● a lack of long-term supply arrangements for key components with our suppliers; ● inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms; ● difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner; ● a modification or change in a manufacturing process or part that unknowingly or unintentionally negatively impacts the operation of our platform; ● production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications; ● delay in delivery due to our suppliers prioritizing other customer orders over ours; ● damage to our brand reputation caused by defective components produced by our suppliers; ● increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and ● fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.
Our reliance on these suppliers subjects us to a number of risks that could harm our business, including: ● interruption of supply resulting from modifications to or discontinuation of a supplier’s operations; ● trade disputes or other political conditions or economic conditions; ● delays in the manufacturing operations of our suppliers, or in the delivery of parts and components to support such manufacturing operations, due to the impact of public health issues, endemics or pandemics, such as COVID-19; ● delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component; ● a lack of long-term supply arrangements for key components with our suppliers; ● inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms; ● difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner; ● a modification or change in a manufacturing process or part that unknowingly or unintentionally negatively impacts the operation of our platform; ● production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications; ● delay in delivery due to our suppliers prioritizing other customer orders over ours; ● damage to our brand reputation caused by defective components produced by our suppliers; ● increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and ● fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.
Our failure to maintain compliance with Nasdaq ’ s continued listing requirements could result in the delisting of our Common Stock. Our common stock is currently listed for trading on the Nasdaq Capital Market. We must satisfy the Nasdaq Capital Market’s continued listing requirements, risk delisting, which would have a material adverse effect on our business.
Our failure to maintain compliance with Nasdaq ’ s continued listing requirements could result in the delisting of our Common Stock. Our common stock is currently listed for trading on the Nasdaq Capital Market. We must satisfy the Nasdaq Capital Market’s continued listing requirements or risk delisting, which would have a material adverse effect on our business.
Furthermore, we are subject to risks including, but not limited to, the following with respect to the development of the BreathTest-1000: ● the governmental approval process could be lengthy, time consuming and is inherently unpredictable, and we cannot guarantee that the required approvals for our products, including FDA approvals, will be granted on a timely basis or at all or that we will ever have a marketable product; ● customers must be persuaded that using our products are effective alternatives to other existing detection methods available for COVID-19 and other infections in order for our products to be commercially successful; ● if we fail to comply with applicable FDA regulations, our premarket submissions could be adversely affected, and we could face substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could be adversely affected.
Furthermore, we are subject to risks including, but not limited to, the following with respect to the development of the BreathTest-1000: ● the governmental approval process could be lengthy, time consuming and is inherently unpredictable, and we cannot guarantee that the required approvals for our products, including FDA approvals, will be granted on a timely basis or at all or that we will ever have a marketable product; ● customers must be persuaded that using our products are effective alternatives to other existing detection methods available for COVID-19 and other infections in order for our products to be commercially successful; 25 Table of Contents ● if we fail to comply with applicable FDA regulations, our premarket submissions could be adversely affected, and we could face substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could be adversely affected.
Our exposures to changes in foreign currency exchange rates may change over time as our business practices evolve and could result in increased costs or reduced revenue and could adversely affect our cash flow. Changes in the relative values of currencies occur regularly and may have a significant impact on our operating results.
Our exposure to changes in foreign currency exchange rates may change over time as our business practices evolve and could result in increased costs or reduced revenue and could adversely affect our cash flow. Changes in the relative values of currencies occur regularly and may have a significant impact on our operating results.
The success of our new products and services will depend on several factors, including our ability to: • properly identify customer needs and predict future needs; • innovate and develop new technologies, services, and applications; • successfully commercialize new technologies in a timely manner; • manufacture and deliver our products in sufficient volumes and on time; • differentiate our offering from our competitors’ offerings; • price our products competitively; • anticipate our competitors’ development of new products, services, or technological innovations; and • control product quantity in our manufacturing process.
The success of our new products and services will depend on several factors, including our ability to: • properly identify customer needs and predict future needs; • innovate and develop new technologies, services, and applications; • successfully commercialize new technologies in a timely manner; • manufacture and deliver our products in sufficient volumes and on time; • differentiate our offering from our competitors’ offerings; • price our products competitively; 26 Table of Contents • anticipate our competitors’ development of new products, services, or technological innovations; and • control product quantity in our manufacturing process.
To the extent these costs are significant, our general and administrative expenses are likely to increase. 35 Table of Contents Our insurance coverage may be inadequate to cover all significant risk exposures. We are exposed to liabilities that are unique to the products and services we provide.
To the extent these costs are significant, our general and administrative expenses are likely to increase. 40 Table of Contents Our insurance coverage may be inadequate to cover all significant risk exposures. We are exposed to liabilities that are unique to the products and services we provide.
These additional regulatory requirements may involve significant costs and expenditures and, if we are not able to comply with any such requirements, our international expansion and business could be significantly harmed. Failure to obtain clearance or authorization for the BreathTest-1000, or other delays in the development of the BreathTest-1000, would adversely affect our ability to grow our business.
These additional regulatory requirements may involve significant costs and expenditures and, if we are not able to comply with any such requirements, our international expansion and business could be significantly harmed. 30 Table of Contents Failure to obtain clearance or authorization for the BreathTest-1000, or other delays in the development of the BreathTest-1000, would adversely affect our ability to grow our business.
We cannot predict with any certainty changes in foreign currency exchange rates or the degree to which we can cost-effectively mitigate this exposure. Repair or replacement costs due to warranties we provide on our products could have a material adverse effect on our business, financial condition and results of operations.
We cannot predict with any certainty changes in foreign currency exchange rates or the degree to which we can cost-effectively mitigate this exposure. 28 Table of Contents Repair or replacement costs due to warranties we provide on our products could have a material adverse effect on our business, financial condition and results of operations.
A natural disaster could result in a temporary or permanent closure of some of our business operations, thus impacting our future financial performance. 23 Table of Contents If we are unable to anticipate technological advances and customer requirements in the commercial and governmental markets, our business and financial condition may be adversely affected.
A natural disaster could result in a temporary or permanent closure of some of our business operations, thus impacting our future financial performance. If we are unable to anticipate technological advances and customer requirements in the commercial and governmental markets, our business and financial condition may be adversely affected.
Such government‑adopted reform measures may adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from third‑party payors. Our financial performance may be adversely affected by medical device tax provisions in healthcare reform laws.
Such government‑adopted reform measures may adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from third‑party payors. 32 Table of Contents Our financial performance may be adversely affected by medical device tax provisions in healthcare reform laws.
The following is a summary of some of the principal risks we face: ● Risks Related to Our Business and Industry ● Legal and Regulatory Risks ● Risks Related to Ownership of Our Common Stock ● General Risks Risks Related to Our Business and Industry We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.
The following is a summary of some of the principal risks we face: ● Risks Related to Our Business and Industry ● Legal and Regulatory Risks ● Risks Related to Ownership of Our Common Stock ● General Risks 23 Table of Contents Risks Related to Our Business and Industry We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.
The FDA may decide that our data are insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application.
The FDA may decide that our data is insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application.
The Board has also designated Series C and Series D Preferred Stock, of which no shares and 280,898 shares are outstanding, respectively, as of June 30, 2022.
The Board has also designated Series C and Series D Preferred Stock, of which no shares and 280,898 shares are outstanding, respectively, as of June 30, 2023.
Even with funding, our products may fail to be effective or attractive to the market or lack the necessary financial or other resources or relationships to be successful. 20 Table of Contents These business units can be expected to experience continued operating losses until they can generate sufficient revenues to cover their operating costs.
Even with funding, our products may fail to be effective or attractive to the market or lack the necessary financial or other resources or relationships to be successful. These business units can be expected to experience continued operating losses until they can generate sufficient revenues to cover their operating costs.
These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial condition or other indicators of value, including our loss per share of $0.17 for our fiscal year ended June 30, 2022.
These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial condition or other indicators of value, including our loss per share of $5.95 for our fiscal year ended June 30, 2023.
Our present and future funding requirements will depend on many factors, including: ● our ability to achieve projected revenue growth; ● the cost of expanding our operations, including production capacity; ● our rate of progress in launching and commercializing new products, and the cost of the sales and marketing activities associated with increasing sales of our existing instruments and products; ● our rate of progress in, and cost of research and development activities associated with, products in research and development; ● the effect of competing technological and market developments; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; ● costs related to domestic and international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight that may be applicable to our products. 21 Table of Contents The various ways we could raise additional capital carry potential risks.
Our present and future funding requirements will depend on many factors, including: ● our ability to achieve projected revenue growth; ● the cost of expanding our operations, including production capacity; 24 Table of Contents ● our rate of progress in launching and commercializing new products, and the cost of the sales and marketing activities associated with increasing sales of our existing instruments and products; ● our rate of progress in, and cost of research and development activities associated with, products in research and development; ● the effect of competing technological and market developments; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; ● costs related to domestic and international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight that may be applicable to our products.
The terms of such debt could impose significant restrictions on our operations. If we raise funds through collaborations or licensing arrangements, we might be required to relinquish significant rights to our platform technologies or products or grant licenses on terms that are not favorable to us or commit to future payment streams.
If we raise funds through collaborations or licensing arrangements, we might be required to relinquish significant rights to our platform technologies or products or grant licenses on terms that are not favorable to us or commit to future payment streams.
We intend to submit an application with the FDA for EUA for the BreathTest-1000. The FDA has the authority to grant an Emergency Use Authorization to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives.
The FDA has the authority to grant an Emergency Use Authorization to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives.
As of June 30, 2022, we had an accumulated deficit of approximately $215.7 million and reported a net loss of $8.3 million for the fiscal year 2022. We are unable to predict the extent of any future losses or when we will become profitable, if at all.
As of June 30, 2023, we had an accumulated deficit of approximately $225.4 million and reported a net loss of $9.6 million for the fiscal year 2023. We are unable to predict the extent of any future losses or when we will become profitable, if at all.
A supply interruption or an increase in demand beyond our current suppliers’ capabilities could harm our ability to manufacture our products unless and until new sources of supply are identified and qualified.
In certain of these cases, we have not yet qualified alternate suppliers. A supply interruption or an increase in demand beyond our current suppliers’ capabilities could harm our ability to manufacture our products unless and until new sources of supply are identified and qualified.
Our Certificate of Incorporation authorizes 250,000,000 shares of common stock, of which 50,567,864 were outstanding as of June 30, 2022, and our Board is authorized to issue additional shares of our common stock.
Our Certificate of Incorporation authorizes 250,000,000 shares of common stock, of which 1,681,729 were outstanding as of June 30, 2023, and our Board is authorized to issue additional shares of our common stock.
The process of obtaining regulatory clearances, approvals, and emergency use authorization to market a medical device can be costly and time‑consuming, and we may not be able to obtain these clearances, approvals, or authorizations on a timely basis, or at all for our proposed products. 26 Table of Contents We expect that our BreathTest-1000 product candidate will undergo FDA premarket review via the 510(k) process.
The process of obtaining regulatory clearances, approvals, and emergency use authorization to market a medical device can be costly and time‑consuming, and we may not be able to obtain these clearances, approvals, or authorizations on a timely basis, or at all for our proposed products.
If we raise funds by issuing equity securities, dilution to our stockholders could result. Any preferred equity securities issued also could provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise funds by borrowing debt, such debt would have rights, preferences and privileges senior to those of holders of our common stock.
The various ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any preferred equity securities issued also could provide for rights, preferences or privileges senior to those of holders of our common stock.
Although we believe our income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution by one or more taxing authorities could have a material impact on the results of our operations. 30 Table of Contents Changes in U.S. trade policy, including changes to existing trade agreements and any resulting changes in international trade relations, may have a material adverse effect on us.
Although we believe our income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution by one or more taxing authorities could have a material impact on the results of our operations.
In addition, loss of any critical component provided by a single source supplier could require us to change the design of our manufacturing process based on the functions, limitations, features and specifications of the replacement components.
In addition, loss of any critical component provided by a single source supplier could require us to change the design of our manufacturing process based on the functions, limitations, features and specifications of the replacement components. 27 Table of Contents In addition, several other non-critical components and materials that comprise our products are currently manufactured by a single supplier or a limited number of suppliers.
The FDA and other federal and state governmental agencies regulate numerous elements of our business, including: ● product design and development; ● pre‑clinical and clinical testing and trials; ● product safety; ● establishment registration and product listing; ● labeling and storage; ● marketing, manufacturing, sales and distribution; ● pre‑market clearance or approval; ● servicing and post‑marketing surveillance, including reporting of deaths or serious injuries and malfunctions that, if they recurred, could lead to death or serious injury; ● advertising and promotion; ● post‑market approval studies; ● product import and export; and ● recalls and field‑safety corrective actions.
The FDA and other federal and state governmental agencies regulate numerous elements of our business, including: ● product design and development; ● pre‑clinical and clinical testing and trials; ● product safety; ● establishment registration and product listing; ● labeling and storage; ● marketing, manufacturing, sales and distribution; ● pre‑market clearance or approval; ● servicing and post‑marketing surveillance, including reporting of deaths or serious injuries and malfunctions that, if they recurred, could lead to death or serious injury; ● advertising and promotion; ● post‑market approval studies; ● product import and export; and ● recalls and field‑safety corrective actions. 29 Table of Contents Before we can market or sell a new medical device, such as the BreathTest-1000, in the United States, we must obtain either clearance under Section 510(k) of the FDCA, grant of a de novo classification request, or approval of a pre‑market approval, or PMA, application from the FDA.
During fiscal year 2022, Astrotech had one existing facility lease and several equipment leases. We believe that our current facility and equipment are well maintained, in good condition, and are adequate for our present and foreseeable needs.
The sublease commenced on December 1, 2022 and has a lease term of 29 months. During fiscal year 2023, Astrotech had two existing facility leases and several equipment leases. We believe that our current facilities and equipment are well maintained, in good condition, and are adequate for our present and foreseeable needs.
We are subject to differing tax rates in several jurisdictions in which we operate, which may adversely affect our business, financial condition, results of operations and prospects. We are subject to taxes in the United States and certain foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions, including the United States, may be subject to change.
We are subject to taxes in the United States and certain foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions, including the United States, may be subject to change.
Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any disputes between us and our stockholders, which could limit stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers.
In addition, our Board could authorize the issuance of a series of preferred stock that has greater voting power than the common stock or that is convertible into our common stock, which could decrease the relative voting power of the common stock or result in dilution to our existing shareholders. 37 Table of Contents Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any disputes between us and our stockholders, which could limit stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers.
On February 2, 2022, the intra-day sales price of our common stock fluctuated between a reported low sale price of $0.62 and a reported high sales price of $0.72. Throughout the fiscal year 2022, the closing sales price of our common stock has fluctuated between a reported low sales price of $0.43 and a reported high sales price of $1.31.
On August 25, 2022, the intra-day sales price of our common stock fluctuated between a reported low sale price of $13.80 and a reported high sales price of $16.20. Throughout the fiscal year 2023, the closing sales price of our common stock has fluctuated between a reported low sales price of $9.28 and a reported high sales price of $16.20.
As of June 30, 2022, we had accrued a balance of $50 thousand relating to product warranty provision, representing a surplus of estimated warranty expenses over actual expenses for the fiscal year 2022.
As of June 30, 2023, and 2022, we had accrued a balance of $88 thousand and $50 thousand relating to product warranty provision, representing a surplus of estimated warranty expenses over actual expenses for the fiscal years. Substantial amounts of warranty claims could have a material adverse effect on our business, financial condition and results of operations.
Our failure, or any product or component supplier’s failure, to comply with applicable regulations could result in a wide range of FDA enforcement actions against us, including warning letters, fines, recalls, injunctions, civil penalties, adverse action against marketing applications, product seizure or detention, operating restrictions, and criminal prosecution, any of which could harm our business.
Our failure, or any product or component supplier’s failure, to comply with applicable regulations could result in a wide range of FDA enforcement actions against us, including warning letters, fines, recalls, injunctions, civil penalties, adverse action against marketing applications, product seizure or detention, operating restrictions, and criminal prosecution, any of which could harm our business. 31 Table of Contents If the BreathTest-1000 or any other device candidates are cleared for commercialization in the United States via the 510(k) process, product modifications may require new 510(k) clearances, de novo submissions, or pre ‑ market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.
The provision indicates that if the Court of Chancery does not have jurisdiction, then the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware, shall be the exclusive forum for such action. 32 Table of Contents These provisions of the bylaws are not a waiver of, and do not relieve anyone of duties to comply with, federal securities laws including those specifying the exclusive jurisdiction of federal courts under the Exchange Act and concurrent jurisdiction of federal and state courts under the Securities Act.
These provisions of the bylaws are not a waiver of, and do not relieve anyone of duties to comply with, federal securities laws including those specifying the exclusive jurisdiction of federal courts under the Exchange Act and concurrent jurisdiction of federal and state courts under the Securities Act.
Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales.
The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations. Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales.
Our customer base is limited; therefore, we continue to work on diversifying our customer base, while going to great lengths to satisfy the needs of our current customer base.
Our customer base is limited; therefore, we continue to work on diversifying our customer base, while going to great lengths to satisfy the needs of our current customer base. Due to the limited number of customers, if any of our customers terminate their relationship with us, it could materially harm our business and results of operations.
The change in U.S. presidential administrations may alter the U.S.’s approach to international trade, which may impact existing bilateral or multi-lateral trade agreements and treaties with foreign countries. The U.S. has imposed tariffs on certain foreign goods and may increase tariffs or impose new ones, and certain foreign governments have retaliated and may continue to do so.
Changes in U.S. trade policy, including changes to existing trade agreements and any resulting changes in international trade relations, may have a material adverse effect on us. The change in U.S. presidential administrations may alter the U.S.’s approach to international trade, which may impact existing bilateral or multi-lateral trade agreements and treaties with foreign countries.
In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. 38 Table of Contents If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc.
In addition, any other delays in the development of the BreathTest-1000, for example, unforeseen issues during product validation, would have an adverse effect on our ability to commercialize the BreathTest-1000. 27 Table of Contents FDA ’ s policy with respect to Emergency Use Authorizations is evolving and may limit the ability for medical products, including the BreathTest-1000, to be eligible for commercialization under an Emergency Use Authorization.
In addition, any other delays in the development of the BreathTest-1000, for example, unforeseen issues during product validation, would have an adverse effect on our ability to commercialize the BreathTest-1000.
Also, some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.
Also, some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.
Due to the limited number of customers, if any of our customers terminate their relationship with us, it could materially harm our business and results of operations. 22 Table of Contents Third parties may claim we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products.
Third parties may claim we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products.
The medical technology industry is regulated extensively by governmental authorities, principally the FDA, and state regulatory agencies with oversight of various aspects of drug and device distribution, sale, and use. The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations.
Legal and Regulatory Risks Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer. The medical technology industry is regulated extensively by governmental authorities, principally the FDA, and state regulatory agencies with oversight of various aspects of drug and device distribution, sale, and use.
We derive a significant portion of our revenues from international sales, which makes us especially vulnerable to increased tariffs.
The U.S. has imposed tariffs on certain foreign goods and may increase tariffs or impose new ones, and certain foreign governments have retaliated and may continue to do so. We derive a significant portion of our revenues from international sales, which makes us especially vulnerable to increased tariffs.
If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, results of operations and financial condition. 29 Table of Contents The AgLAB line of business is subject to heightened regulatory scrutiny and may experience additional uncertainty, difficulties, and risks due to its involvement with cannabis and/or businesses or activities relating to cannabis, particularly to the extent such businesses or activities are found to violate the federal Controlled Substances Act ( “ CSA ” ).
If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, results of operations and financial condition. Our AgLAB business ’ growth is highly dependent on the U.S. hemp and cannabis market.
Removed
In addition, several other non-critical components and materials that comprise our products are currently manufactured by a single supplier or a limited number of suppliers. In certain of these cases, we have not yet qualified alternate suppliers.
Added
If we raise funds by borrowing debt, such debt would have rights, preferences and privileges senior to those of holders of our common stock. The terms of such debt could impose significant restrictions on our operations.
Removed
Substantial amounts of warranty claims could have a material adverse effect on our business, financial condition and results of operations. 25 Table of Contents Legal and Regulatory Risks Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer.
Added
We expect that our BreathTest-1000 product candidate will undergo FDA premarket review via the 510(k) process.
Removed
Before we can market or sell a new medical device, such as the BreathTest-1000, in the United States, we must obtain either clearance under Section 510(k) of the FDCA, grant of a de novo classification request, or approval of a pre‑market approval, or PMA, application from the FDA.
Added
FDA ’ s policy with respect to Emergency Use Authorizations is evolving and may limit the ability for medical products, including the BreathTest-1000, to be eligible for commercialization under an Emergency Use Authorization. We intend to submit an application with the FDA for EUA for the BreathTest-1000.
Removed
If the BreathTest-1000 or any other device candidates are cleared for commercialization in the United States via the 510(k) process, product modifications may require new 510(k) clearances, de novo submissions, or pre ‑ market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.
Added
Once our BreathTest-1000 or any other device candidate we may develop in the future, if any, is cleared or approved by FDA for marketing in the United States, if ever, we may be liable if the FDA or other U.S. enforcement agencies determine we have engaged in the off ‑ label promotion of such products or have disseminated false or misleading labeling or promotional materials.
Removed
The success of AgLAB’s business strategy depends, in large part, on the constantly evolving legal and regulatory landscape of the cannabis industry. The political environment surrounding the cannabis industry in general can be volatile and the regulatory framework remains in flux.
Added
New regulations causing licensing shortages and future regulations may create other limitations that decrease the demand for our products. General regulations at state and federal in the future may adversely impact our business.
Removed
To our knowledge, there are approximately 38 states that have legalized cannabis in some form, and additional states have pending legislation regarding the same; however, the risk remains that applicable federal and/or state laws governing cannabis-related activities and products may have a drastic impact on the industry as a whole, adversely impacting our business, results of operations, financial condition or prospects.
Added
Although we do not grow, sell or distribute cannabis products, our products are closely tied to the hemp and cannabis industry and could subject us to regulatory, financial, operational and reputational risks and challenges.
Removed
The cannabis industry may come under the scrutiny or further scrutiny by the FDA, SEC, DEA, DOJ, state attorneys general, and various other federal and/or state or non-governmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale or use of cannabis for medical or non-medical purposes in the United States.
Added
The base of cannabis growers in the U.S. has grown over the last few decades since the legalization of cannabis for medical uses in states such as California, Colorado and Washington. The U.S. cannabis market is still in its infancy and early adopter states such as California, Colorado and Washington represent a large portion of historical industry revenues.
Removed
It is impossible to determine the extent of the impact of any new laws, regulations, or initiatives that may be proposed, or whether any proposals will become law. The regulatory uncertainty surrounding the cannabis industry may adversely affect our business prospects.
Added
The U.S. cannabis cultivation market is expected to be one of the fastest growing industries in the U.S. over the coming years. If the U.S. cannabis cultivation market does not grow as expected, our business, financial condition and results of operations could be impacted.
Removed
Further, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis will protect our relevant current or future endeavors in the cannabis space, given the complex interplay between state and federal laws in this space.
Added
The California cannabis cultivation market is expected to be one of the fastest growing industries in California over the coming years. If the California cannabis cultivation market does not grow as expected, our business, financial condition and results of operations could be impacted.
Removed
Additionally, there can be no assurances that any laws that would potentially protect cannabis-related operations will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.
Added
Marijuana remains illegal under U.S. federal law, as it is listed as a Schedule I substance under the United States Controlled Substances Act of 1970 (the “CSA”).
Removed
If the federal government begins to enforce federal laws relating to cannabis in states where the manufacture, sale, and/or use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, our business, results of operations, financial condition and prospects would be materially adversely affected.
Added
Notwithstanding laws in various states permitting certain cannabis activities, all cannabis activities, including possession, distribution, processing and manufacturing of cannabis in violation of federal law and investment in, and financial services or transactions involving proceeds of, or promoting such activities remain illegal under various U.S. federal criminal and civil laws and regulations, including the CSA, as well as laws and regulations of several states that have not legalized some or any cannabis activities to date.
Removed
It is also important to note that local and city ordinances may strictly limit and/or restrict disbursement of cannabis in a manner that will make it extremely difficult or impossible to transact business that is necessary for the continued operation of the cannabis industry.
Added
Compliance with applicable state laws regarding cannabis activities does not protect us from federal prosecution or other enforcement action, such as seizure or forfeiture remedies, nor does it provide any defense to such prosecution or action. Cannabis activities conducted in or related to conduct in multiple states may potentially face a higher level of scrutiny from federal authorities.
Removed
Federal actions against individuals or entities engaged in the cannabis industry or a repeal of applicable cannabis related legislation could adversely affect us and our business prospects.
Added
Penalties for violating federal drug, conspiracy, aiding, abetting, bank fraud and/or money laundering laws may include prison, fines, and seizure/forfeiture of property used in connection with cannabis activities, including proceeds derived from such activities.
Removed
Due to the nature of AgLAB’s business and the fact that related contracts may involve cannabis and activities that may not be legal or may be subject to substantial uncertainty regarding their legality under U.S. federal law and in certain states and localities, we may face difficulties in enforcing certain contracts in federal courts (as well as courts in states with comparatively stringent or restrictive cannabis laws).
Added
Legislation and regulations pertaining to the use and cultivation of hemp and cannabis are enacted on both the state and federal government level within the United States. As a result, the laws governing the cultivation and use of hemp and cannabis may be subject to change.
Removed
The inability to enforce one or more contracts, as applicable, could have a material adverse effect on our business prospects. Our ancillary participation in the cannabis industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by various federal, state, or local governmental authorities against us or our investments.
Added
Any new laws and regulations limiting the use or cultivation of hemp and cannabis and any enforcement actions by state and federal governments could indirectly reduce demand for our products and may impact our current and planned future operations.
Removed
Litigation, complaints, and enforcement actions involving either us or our investments could consume considerable amounts of financial and other corporate resources, which could have an adverse effect on our future cash flows, earnings, results of operations and financial condition.
Added
There can be no assurance that changes in regulation of the industry and more rigorous enforcement by federal authorities will have a detrimental effect on us..

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presently anticipate presenting the settlement for approval on December 12, 2022.
Biggest changeThereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presented the settlement to the Court for approval.
We investigated those allegations and do not believe that the filing and effectiveness of the 2020 Certificate Amendment was either invalid or ineffective. Nevertheless, to resolve any uncertainty, on April 30, 2021, the Company filed a validation proceeding in the Delaware Court of Chancery, In re Astrotech Corporation, C.A.
The Company investigated those allegations and does not believe that the filing and effectiveness of the 2020 Certificate Amendment was either invalid or ineffective. Nevertheless, to resolve any uncertainty, on April 30, 2021, the Company filed a validation proceeding in the Delaware Court of Chancery, In re Astrotech Corporation, C.A.
No. 2021-0380-JRS, pursuant to Section 205 of the Delaware General Corporation Law. On October 6, 2021, the Delaware Court of Chancery granted our request and confirmed and validated the 2020 Certificate Amendment.
No. 2021-0380-JRS, pursuant to Section 205 of the Delaware General Corporation Law. On October 6, 2021, the Delaware Court of Chancery granted the Company’s request and confirmed and validated the 2020 Certificate Amendment.
No. 2021-0322-JRS (the “Stein Action”), in which it was alleged, among other things, that we improperly included broker non-votes in the tabulation of votes counted in favor to approve an amendment to our Certificate of Incorporation (the “2020 Certificate Amendment”) and, thus the 2020 Certificate Amendment was defective.
No. 2021-0322-JRS (the “Stein Action”), in which it was alleged, among other things, that the Company improperly included broker non-votes in the tabulation of votes counted in favor to approve an amendment to the Company’s Certificate of Incorporation (the “2020 Certificate Amendment”) and, thus the 2020 Certificate Amendment was defective.
Removed
Further information regarding the Stein Action and the Section 205 Action is provided in the Schedule 14A proxy statement amendment and supplement filed by the Company with the Securities and Exchange Commission on April 29, 2021.
Added
On February 13, 2023, the Court approved the settlement, awarded the Plaintiff’s attorneys’ fees and expenses of $290,000, paid prior to the end of fiscal year 2023 and entered a final order and judgment dismissing the Delaware Action with prejudice.
Added
The parties to the settlement recognize that entry into the settlement does not constitute an admission of liability, wrongdoing, or any matter of fact or law.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+5 added−0 removed1 unchanged
Biggest changeThis number does not include beneficial or other owners for whom common stock may be held in “street” name. The last reported sale price of our common stock as reported by The Nasdaq Capital Market on September 13, 2022 was $0.47 per share. Sales of Unregistered Securities None.
Biggest changeThis number does not include beneficial or other owners for whom common stock may be held in “street” name. The last reported sale price of our common stock as reported by The Nasdaq Capital Market on September 26, 2023 was $10.10 per share.
We have never paid cash dividends and have no intention of paying dividends in the future. 36 Table of Contents We have 250,000,000 shares of common stock authorized for issuance. As of September 13, 2022, we had 50,630,849 shares of common stock outstanding, which were held by approximately 130 holders of record.
We have never paid cash dividends and have no intention of paying dividends in the future. 41 Table of Contents We have 250,000,000 shares of common stock authorized for issuance. As of September 26, 2023, we had 1,682,286 shares of common stock outstanding, which were held by approximately 130 holders of record.
Added
Issuer Purchase s of Equity Securities The table below sets forth the information required by Item 703(b) of Regulation S-K with respect to any purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in § 240 10b-18(a)(3) of the Exchange Act, of shares of our common stock.
Added
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs February 1 through February 28, 2023 2,035 $ 12.67 2,035 $ 974,214 March 1 through March 31, 2023 3,786 $ 11.43 3,786 $ 930,930 April 1 through April 30, 2023 1,681 $ 10.71 1,681 $ 912,923 May 1 through May 31, 2023 1,993 $ 11.01 1,993 $ 890,979 June 1 through June 30, 2023 821 $ 11.59 821 $ 881,468 Total 10,316 10,316 (1) On November 9, 2022, the Company’s Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $1.0 million of the Company’s common stock beginning November 17, 2022 and continuing through and including November 17, 2023.
Added
No repurchases were made pursuant to the share repurchase program prior to February 2023. On June 16, 2023, in connection with entry into the ATM Agreement, the Company terminated its existing share repurchase program, effective immediately, in order to comply with Regulation M under the Exchange Act.
Added
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.
Added
The timing, as well as the number and value of shares repurchased under the program, could have been determined by the Company at its discretion and would have depended on a variety of factors, including management’s assessment of the intrinsic value of the Company’s common stock, the market price of the Company’s common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSeptember 15, 2022 47 Table of Contents ASTROTECH CORPORATION Consolidated Balance Sheets (In thousands, except share and per share data) June 30, 2022 2021 Assets Current assets Cash and cash equivalents $ 26,453 $ 35,936 Short-term investments 26,173 27,351 Accounts receivable 56 5 Cost and estimated revenue in excess of billings 2 — Inventory, net: Raw materials 864 1,056 Work-in-process 136 147 Finished goods 518 297 Prepaid expenses and other current assets 748 318 Total current assets 54,950 65,110 Property and equipment, net 1,098 263 Operating leases, right-of-use asset, net 162 249 Other assets, net 11 11 Total assets $ 56,221 $ 65,633 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 169 $ 396 Payroll related accruals 816 344 Accrued expenses and other liabilities 961 888 Income tax payable 2 2 Term note payable - related party 500 2,500 Lease liabilities, current 234 81 Total current liabilities 2,682 4,211 Lease liabilities, net of current portion 303 215 Total liabilities 2,985 4,426 Commitments and contingencies (Note 14) 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, 2022 and 2021 — — Common stock, $ 0.001 par value, 250,000,000 and 50,000,000 shares authorized at June 30, 2022 and 2021 respectively; 50,567,864 and 49,450,558 shares issued and outstanding at June 30, 2022 and 2021, respectively 190,642 190,641 Additional paid-in capital 79,505 77,971 Accumulated deficit (215,712 ) (207,382 ) Accumulated other comprehensive loss (1,199 ) (23 ) Total stockholders’ equity 53,236 61,207 Total liabilities and stockholders’ equity $ 56,221 $ 65,633 See accompanying notes to consolidated financial statements. 48 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) June 30, 2022 2021 Revenue $ 869 $ 334 Cost of revenue 677 298 Gross profit 192 36 Operating expenses: Selling, general and administrative 6,006 4,741 Research and development 2,781 2,692 Disposal of corporate lease — 513 Total operating expenses 8,787 7,946 Loss from operations (8,595 ) (7,910 ) Other income and (expense), net 265 (235 ) Gain on extinguishment of debt - PPP loan — 542 Loss from operations before income taxes (8,330 ) (7,603 ) Income tax benefit — — Net loss $ (8,330 ) $ (7,603 ) Weighted average common shares outstanding: Basic and diluted 47,702 21,984 Basic and diluted net loss per common share: $ (0.17 ) $ (0.35 ) Other comprehensive loss, net of tax: Net loss $ (8,330 ) $ (7,603 ) Available-for-sale securities Net unrealized losses, net of zero tax expense (1,176 ) (23 ) Total comprehensive loss $ (9,506 ) $ (7,626 ) See accompanying notes to consolidated financial statements. 49 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, 2020 281 $ — 7,850 $ 190,599 $ (4,129 ) $ 13,934 $ (199,779 ) $ — $ 625 Net change in available-for-sale marketable securities — — — — — — — (23 ) (23 ) Issuance of shares, net of offering issuance costs of $ 5,685 — — 39,585 40 4,129 63,413 — — 67,582 Stock-based compensation — — 2,087 2 — 630 — — 632 Cancelation of restricted stock — — (71 ) — — (6 ) — — (6 ) Net loss — — — — — — (7,603 ) — (7,603 ) Balance at June 30, 2021 281 $ — 49,451 190,641 — 77,971 (207,382 ) (23 ) 61,207 Net change in available-for-sale marketable securities, net of zero tax — — — — — — — (1,176 ) (1,176 ) Stock-based compensation — — 1,371 1 — 1,534 — — 1,535 Cancelation of restricted stock — — (254 ) — — — — — — Net loss — — — — — — (8,330 ) — (8,330 ) Balance at June 30, 2022 281 $ — 50,568 $ 190,642 $ — $ 79,505 $ (215,712 ) $ (1,199 ) $ 53,236 See the accompanying notes to consolidated financial statements. 50 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Cash Flows (In thousands) Years Ended June 30, 2022 2021 Cash flows from operating activities: Net loss $ (8,330 ) $ (7,603 ) Adjustments to reconcile net loss from operations to net cash used in operating activities: Stock-based compensation 1,535 626 Depreciation and amortization 236 203 Gain from extinguishment of debt - PPP loan — (542 ) Loss on impairment of long-lived assets — 173 Changes in assets and liabilities: Accounts receivable (51 ) 96 Cost and estimated revenue in excess of billings (2 ) — Inventory, net (18 ) (824 ) Income tax receivable — 429 Accounts payable (227 ) 157 Other assets and liabilities 65 (113 ) Net cash used in operating activities (6,792 ) (7,398 ) Cash flows from investing activities: Purchases of security investments — (27,374 ) Purchases of property and equipment (596 ) (211 ) Net cash used in investing activities (596 ) (27,585 ) Cash flows from financing activities: Repayment of related party debt (2,000 ) — Repayments on lease financing (95 ) (12 ) Proceeds from issuance of stock, net of offering issuance costs — 67,582 Net cash (used in) provided by financing activities $ (2,095 ) $ 67,570 Net change in cash and cash equivalents $ (9,483 ) $ 32,587 Cash and cash equivalents at beginning of period 35,936 3,349 Cash and cash equivalents at end of period $ 26,453 $ 35,936 Supplemental disclosures of cash flow information: Cash paid for interest $ 515 $ 3 Acquisition of equipment through finance lease $ 394 $ — Operating right-of-use assets and associated liabilities $ — $ 246 See accompanying notes to consolidated financial statements. 51 Table of Contents ASTROTECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended June 30, 2022 and 2021 ( 1 ) Description of the Company and Operating Environment Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology.
Biggest changeSeptember 28, 2023 53 Table of Contents ASTROTECH CORPORATION Consolidated Balance Sheets (In thousands, except share and per share data) June 30, 2023 2022 Assets Current assets Cash and cash equivalents $ 14,208 $ 26,453 Short-term investments 27,919 26,173 Accounts receivable 225 56 Contract asset — 2 Inventory, net: Raw materials 1,379 864 Work-in-process 243 136 Finished goods 373 518 Income tax receivable 1 — Prepaid expenses and other current assets 365 748 Total current assets 44,713 54,950 Property and equipment, net 2,670 1,098 Operating lease right-of-use assets, net 262 162 Other assets, net 30 11 Total assets $ 47,675 $ 56,221 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 546 $ 169 Payroll related accruals 633 816 Accrued expenses and other liabilities 1,170 961 Income tax payable — 2 Term note payable - related party — 500 Lease liabilities, current 316 234 Total current liabilities 2,665 2,682 Lease liabilities, net of current portion 291 303 Total liabilities 2,956 2,985 Commitments and contingencies (Note 14) 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, 2023 and 2022, respectively — — Common stock, $ 0.001 par value, 250,000,000 shares authorized at June 30, 2023 and 2022 respectively; 1,692,045 and 1,685,595 shares issued at June 30, 2023 and 2022 respectively; 1,681,729 and 1,685,595 outstanding at June 30, 2023 and 2022, respectively 190,643 190,642 Treasury shares, 10,316 shares and no shares at June 30, 2023 and 2022, respectively (119 ) — Additional paid-in capital 81,002 79,505 Accumulated deficit (225,354 ) (215,712 ) Accumulated other comprehensive loss (1,453 ) (1,199 ) Total stockholders’ equity 44,719 53,236 Total liabilities and stockholders’ equity $ 47,675 $ 56,221 See accompanying notes to consolidated financial statements. 54 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) June 30, 2023 2022 Revenue $ 750 $ 869 Cost of revenue 444 677 Gross profit 306 192 Operating expenses: Selling, general and administrative 5,775 6,006 Research and development 5,591 2,781 Total operating expenses 11,366 8,787 Loss from operations (11,060 ) (8,595 ) Other income and expense, net 1,418 265 Loss from operations before income taxes (9,642 ) (8,330 ) Income tax benefit — — Net loss $ (9,642 ) $ (8,330 ) Weighted average common shares outstanding: Basic and diluted 1,620 1,590 Basic and diluted net loss per common share: Net loss per common share $ (5.95 ) $ (5.24 ) Other comprehensive loss, net of tax: Net loss $ (9,642 ) $ (8,330 ) Available-for-sale securities: Net unrealized loss (254 ) (1,176 ) Total comprehensive loss $ (9,896 ) $ (9,506 ) See accompanying notes to consolidated financial statements. 55 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, 2021 281 $ — 1,648 $ 190,641 $ — $ 77,971 $ (207,382 ) $ (23 ) $ 61,207 Net change in available-for-sale marketable securities — — — — — — — (1,176 ) (1,176 ) Stock-based compensation — — 46 1 — 1,534 — — 1,535 Cancellation of restricted stock — — (8 ) — — — — — — Net loss — — — — — — (8,330 ) — (8,330 ) Balance at June 30, 2022 281 $ — 1,686 190,642 — 79,505 (215,712 ) (1,199 ) 53,236 Net change in available-for-sale marketable securities — — — — — — — (254 ) (254 ) Stock-based compensation — — 4 1 — 1,497 — — 1,498 Restricted stock issuance — — 2 — — — — — — Purchase of treasury stock — — (10 ) — (119 ) — — — (119 ) Net loss — — — — — — (9,642 ) — (9,642 ) Balance at June 30, 2023 281 $ — 1,682 $ 190,643 $ (119 ) $ 81,002 $ (225,354 ) $ (1,453 ) $ 44,719 See the accompanying notes to consolidated financial statements. 56 Table of Contents ASTROTECH CORPORATION Consolidated Statements of Cash Flows (In thousands) Years Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ (9,642 ) $ (8,330 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,498 1,535 Depreciation 366 148 Amortization of operating lease right-of-use assets 123 88 Interest on financing leases 15 13 Loss on disposal of asset 25 — Changes in assets and liabilities: Accounts receivable (169 ) (51 ) Contract asset 2 (2 ) Inventory, net (477 ) (18 ) Income tax receivable (1 ) — Accounts payable 377 (227 ) Other assets and liabilities 390 138 Income taxes payable (2 ) — Operating lease liabilities (130 ) (86 ) Net cash used in operating activities (7,625 ) (6,792 ) Cash flows from investing activities: Purchases of property and equipment (1,844 ) (596 ) Purchases of short-term investments (5,140 ) — Proceeds from short-term investments 3,140 — Net cash used in investing activities (3,844 ) (596 ) Cash flows from financing activities: Purchase of treasury shares (119 ) — Repayment of related-party debt (500 ) (2,000 ) Repayments on finance lease liabilities (157 ) (95 ) Net cash used in financing activities $ (776 ) $ (2,095 ) Net change in cash and cash equivalents $ (12,245 ) $ (9,483 ) Cash and cash equivalents at beginning of period 26,453 35,936 Cash and cash equivalents at end of period $ 14,208 $ 26,453 Supplemental disclosures of cash flow information: Cash paid for interest $ 69 $ 515 Acquisition of equipment through financing lease $ 119 $ 394 Operating right-of-use assets and associated liabilities $ 223 $ — Income taxes paid $ 2 $ — See accompanying notes to consolidated financial statements. 57 Table of Contents ASTROTECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended June 30, 2023 and 2022 ( 1 ) Description of the Company and Operating Environment Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology.
Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Astrotech Corporation Austin, Texas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Astrotech Corporation and subsidiaries (the "Company") as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements").
Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Astrotech Corporation Austin, Texas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Astrotech Corporation and subsidiaries (the "Company") as of June 30, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements").
(“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes.
(“AgLAB”) is developing a series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the distillation processes.
We believe that our audits provide a reasonable basis for our opinion. 46 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
We believe that our audits provide a reasonable basis for our opinion. 52 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
Our future capital requirements will depend on many factors, including: ● future research and development efforts; ● our ability to enter into and terms and timing of any collaborations, licensing agreements, or other arrangements; 42 Table of Contents ● the costs of sales, marketing, distribution and manufacturing efforts; ● our headcount growth and associated costs as we expand our business; ● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property related claims; and ● the costs of operating as a public company.
Our future capital requirements will depend on many factors, including: ● future research and development efforts; ● our ability to enter into and terms and timing of any collaborations, licensing agreements, or other arrangements; ● the costs of sales, marketing, distribution and manufacturing efforts; ● our headcount growth and associated costs as we expand our business; ● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property related claims; and ● the costs of operating as a public company.
( 16 ) Impact of COVID- 19 Pandemic The Company has taken what it believes are necessary precautions to safeguard its employees from the COVID- 19 pandemic. The Company continues to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities.
( 15 ) Impact of COVID- 19 Pandemic The Company has taken what it believes are necessary precautions to safeguard its employees from the COVID- 19 pandemic. The Company continues to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities.
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. Foreign Currency The Company’s international operations are subject to certain opportunities and risks, including from foreign currency fluctuations and governmental actions.
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. 60 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.
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 $1.0 million as of June 30, 2022 .
Utilization of some of these net operating losses is limited due to the changes in stock ownership of the Company associated with the October 2007 Exchange Offer; as such, the benefit from these losses may not be realized. The Company has federal research and development income tax credit carryovers of $1.1 million as of June 30, 2023.
ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1 st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in breath analysis applications.
ATI currently licenses the AMS Technology to three wholly-owned subsidiaries of Astrotech on an exclusive basis, including to 1 st Detect for use in the security and detection market, to AgLAB Inc. ("AgLAB") for use in the agriculture market, and to BreathTech Corporation (“BreathTech”) for use in breath analysis applications.
During fiscal years 2022 and 2021 , the Company conducted business in eleven and ten countries, respectively. The Company closely monitors its operations in each country in which it does business and seeks to adopt appropriate strategies that are responsive to changing economic and political environments. The Company currently conducts business in the U.S. dollar and the Euro.
During fiscal years 2023 and 2022 , the Company conducted business in eleven countries. The Company closely monitors its operations in each country in which it does business and seeks to adopt appropriate strategies that are responsive to changing economic and political environments. The Company currently conducts business in the U.S. dollar and the Euro.
A rollforward of the beginning and ending amount of unrecognized tax benefits from July 1, 2021 to June 30, 2022 is as follows: Year Ended June 30, (In thousands) 2022 2021 Fiscal year beginning balance $ 329 $ — Additions for tax positions of current period 71 80 Additions for tax positions of prior years — 249 Decreases for tax positions of prior years — — Fiscal year ending balance $ 400 $ 329 The Company recognizes interest and penalties related to income tax matters in income tax expense, as incurred.
A rollforward of the beginning and ending amount of unrecognized tax benefits from July 1, 2021 to June 30, 2023 is as follows: Year Ended June 30, (In thousands) 2023 2022 Fiscal year beginning balance $ 400 $ 329 Additions for tax positions of current period 86 71 Additions for tax positions of prior years — — Decreases for tax positions of prior years — — Fiscal year ending balance $ 486 $ 400 The Company recognizes interest and penalties related to income tax matters in income tax expense, as incurred.
If approved, the TRACER 1000 will be approved for cargo sales in the United States. AgLAB Inc. AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB-1000™ series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes.
If approved, the TRACER 1000 will be approved for cargo sales in the United States. AgLAB Inc. AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB 1000™ series of mass spectrometers for use in the hemp and cannabis markets with initial focus on optimizing yields in the distillation process.
The project will focus on detecting bloodstream infections, respiratory infections such as influenza types A and B and respiratory syncytial virus (“RSV”), carriage of Staphylococcus aureus, and Clostridioides difficile (“C. diff”) infections.
The project focuses on detecting bloodstream infections, respiratory infections such as influenza types A and B and respiratory syncytial virus (“RSV”), carriage of Staphylococcus aureus, and Clostridioides difficile (“C. diff”) infections.
For the years ended June 30, 2022 and 2021 , the Company made matching contributions of $57 thousand and $31 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.
For the years ended June 30, 2023 and 2022 , the Company made matching contributions of $59 thousand and $57 thousand, respectively, to the plan. The Company has the right, but not an obligation, to make additional contributions to the plan in future years at the discretion of the Company’s Board of Directors.
These credits will expire between the years 2035 and 2042. At June 30, 2022 , the Company also has accumulated state net operating loss carryforwards of approximately $7.4 million ($0.3 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 credits will expire between the years 2035 and 2043. At June 30, 2023, the Company also has accumulated state net operating loss carryforwards of approximately $7.4 million ($0.4 million, tax effected) that are available to offset future state taxable income. These net operating loss carryforwards expire between the years 2026 and 2036.
For the years ended June 30, 2022 and 2021 , the Company did not recognize any interest expense for uncertain tax positions. 70 Table of Contents ( 12 ) Net Loss per Share Basic loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period.
For the years ended June 30, 2023 and 2022 , the Company did not recognize any interest expense for uncertain tax positions. ( 12 ) Net Loss per Share Basic loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period.
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, 2022 and 2021 were $2.8 million and $2.7 million, respectively.
Research and development costs are used to improve system functionality, streamline and simplify the user experience, and extend our capabilities into customer-defined, application-specific opportunities. Research and development expenses for the fiscal years ended June 30, 2023 and 2022 were $5.6 million and $2.8 million, respectively.
Operating Activities Net cash used in operating activities was $6.8 million for the year ended June 30, 2022, compared to cash used in operating activities of $7.4 million for the year ended June 30, 2021.
Operating Activities Net cash used in operating activities was $7.6 million for the year ended June 30, 2023, compared to cash used in operating activities of $6.8 million for the year ended June 30, 2022.
The aggregate intrinsic value of all options outstanding at June 30, 2022 was $0.
The aggregate intrinsic value of all options outstanding at June 30, 2023 was $0.
Treasury yield curve in effect at the time of grant. • For the years ended June 30, 2022 and 2021 , the Company used the simplified method of calculating the expected life of the options. ( 11 ) Income Taxes The Company accounts for income taxes under the asset and liability method.
Treasury yield curve in effect at the time of grant. • For the years ended June 30, 2023 and 2022 , the Company used the simplified method of calculating the expected life of the options. 72 Table of Contents ( 11 ) Income Taxes The Company accounts for income taxes under the asset and liability method.
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, 2022 and 2021 is summarized in the following table: (In thousands) Warranty Provision Balance as of June 30, 2020 $ 18 Warranty claims provided for 49 Settlements made (51 ) Balance as of June 30, 2021 16 Warranty claims provided for 112 Settlements made (78 ) Balance as of June 30, 2022 $ 50 Research and Development Research and development costs are expensed as incurred.
The current obligation for warranty provision is included in accrued expenses and other liabilities in the consolidated balance sheets, whose activity for each of the two fiscal years ended June 30, 2023 and 2022 is summarized in the following table: (In thousands) Warranty Provision Balance as of June 30, 2021 $ 16 Warranty claims provided for 112 Settlements made (78 ) Balance as of June 30, 2022 50 Warranty claims provided for 157 Settlements made (119 ) Balance as of June 30, 2023 $ 88 Research and Development Research and development costs are expensed as incurred.
The Company has not made any additional contributions for the years ended June 30, 2022 and 2021 . ( 14 ) Commitments and Contingencies The Company is subject to various lawsuits and other claims in the normal course of business.
The Company has not made any additional contributions for the years ended June 30, 2023 and 2022 . 75 Table of Contents ( 14 ) Commitments and Contingencies The Company is subject to various lawsuits and other claims in the normal course of business.
BreathTech Corporation BreathTech, an exclusive licensee of ATI for use in breath analysis, is developing the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection.
BreathTech Corporation BreathTech, an exclusive licensee of ATI for use in breath analysis applications, is developing the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites found in a person’s breath that could indicate they may have a compromised condition including but not limited to a bacterial or viral infection.
The Company had unrecognized tax benefit of $400 thousand as of June 30, 2022 , all of which has been accounted for as contra deferred tax assets.
The Company had unrecognized tax benefit of $486 thousand as of June 30, 2023 , all of which has been accounted for as contra deferred tax assets.
The assumptions used for the years ended June 30, 2022 and 2021 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, 2022 June 30, 2021 Expected dividend yield — — Expected volatility 104.97 % 106.29 % Risk-free interest rates 0.65 % 1.45 % Expected option life (in years) 3.5 3.5 Weighted-average grant-date fair value of options awarded $ 0.86 $ 2.40 • 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.
The assumptions used for the years ended June 30, 2023 and 2022 and the resulting estimates of weighted-average fair value per share of options granted or modified are summarized in the following table: Year Ended Year Ended June 30, 2023 June 30, 2022 Expected Dividend Yield — — Expected Volatility 104.67 % 104.97 % Risk-Free Interest Rates 1.59 % 0.65 % Expected Option Life (in years) 3.5 3.5 Weighted-average grant-date fair value of options awarded $ 20.22 $ 25.80 • The expected dividend yield is based on the Company’s current dividend yield and the best estimate of projected dividend yield for future periods within the expected life of the option, which is currently 0%. • The Company estimated volatility using the historical share price performance over the expected life.
On March 27, 2018, the Company announced the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test’s (“ACSQT”) and, on April 4, 2018, the Company announced that the TRACER 1000 began testing with TSA for passenger screening at airports.
On March 27, 2018, we announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, we announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports.
Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, and the recognition and measurement of loss contingencies, if any. Actual results may vary.
Management continuously evaluates its critical accounting policies and estimates, including those used in evaluating the recoverability of long-lived assets, recognition of revenue, valuation of inventory, warranty provision and the recognition and measurement of loss contingencies, if any.
The Company also had net operating loss carryforwards with indefinite lives of approximately $42.3 million ($8.9 million, tax effected) for federal income tax purposes that are available to offset future regular taxable income.
The Company also had net operating loss carryforwards with indefinite lives of approximately $45.7 million ($9.6 million, tax effected) for federal income tax purposes that are available to offset future regular taxable income.
AgLAB holds an exclusive AMS Technology license from ATI for agriculture applications. ● BreathTech Corporation (“BreathTech”) is developing a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate they may have a bacterial or viral infection. BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications.
AgLAB holds an exclusive AMS Technology license from ATI for agriculture applications. ● BreathTech Corporation (“BreathTech”) is developing a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate a compromised condition including but not limited to a bacterial or viral infection.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Pickens, in connection with the Original Notes, pursuant to which, (a) the principal amount of $1.0 million and accrued interest of $172 thousand on the 2020 Note was paid in full and the 2020 Note was canceled, and (b) $1.0 million of the principal amount and $330 thousand of accrued interest on the 2019 Note was paid and the maturity date on the remaining balance of $500 thousand of the 2019 Note was extended to September 5, 2022.
Pursuant to the Amendments, (a) the principal amount of $1.0 million and accrued interest of $172 thousand on the 2020 Note was paid in full and the 2020 Note was canceled, and (b) $1.0 million of the principal amount and $330 thousand of accrued interest on the 2019 Note was paid and the maturity date on the remaining balance of $500 thousand of the 2019 Note was extended to September 5, 2022 ( the “Amended Maturity Date”).
In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID-19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines.
In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID- 19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines. 76 Table of Contents The Company continues to manage production, to secure alternative supplies, and to take other proactive actions.
The following tables present the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of June 30, 2022 and June 30, 2021 : June 30, 2022 Carrying Fair Value Measured Using Fair (In thousands) Amount Level 1 Level 2 Level 3 Value Available-for-Sale Securities Mutual Funds - Corporate & Government Debt $ 19,191 $ 19,191 $ — $ — $ 19,191 ETFs - Corporate & Government Debt 6,982 6,982 — — 6,982 Total $ 26,173 $ 26,173 $ — $ — $ 26,173 June 30, 2021 Carrying Fair Value Measured Using Fair (In thousands) Amount Level 1 Level 2 Level 3 Value Available-for-Sale Securities Mutual Funds - Corporate & Government Debt $ 19,985 $ 19,985 $ — $ — $ 19,985 ETFs - Corporate & Government Debt 7,366 7,366 — — 7,366 Total $ 27,351 $ 27,351 $ — $ — $ 27,351 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). 61 Table of Contents ( 7 ) Debt On September 5, 2019, the Company entered into a private placement transaction with Thomas B.
The following tables present the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of June 30, 2023 , and June 30, 2022 : June 30, 2023 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 $ 18,965 $ 18,965 $ — $ — $ 18,965 ETFs - Corporate & Government Debt 6,958 6,958 — — 6,958 Time Deposits: 91-360 days 1,996 — 1,996 1,996 Total Available-for-Sale Investments $ 27,919 $ 25,923 $ 1,996 $ — $ 27,919 June 30, 2022 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 $ 19,191 $ 19,191 $ — $ — $ 19,191 ETFs - Corporate & Government Debt 6,982 6,982 — — 6,982 Total Available-for-Sale Investments $ 26,173 $ 26,173 $ — $ — $ 26,173 The value of available-for-sale investments is based on pricing from third -party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs). 67 Table of Contents ( 7 ) Related-party Debt On September 5, 2019, the Company entered into a private placement transaction with Thomas B.
In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss. Employment Contracts The Company has entered into an employment contract with a key executive.
In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss. Employment Contracts The Company has entered into an employment contract with a key executive. Generally, certain amounts may become payable in the event the Company terminates the executive’s employment.
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.
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.
At June 30, 2022 , the Company had net operating loss carryforwards of approximately $80.5 million with approximately $38.2 million ($8.0 million, tax effected) for federal income tax purposes that are available to offset future regular taxable income set to expire between the years of 2023 and 2037.
At June 30, 2023, the Company had net operating loss carryforwards of approximately $83.5 million with approximately $37.8 million ($7.9 million, tax effected) for federal income tax purposes that are available to offset future regular taxable income set to expire between the years of 2024 and 2037.
Business Overview Segment Information – The Company has determined that it does not meet the criteria of Accounting Standards Codification (“ASC”) 280 “Segment Reporting” because the Company’s subsidiaries represent Company brands that leverage the same core technology rather than independent operating segments. Furthermore, restatement of prior results is not necessary as they would mirror the consolidated results. Astrotech Technologies, Inc.
Business Overview Segment Information – The Company has determined that it does not meet the criteria of Accounting Standards Codification (“ASC”) 280 “Segment Reporting” because the Company’s subsidiaries represent Company brands that leverage the same core technology rather than independent operating segments. Astrotech Technologies, Inc.
Leveraging Sanmina’s expertise, we have improved the manufacturability and reliability of our systems. 1 st Detect Corporation 1 st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide.
ATI contracts with various vendors to assist with the further development of our mass spectrometer products including the manufacturability and reliability of our systems. 1 st Detect Corporation 1 st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide.
All of the Company’s revenue for the fiscal year ended June 30, 2021 was also generated by two customers. The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (the “FDIC”).
All of the Company’s revenue for the fiscal year ended June 30, 2022 was also generated by two customers. Additionally, the material amount of the company's receivables was compromised by two companies in both fiscal years. The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (the “FDIC”).
Accounting Pronouncements In November 2021, FASB issued ASU No. 2021 - 10, “Government Assistance (Topic 832 )” (“ASU 2021 - 10” ), which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.
Accounting Pronouncements In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021 - 10, “Government Assistance (Topic 832 )” (“ASU 2021 - 10” ), which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.
The new pronouncement requires entities to provide information about the nature of the transaction, terms and conditions associated with the transaction, and financial statement line items affected by the transaction. ASU 2021 - 10 is effective for fiscal years beginning after December 15, 2021.
The new pronouncement requires entities to provide information about the nature of the transaction, terms and conditions associated with the transaction, and financial statement line items affected by the transaction. ASU 2021 - 10 is effective for fiscal years beginning after December 15, 2021. The adoption of this did not have a material impact on its financial statements.
This necessitates deferral of all or a portion of revenue recognition until collection. During the fiscal year ended June 30, 2022 , the Company had two material revenue sources that comprised substantially all of its $869 thousand in revenue.
This necessitates deferral of all or a portion of revenue recognition until assurance of collection. During the fiscal year ended June 30, 2023 , the Company had four material customers that comprised substantially all of its $750 thousand in revenue.
We believe the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements: 39 Table of Contents Revenue Recognition We adopted the provisions of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) in fiscal year 2019.
We believe the following accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements: 44 Table of Contents Revenue Recognition Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“Topic 606”), which was adopted by the Company in fiscal year 2019.
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.
These warranties typically provide for repairs and maintenance of the products if problems arise during a specified time period after original shipment. Concurrent with the sale of products, we record a provision for estimated warranty expenses with a corresponding increase in cost of goods sold.
For more information, see Note 12. Cash and Cash Equivalents The Company considers short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are comprised primarily of operating cash accounts, money market investments, and mutual fund investments.
For more information, see Note 12. Cash and Cash Equivalents The Company considers short-term investments with original maturities of three months or less to be cash equivalents.
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 2021, Astrotech sold all treasury stock held by the Company.
The Company adopted this guidance as of June 30, 2022 and the adoption had no impact on the Company’s consolidated financial statements. 63 Table of Contents Treasury Stock The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders’ equity.
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 lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation, when determinable, and are recognized in determining its ROU assets. The Company’s operating leases are reflected in the operating lease, right-of-use asset; lease liabilities, current; and lease liabilities, non-current in its consolidated balance sheets.
If we raise funds through additional strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or future revenue streams or to grant licenses on terms that may not be favorable to us.
Prior to termination, we had not sold any shares of our common stock pursuant to the ATM Agreement. If we raise funds through additional strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or future revenue streams or to grant licenses on terms that may not be favorable to us.
The Company continues to manage production, to secure alternative supplies, and to take other proactive actions. The Company believes that it will be able to pass the inflation caused by raw materials shortages and increased shipping costs to its customers by increasing the price of its instruments.
The Company believes that it will be able to pass the inflation caused by raw materials shortages and increased shipping costs to its customers by increasing the price of its instruments.
The Company charges actual expenses of repairs under warranty, including parts and labor, to this provision when incurred.
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.
We are currently selling the TRACER 1000 to customers who accept ECAC certification. We have deployed the TRACER 1000 in approximately 20 locations in 11 countries throughout Europe and Asia.
We are currently selling the TRACER 1000 to customers who accept ECAC certification. As of June 30, 2023, we have deployed the TRACER 1000 in approximately 29 locations in 14 countries throughout Europe and Asia.
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.
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.
During the fiscal year ended June 30, 2021 , the Company recognized revenue from two material customers for total revenue of $334 thousand. Revenue was recognized at a point in time consistent with the guidelines in Topic 606. Contract Assets and Liabilities.
During the fiscal year ended June 30, 2022 , the Company had two material customers that consisted substantially all of the $869 thousand. Revenue was recognized at a point in time consistent with the guidelines in Topic 606. Contract Assets and Liabilities.
The payroll tax deferral was effective from the enactment date through December 31, 2020, and the deferred amount will be repaid in two installments. 50% of the deferred amount has been paid as of December 31, 2021, and the remainder will be due by December 31, 2022.
The payroll tax deferral was effective from the enactment date through December 31, 2020, and the deferred amount will be repaid in two installments. 50% of the deferred amount has been paid as of December 31, 2021, and the remainder was paid before December 31, 2022. The deferred payroll taxes are recorded within accrued liabilities on the consolidated balance sheets.
The pre-clinical trials were conducted in collaboration with UT Health San Antonio in 2017. 53 Table of Contents (2) Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Astrotech Corporation and its wholly-owned subsidiaries that are required to be consolidated. All intercompany transactions have been eliminated in consolidation.
( 2 ) Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Astrotech Corporation and its wholly-owned subsidiaries that are required to be consolidated. All intercompany transactions have been eliminated in consolidation.
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.
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.
The Company only gives consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. 54 Table of Contents Product Sales.
Additionally, the Company has elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. The Company only gives consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year. Product Sales.
The weighted-average sale price per shares was $3.14. 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, 2022. Series D Preferred Shares are convertible to common stock on a one -to- one basis.
Preferred Stock The Company has issued 280,898 shares of Series D convertible preferred stock (“Series D Preferred Shares”), all of which were issued and outstanding as of June 30, 2023. Series D Preferred Shares are convertible to common stock on a one -to- one basis. Series D Preferred Shares are not callable by the Company.
Fair Value of Financial Instruments Astrotech’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. Management believes the carrying amounts of these assets and liabilities approximates their fair value due to their liquidity. For more information about the Company’s accounting policies surrounding fair value investments, see Note 6.
Fair Value of Financial Instruments Astrotech’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. Management believes the carrying amounts of these assets and liabilities approximates their fair value due to their liquidity.
Armanino LLP San Francisco, California We have served as the Company's auditor since 2019.
Armanino LLP Dallas, Texas We have served as the Company's auditor since 2019.
Generally, certain amounts may become payable in the event the Company terminates the executive’s employment. 71 Table of Contents Legal Proceedings On April 15, 2021, a putative stockholder of the Company commenced a class action and derivative lawsuit in the Delaware Court of Chancery, Stein v. Pickens, et al., C.A.
Legal Proceedings On April 15, 2021, a putative stockholder of the Company commenced a class action and derivative lawsuit in the Delaware Court of Chancery, Stein v. Pickens, et al., C.A.
Significant changes to operating expenses include the following: • Selling, General and Administrative Expenses – Our selling, general and administrative expenses increased by $1.3 million, or 26.7%, for the year ended June 30, 2022, compared to the year ended June 30, 2021.
Significant changes to operating expenses include the following: • Selling, General and Administrative Expenses – Our selling, general and administrative expenses decreased by $231 thousand, or 3.8%, for the year ended June 30, 2023, compared to the year ended June 30, 2022.
Weaknesses in one currency in which the Company does business are often offset by strengths in the other currency. Revenues, costs, and expenses are translated at the applicable rate on the date of the transaction. 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.
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.
Our actual results may differ materially from those anticipated in these forward-looking statements. Business Overview Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology through its wholly-owned subsidiaries: ● Astrotech Technologies, Inc.
Business Overview Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology. 42 Table of Contents Our efforts are focused on commercializing our platform mass spectrometry technology through our wholly-owned subsidiaries. ● Astrotech Technologies, Inc.
Reconciliation and the components of basic and diluted net loss per share are as follows (in thousands, except per share data): Year Ended June 30, 2022 2021 Numerator: Net loss $ (8,330 ) $ (7,603 ) Denominator: Denominator for basic and diluted net loss per share — weighted average common stock outstanding 47,702 21,984 Basic and diluted net loss per common share: Net loss $ (0.17 ) $ (0.35 ) All unvested restricted stock awards for the years ended June 30, 2022 and 2021 are not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.
Reconciliation and the components of basic and diluted net loss per share are as follows (in thousands): Year Ended June 30, 2023 2022 Numerator: Net loss $ (9,642 ) $ (8,330 ) Denominator: Denominator for basic and diluted net loss per share — weighted average common stock outstanding 1,620 1,590 Basic and diluted net loss per common share: Net loss $ (5.95 ) $ (5.24 ) All unvested restricted stock awards for the years ended June 30, 2023 and 2022 are not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.
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.
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.
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) 2022 2021 Expected benefit $ 1,749 $ 1,596 State tax expense — — Tax credits 166 187 Change in valuation allowance (1,511 ) (1,352 ) Loan forgiveness - PPP loan — 114 Stock-based compensation (306 ) (36 ) Prior year true-up (9 ) 26 Expiration of net operating loss carryovers (89 ) (533 ) Other permanent items — (2 ) Total income tax benefit $ — $ — Deferred Tax Assets and Liabilities The Company’s deferred tax assets as of June 30, 2022 and 2021 consist of the following: Year Ended June 30, (In thousands) 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 17,202 $ 15,882 Tax credit carryforwards 1,330 1,165 Lease liability - current and non-current 113 62 Accrued expenses and other timing 180 65 Stock-based compensation 579 676 Property and equipment, principally due to differences in depreciation — 77 Total gross deferred tax assets $ 19,404 $ 17,927 Less — valuation allowance (19,348 ) (17,875 ) Net deferred tax assets $ 56 $ 52 Deferred tax liabilities: Right-of-use assets $ (34 ) $ (52 ) Property and equipment, principally due to differences in depreciation (22 ) — Total gross deferred tax liabilities (56 ) (52 ) Net deferred tax assets $ — $ — 69 Table of Contents The Company files consolidated returns for federal, California, Florida, and Texas income and franchise taxes.
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) 2023 2022 Expected benefit $ 2,025 $ 1,749 State tax expense — — Tax credits 200 166 Change in valuation allowance (1,838 ) (1,511 ) Stock-based compensation (296 ) (306 ) Prior year true-up — (9 ) Expiration of net operating loss carryovers (88 ) (89 ) Other permanent items (3 ) — Total income tax benefit $ — $ — 73 Table of Contents Deferred Tax Assets and Liabilities The Company’s deferred tax assets as of June 30, 2023 and 2022 consist of the following: Year Ended June 30, (In thousands) 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 17,920 $ 17,202 Tax credit carryforwards 1,530 1,330 Lease liability - current and non-current 128 113 Unrealized loss on securities 305 — IRC Section 174 R&D Expense Capitalization 1,061 Accrued expenses and other timing 143 180 Stock-based compensation 111 579 Property and equipment, principally due to differences in depreciation — — Total gross deferred tax assets $ 21,198 $ 19,404 Less — valuation allowance (21,064 ) (19,348 ) Net deferred tax assets $ 134 $ 56 Deferred tax liabilities: Right-of-use assets $ (55 ) $ (34 ) Property and equipment, principally due to differences in depreciation (79 ) (22 ) Total gross deferred tax liabilities (134 ) (56 ) Net deferred tax assets $ — $ — The Company files consolidated returns for federal, California, Florida, and Texas income and franchise taxes.
LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity During the fiscal year 2021, we successfully completed several public offerings of our common stock, raising net proceeds of approximately $67.6 million which will be used to satisfy our short-term and long-term capital needs.
Pursuant to ASC 740 “Income Taxes”, a valuation allowance has been established on all of our deferred tax assets. 47 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity During the fiscal year 2021, we successfully completed several public offerings of our common stock, raising net proceeds of approximately $67.6 million which will be used to satisfy our short-term and long-term capital needs.
Revenue Recognition Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606” ), which was adopted by the Company in fiscal year 2019. The methodology used is based on contract type and how products and services are provided.
Actual results may vary. 59 Table of Contents 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.
Thereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presently anticipate presenting the settlement for approval on December 12, 2022.
Thereafter, a settlement in principle was reached with the Plaintiffs in the Stein Action and the parties to the Stein Action presented the settlement to the Court for approval.
Operating Expenses – Our operating expenses increased $841 thousand, or 10.6%, during the fiscal year ended June 30, 2022, compared to the fiscal year ended June 30, 2021.
Operating Expenses – Our operating expenses increased $2.6 million, or 29.3%, during the fiscal year ended June 30, 2023, compared to the fiscal year ended June 30, 2022.
As such, on September 5, 2022, the 2019 Note matured and the principal amount of $500 thousand and accrued interest of $55 thousand was paid in full and the 2019 Note was canceled. With the cancelation of the 2019 Note, the Amended Subsidiary Guarantee was terminated and the Subsidiaries' Collateral was released.
The Subsidiary Guarantee with respect to the 2020 Note was also canceled by the Amended Subsidiary Guarantee due to the 2020 Note being repaid in full. On September 5, 2022, the 2019 Note matured and the principal amount of $500 thousand and accrued interest of $55 thousand was paid in full and the 2019 Note was canceled.
Options to purchase 1,028,532 shares of common stock at exercise prices ranging from $0.64 to $6.00 per share outstanding for the year ended June 30, 2022 and options to purchase 275,503 shares of common stock at exercise prices ranging from $1.85 to $7.50 per share outstanding for the year ended June 30, 2021 were not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.
Options to purchase 38,166 shares of common stock at exercise prices ranging from $10.38 to $175.50 per share outstanding for the year ended June 30, 2023 and options to purchase 34,284 shares of common stock at exercise prices ranging from $19.20 to $175.50 per share outstanding for the year ended June 30, 2022 were not included in diluted net loss per share, as the impact to net loss per share is anti-dilutive.
Contractual Obligations and Commitments The following table summarized our commitments to settle contractual obligations as of June 30, 2022: Payments Due by Period (In thousands) Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years Operating lease commitments (1) $ 197 $ 104 $ 93 — — Finance lease commitments (2) 375 154 221 — — Debt obligations (3) 555 555 — — — Total $ 1,127 $ 813 $ 314 $ — $ — (1) Consists of payments due for our lease of research and development space in Austin, Texas that expires June 2024.
Contractual Obligations and Commitments The following table summarized our commitments to settle contractual obligations as of June 30, 2023: Payments Due by Period (In thousands) Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years Operating lease commitments (1) $ 277 $ 139 $ 138 — — Finance lease commitments (2) 330 168 138 24 — Total $ 607 $ 307 $ 276 $ 24 $ — (1) Consists of payments due for our leases of research and development space in Austin, Texas that expires April 2025.
Transaction gains and losses, which were included in the Company’s consolidated statements of operations and comprehensive loss, amounted to a loss of approximately $13 thousand for the fiscal year ended June 30, 2022 and a gain of approximately $3 thousand for the fiscal year ended June 30, 2021 . 55 Table of Contents Warranty Provision Astrotech offers its customers warranties on the products that it sells.
Transaction gains and losses, which were included in the Company’s consolidated statements of operations and comprehensive loss, amounted to a loss of approximately $3 thousand for the fiscal year ended June 30, 2023 and a loss of approximately $13 thousand for the fiscal year ended June 30, 2022 .
Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 23 granted patents and one additional patent in process along with extensive trade secrets.
In contrast, the AMS Technology has been designed to be inexpensive, smaller, and easier to use when compared to traditional mass spectrometers. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 18 granted patents along with extensive trade secrets.
The Company enters into contracts to sell products and provide services, and it recognizes contract assets and liabilities that arise from these transactions. The Company recognizes revenue and corresponding accounts receivable according to Topic 606 and, at times, recognizes revenue in advance of the time when contracts give it the right to invoice a customer.
Revenue was recognized at a point in time consistent with the guidelines in Topic 606. Contract Assets and Liabilities. The Company enters into contracts to sell products and provide services, and it recognizes contract assets and liabilities that arise from these transactions.
At June 30, 2022 , there was $507 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 2.65 years.
At June 30, 2023 , there was $1.3 million of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 1.92 years.
Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. On June 16, 2023, we entered into an at-the-market offering agreement (the “ATM Agreement”) with H.C. Wainwright (“Wainwright”).
Astrotech Technologies, Inc. ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1 st Detect. Long recognized as the gold standard in chemical detection, mass spectrometry has historically been considered to be too costly, bulky, and cumbersome. In contrast, the AMS Technology has been designed to be comparatively inexpensive, small, and easy to use.
BreathTech holds an exclusive AMS Technology license from ATI for breath analysis applications. Astrotech Technologies, Inc. ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1st Detect. Long recognized as the gold standard in chemical detection, mass spectrometry has historically been too costly, bulky, and cumbersome.

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