UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  March 31, 20192020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 001-34426

 

Astrotech Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

91-1273737

State or Other Jurisdiction of

Incorporation or Organization

 

I.R.S. Employer Identification No.

 

 

 

201 West 5th Street, Suite 1275, Austin, Texas

 

78701

Address of Principal Executive Offices

 

Zip Code

 

(512) 485-9530

Registrant’s Telephone Number, Including Area Code

Not Applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ASTC

NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 


Large accelerated filer

 

 ☐

  

Accelerated filer

 

 ☐

Non-accelerated filer

 

 ☑

  

Smaller reporting company

 

 ☑

Emerging growth company

 

 ☐

 

 

 

 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ASTC

NASDAQ Stock Market, LLC

As of May 8, 2019,13, 2020, the number of shares of the registrant’s common stock outstanding was: 5,776,509.7,575,464.

 

 

 


ASTROTECH CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I:

 

FINANCIAL INFORMATION

 

4

 

 

 

 

 

ITEM 1.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

4

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

1719

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

2225

ITEM 4.

 

CONTROLS AND PROCEDURES

 

2225

 

 

 

 

 

PART II:

 

OTHER INFORMATION

 

2326

 

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

2326

ITEM 1A.

 

RISK FACTORS

 

2326

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

2327

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

2327

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

2327

ITEM 5.

 

OTHER INFORMATION

 

2327

ITEM 6.

 

EXHIBITS

 

2428

 

 


 

PART I: FINANCIAL INFORMATION

ITEM 1.   Condensed Consolidated Financial Statements

ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

 

 

March 31,

2020

 

 

June 30,

2019

 

 

March 31,

2019

 

 

June 30,

2018

 

 

(Unaudited)

 

 

(Note)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,524

 

 

$

552

 

 

$

4,660

 

 

$

1,588

 

Short-term investments

 

 

 

 

 

3,551

 

Accounts receivable, net of allowance

 

 

41

 

 

 

12

 

Restricted cash

 

 

122

 

 

 

 

Accounts receivable, net of allowance of $0

 

 

85

 

 

 

3

 

Inventory:

 

 

 

 

 

 

 

 

Raw materials

 

 

374

 

 

 

150

 

Work-in-process

 

 

155

 

 

 

181

 

Finished goods

 

 

64

 

 

 

 

Income tax receivable

 

 

429

 

 

 

 

 

 

429

 

 

 

429

 

Prepaid expenses and other current assets

 

 

328

 

 

 

161

 

 

 

239

 

 

 

371

 

Total current assets

 

 

2,322

 

 

 

4,276

 

 

 

6,128

 

 

 

2,722

 

Property and equipment, net

 

 

531

 

 

 

733

 

 

 

371

 

 

 

469

 

Deferred tax asset

 

 

429

 

 

 

 

Long-term investments

 

 

 

 

 

50

 

Other assets, net

 

 

81

 

 

 

81

 

Operating leases, right-of-use assets, net

 

 

937

 

 

 

 

Long-term tax receivable

 

 

-

 

 

 

429

 

Other assets

 

 

72

 

 

 

72

 

Total assets

 

$

3,363

 

 

$

5,140

 

 

$

7,508

 

 

$

3,692

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

139

 

 

 

112

 

 

 

188

 

 

 

160

 

Payroll-related accruals

 

 

312

 

 

 

412

 

Accrued liabilities and other

 

 

393

 

 

 

434

 

Payroll related accruals

 

 

412

 

 

 

319

 

Accrued expenses and other liabilities

 

 

718

 

 

 

357

 

Income tax payable

 

 

2

 

 

 

2

 

 

 

2

 

 

 

2

 

Term note payable - related party

 

 

2,500

 

 

 

 

Lease liabilities, current

 

 

326

 

 

 

 

Total current liabilities

 

 

846

 

 

 

960

 

 

 

4,146

 

 

 

838

 

Lease liabilities, non-current

 

 

711

 

 

 

 

Other liabilities

 

 

156

 

 

 

188

 

 

 

 

 

 

146

 

Total liabilities

 

 

1,002

 

 

 

1,148

 

 

 

4,857

 

 

 

984

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, convertible, 2,500,000 shares authorized; no shares issued and outstanding at March 31, 2019 and June 30, 2018, respectively

 

 

 

 

 

 

Common stock, $0.001 par value, 15,000,000 shares authorized; 6,176,425 and 4,496,873 shares issued at March 31, 2019 and June 30, 2018, respectively; 5,776,509 and 4,097,346 shares outstanding at March 31, 2019 and June 30, 2018, respectively

 

 

190,648

 

 

 

190,570

 

Treasury stock, 399,916 and 399,527 shares at cost at March 31, 2019 and June 30, 2018, respectively

 

 

(4,129

)

 

 

(4,128

)

Convertible preferred stock, $0.001 par value, 2,500,000 shares authorized; 280,898 shares of Series C and 280,898 shares of Series D issued and outstanding at March 31, 2020 and June 30, 2019, respectively

 

 

 

 

 

 

Common stock, $0.001 par value, 15,000,000 shares authorized; 7,975,388 and 6,184,698 shares issued at March 31, 2020 and June 30, 2019, respectively; 7,575,742 and 5,775,171 shares outstanding at March 31, 2020 and June 30, 2019, respectively

 

 

190,599

 

 

 

190,571

 

Treasury stock, 399,916 shares at cost at March 31, 2020 and June 30, 2019, respectively

 

 

(4,129

)

 

 

(4,129

)

Additional paid-in capital

 

 

5,798

 

 

 

1,745

 

 

 

13,868

 

 

 

7,964

 

Accumulated deficit

 

 

(189,956

)

 

 

(184,164

)

 

 

(197,687

)

 

 

(191,698

)

Accumulated other comprehensive loss

 

 

 

 

 

(31

)

Total stockholders’ equity

 

 

2,361

 

 

 

3,992

 

 

 

2,651

 

 

 

2,708

 

Total liabilities and stockholders’ equity

 

$

3,363

 

 

$

5,140

 

 

$

7,508

 

 

$

3,692

 

 

See accompanying notes to unaudited condensed consolidated financial statements.


ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

 

 

$

 

 

$

40

 

 

$

41

 

 

$

118

 

 

 

 

 

$

324

 

 

$

40

 

Cost of revenue

 

 

 

 

 

 

 

 

11

 

 

 

24

 

 

 

111

 

 

 

 

 

 

307

 

 

 

11

 

Gross profit

 

 

 

 

 

 

 

 

29

 

 

 

17

 

 

 

7

 

 

 

 

 

 

17

 

 

 

29

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

1,238

 

 

 

1,363

 

 

 

3,667

 

 

 

4,397

 

 

 

1,193

 

 

 

1,238

 

 

 

3,505

 

 

 

3,667

 

Research and development

 

 

1,026

 

 

 

1,495

 

 

 

3,027

 

 

 

4,721

 

 

 

814

 

 

 

1,026

 

 

 

2,608

 

 

 

3,027

 

Total operating expenses

 

 

2,264

 

 

 

2,858

 

 

 

6,694

 

 

 

9,118

 

 

 

2,007

 

 

 

2,264

 

 

 

6,113

 

 

 

6,694

 

Loss from operations

 

 

(2,264

)

 

 

(2,858

)

 

 

(6,665

)

 

 

(9,101

)

 

 

(2,000

)

 

 

(2,264

)

 

 

(6,096

)

 

 

(6,665

)

Interest and other income, net

 

 

12

 

 

 

3

 

 

 

15

 

 

 

103

 

Loss before income taxes

 

 

(2,252

)

 

 

(2,855

)

 

 

(6,650

)

 

 

(8,998

)

Interest and other expense, net

 

 

(68

)

 

 

12

 

 

 

(123

)

 

 

15

 

Loss from operations before income taxes

 

 

(2,068

)

 

 

(2,252

)

 

 

(6,219

)

 

 

(6,650

)

Income tax benefit

 

 

858

 

 

 

 

 

 

858

 

 

 

 

 

 

 

 

 

858

 

 

 

 

 

 

858

 

Net loss

 

$

(1,394

)

 

$

(2,855

)

 

$

(5,792

)

 

$

(8,998

)

 

$

(2,068

)

 

$

(1,394

)

 

$

(6,219

)

 

$

(5,792

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

5,467

 

 

 

4,060

 

 

 

4,734

 

 

 

4,059

 

 

 

6,107

 

 

 

5,467

 

 

 

5,934

 

 

 

4,734

 

Basic and diluted net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(0.25

)

 

$

(0.70

)

 

$

(1.22

)

 

$

(2.22

)

 

$

(0.34

)

 

$

(0.25

)

 

$

(1.05

)

 

$

(1.22

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,394

)

 

$

(2,855

)

 

$

(5,792

)

 

$

(8,998

)

 

$

(2,068

)

 

$

(1,394

)

 

$

(6,219

)

 

$

(5,792

)

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain

 

 

 

 

 

(32

)

 

 

 

 

 

(67

)

Reclassification adjustment for realized loss

 

 

 

 

 

42

 

 

 

31

 

 

 

76

 

 

 

 

 

 

 

 

 

 

 

 

31

 

Total comprehensive loss

 

$

(1,394

)

 

$

(2,845

)

 

$

(5,761

)

 

$

(8,989

)

 

$

(2,068

)

 

$

(1,394

)

 

$

(6,219

)

 

$

(5,761

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 



ASTROTECH CORPORATION

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class C

 

 

Class D

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

Outstanding

 

 

Amount

 

 

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, 2019

 

 

281

 

 

$

 

 

 

281

 

 

$

 

 

 

5,775

 

 

$

190,571

 

 

$

(4,129

)

 

$

7,964

 

 

$

(191,698

)

 

$

 

 

$

2,708

 

Adjustment to opening retained earnings related to adoption of ASC Topic 842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230

 

 

 

 

 

 

230

 

Issuance of shares, net of offering issuance costs of $7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

146

 

 

 

 

 

 

 

 

 

321

 

 

 

 

 

 

 

 

 

321

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

 

 

78

 

Restricted stock issuance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,068

)

 

 

 

 

 

(2,068

)

Balance at September 30, 2019

 

 

281

 

 

$

 

 

 

281

 

 

$

 

 

 

5,926

 

 

$

190,597

 

 

$

(4,129

)

 

$

8,363

 

 

$

(193,536

)

 

$

 

 

$

1,295

 

Issuance of stock, net of offering issuance costs of $19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

433

 

 

 

1

 

 

 

 

 

 

951

 

 

 

 

 

 

 

 

 

952

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

97

 

 

 

 

 

 

 

 

 

97

 

Cancellation of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

(11

)

Forfeiture of stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,083

)

 

 

 

 

 

(2,083

)

Balance at December 31, 2019

 

 

281

 

 

 

 

 

 

281

 

 

 

 

 

 

6,348

 

 

$

190,598

 

 

$

(4,129

)

 

$

9,397

 

 

$

(195,619

)

 

$

 

 

$

247

 

Issuance of stock, net of offering issuance costs of $667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,227

 

 

 

1

 

 

 

 

 

 

4,376

 

 

 

 

 

 

 

 

 

4,377

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95

 

 

 

 

 

 

 

 

 

95

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,068

)

 

 

 

 

 

(2,068

)

Balance at March 31, 2020

 

 

281

 

 

 

 

 

 

281

 

 

 

 

 

 

7,575

 

 

$

190,599

 

 

$

(4,129

)

 

$

13,868

 

 

$

(197,687

)

 

$

 

 

$

2,651

 


 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2018

 

 

4,097

 

 

$

190,570

 

 

$

(4,128

)

 

$

1,745

 

 

$

(184,164

)

 

$

(31

)

 

$

3,992

 

Net change in available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

31

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

44

 

 

 

 

 

 

 

 

 

44

 

Cancellation of restricted stock

 

 

(5

)

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

Forfeiture of stock options

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Exercise of stock options

 

 

3

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Share repurchases

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

(1

)

Restricted stock issuance

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,238

)

 

 

 

 

 

(2,238

)

Balance at September 30, 2018

 

 

4,095

 

 

$

190,565

 

 

$

(4,129

)

 

$

1,793

 

 

$

(186,402

)

 

$

 

 

$

1,827

 

Issuance of stock, net of offering costs

 

 

1,277

 

 

 

1

 

 

 

 

 

 

2,920

 

 

 

 

 

 

 

 

 

2,921

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

45

 

Forfeiture of stock options

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Restricted stock issuance

 

 

199

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,160

)

 

 

 

 

 

(2,160

)

Balance at December 31, 2018

 

 

5,571

 

 

$

190,584

 

 

$

(4,129

)

 

$

4,757

 

 

$

(188,562

)

 

$

 

 

$

2,650

 

Issuance of stock, net of offering costs

 

 

206

 

 

 

 

 

 

 

 

 

998

 

 

 

 

 

 

 

 

 

998

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

 

 

 

 

 

 

43

 

Restricted stock issuance

 

 

 

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,394

)

 

 

 

 

 

(1,394

)

Balance at March 31, 2019

 

 

5,777

 

 

$

190,648

 

 

$

(4,129

)

 

$

5,798

 

 

$

(189,956

)

 

$

 

 

$

2,361

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

Outstanding

 

 

Amount

 

 

Treasury

Stock

Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Deficit

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Total

Stockholders’

Equity

 

 

Class C

 

 

Class D

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2017

 

 

4,111

 

 

$

190,382

 

 

$

(4,121

)

 

$

1,483

 

 

$

(170,913

)

 

$

(61

)

 

$

16,770

 

Net change in available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

Number of

Shares

Outstanding

 

 

Amount

 

 

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, 2018

 

 

 

 

$

 

 

 

 

 

$

 

 

 

4,097

 

 

$

190,570

 

 

$

(4,128

)

 

$

1,745

 

 

$

(184,164

)

 

$

(31

)

 

$

3,992

 

Net change in available-for-sale debt and marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

31

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44

 

 

 

 

 

 

 

 

 

44

 

Cancellation of restricted stock

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

Forfeiture of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Share repurchases

 

 

(1

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

(1

)

Restricted stock issuance

 

 

 

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,006

)

 

 

 

 

 

(3,006

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,238

)

 

 

 

 

 

(2,238

)

Balance at September 30, 2017

 

 

4,108

 

 

$

190,437

 

 

$

(4,124

)

 

$

1,550

 

 

$

(173,919

)

 

$

(59

)

 

$

13,885

 

Net change in available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Balance at September 30, 2018

 

 

 

 

$

 

 

 

 

 

$

 

 

 

4,095

 

 

$

190,565

 

 

$

(4,129

)

 

$

1,793

 

 

$

(186,402

)

 

$

 

 

$

1,827

 

Issuance of stock, net of offering issuance costs of $73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,277

 

 

 

1

 

 

 

 

 

 

2,920

 

 

 

 

 

 

 

 

 

2,921

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

45

 

Forfeiture of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Restricted stock issuance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

199

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,160

)

 

 

 

 

 

(2,160

)

Balance at December 31, 2018

 

 

 

 

$

 

 

 

 

 

$

 

 

 

5,571

 

 

$

190,584

 

 

$

(4,129

)

 

$

4,757

 

 

$

(188,562

)

 

$

 

 

$

2,650

 

Issuance of stock, net of offering issuance costs of $19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

206

 

 

 

 

 

 

 

 

 

998

 

 

 

 

 

 

 

 

 

998

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

 

 

 

 

 

 

43

 

Restricted stock issuance

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,137

)

 

 

 

 

 

(3,137

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,394

)

 

 

 

 

 

(1,394

)

Balance at December 31, 2017

 

 

4,108

 

 

$

190,491

 

 

$

(4,124

)

 

$

1,616

 

 

$

(177,056

)

 

$

(62

)

 

$

10,865

 

Net change in available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

92

 

 

 

 

 

 

 

 

 

92

 

Restricted stock issuance

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,855

)

 

 

 

 

 

(2,855

)

Balance at March 31, 2018

 

 

4,108

 

 

$

190,544

 

 

$

(4,124

)

 

$

1,708

 

 

$

(179,911

)

 

$

(52

)

 

$

8,165

 

Balance at March 31, 2019

 

 

 

 

$

 

 

 

 

 

$

 

 

 

5,777

 

 

$

190,648

 

 

$

(4,129

)

 

$

5,798

 

 

$

(189,956

)

 

$

 

 

$

2,361

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 


ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

2019

 

 

2018

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,792

)

 

$

(8,998

)

 

$

(6,219

)

 

$

(5,792

)

Adjustments to reconcile net loss to net cash used in operating

activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

205

 

 

 

387

 

 

 

282

 

 

 

205

 

Amortization

 

 

6

 

 

 

19

 

Depreciation

 

 

200

 

 

 

576

 

Depreciation and amortization

 

 

327

 

 

 

206

 

Deferred income tax benefit

 

 

(429

)

 

 

 

 

 

 

 

 

(429

)

Net loss on sale of available-for-sale investments

 

 

31

 

 

 

76

 

 

 

 

 

 

31

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(29

)

 

 

142

 

 

 

(82

)

 

 

(29

)

Inventory

 

 

(262

)

 

 

 

Income tax receivable

 

 

(429

)

 

 

 

 

 

 

 

 

(429

)

Accounts payable

 

 

27

 

 

 

(135

)

 

 

28

 

 

 

27

 

Other assets and liabilities

 

 

(340

)

 

 

(708

)

 

 

970

 

 

 

(340

)

Net cash used in operating activities

 

 

(6,550

)

 

 

(8,641

)

 

 

(4,956

)

 

 

(6,550

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sale of available-for-sale investments

 

 

3,345

 

 

 

5,458

 

Maturities of available-for-sale securities

 

 

250

 

 

 

1,649

 

Proceeds from sale of available-for-sale investments

 

 

 

 

 

3,345

 

Proceeds from maturities of securities

 

 

 

 

 

250

 

Sale of property and equipment

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Purchases of property and equipment

 

 

 

 

 

(14

)

Net cash provided by investing activities

 

 

3,597

 

 

 

7,093

 

 

 

 

 

 

3,597

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments for purchase of treasury stock

 

 

(1

)

 

 

(3

)

 

 

 

 

 

(1

)

Proceeds from term note payable - related party

 

 

2,500

 

 

 

 

Proceeds from exercise of stock options

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Proceeds from issuance of common stock, net of offering costs

 

 

3,919

 

 

 

 

Net cash provided by (used in) financing activities

 

 

3,925

 

 

 

(3

)

Proceeds from issuance of stock, net of offering issuance costs

 

 

5,650

 

 

 

3,919

 

Net cash provided by financing activities

 

 

8,150

 

 

 

3,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

$

972

 

 

$

(1,551

)

Cash and cash equivalents at beginning of period

 

 

552

 

 

 

2,184

 

Cash and cash equivalents at end of period

 

$

1,524

 

 

$

633

 

Net change in cash and cash equivalents and restricted cash

 

$

3,194

 

 

 

972

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

1,588

 

 

 

552

 

Cash and cash equivalents and restricted cash at end of period

 

$

4,782

 

 

$

1,524

 

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents and restricted cash at end of period:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,660

 

 

$

1,524

 

Restricted cash

 

 

122

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,782

 

 

$

1,524

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

 

 

$

 

 

$

 

 

$

 

Income taxes paid

 

$

 

 

$

 

 

$

 

 

$

 

Impact to retained earnings from adoption of ASC Topic 842

 

$

230

 

 

$

 

Operating right-of-use assets and associated liabilities

 

$

1,608

 

 

$

 

 

See accompanying notes to unaudited condensed consolidated financial statements.


ASTROTECH CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) General Information

Description of the Company – Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” “the Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a science and technology development and commercialization company that launches, manages, and builds scalable companies based on innovative technology in order to maximize shareholder value.

 

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared by Astrotech Corporation in accordance with United States Generally Accepted Accounting Principlesgenerally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the nine months ended March 31, 20192020 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019.2020. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

Accounting Pronouncements – In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”) and ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company’s population of leases consists of two property leases of 17,560 square feet expiring in April 2020 and 5,219 square feet expiring in December 2023, and a few office equipment leases. The Company has engaged a third-party to assist in assessing and implementing the new standard, including classification of leases, identifying lease and non-lease components, discount rates, and the practical expedients that are available under the guidance. The Company expects to complete the assessment and impact of adopting the new standard by the end of fiscal year 2019.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting standards, and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current generally accepted accounting standards; however, ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. This amendment affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of this standard will have on its financial statements.

 

Our Business Units

Astrotech Technology, Inc.

Astrotech Technology, Inc. (“ATI”) owns and licenses the Astrotech Mass Spectrometer Technology™ (the “AMS Technology™”), the platform mass spectrometry technology originally developed by 1st Detect Corporation (“1st Detect”).  The intellectual property includes 37 granted patents and five additional patents in process.  With a number of diverse market opportunities for the core technology, ATI licenses the intellectual property for different fields of use. ATI currently licenses the intellectual property to 1st 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 the healthcare industry.    

 

1st Detect Corporation

 

1st Detect, Corporationa licensee of ATI, has developed the TRACER 1000™, the world’s first mass spectrometer (“1st Detect”MS”) is a manufacturer ofbased explosives and narcoticstrace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the explosives trace detectors developed for useused at airports, secured facilities, and borders worldwide. The TRACER 1000

AgLAB Inc.

AgLAB, a licensee of ATI, is currently undergoing regulatory testing with bothdeveloping the Transportation Security Administration (“TSA”)AgLAB-1000™ series of mass spectrometers for use in the agriculture market. These systems are being designed for applications in the hemp and European Civil Aviation Conference (“ECAC”) as certification by either agency is necessarycannabis markets to sell the TRACER 1000maximize processing efficiencies and to the airport market. On June 19, 2018, the Company announced that the TRACER 1000 had entered the ECAC Common Evaluation Process (“CEP”) to obtain certification in Europe. On December 12, 2018, the Company announced that the TRACER 1000 passed the ECAC CEP tests for airport checkpoint screening of


passengers. On January 9, 2019, the Company subsequently announced that the TRACER 1000 passed the CEP tests for airport cargo screening. Finally, on February 21, 2019, the Company announced that 1st Detect received ECAC certification for both passenger and cargo screening for the TRACER 1000, and the Company can now begin selling its product internationally.detect pesticides.  

 

In addition, 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 began testing with TSA for passenger screening at airports. Both programs are currently progressing as expected.BreathTech Corporation

 

With TSA and ECAC having twoBreathTech, a licensee of the most rigorous technology review programsATI, is developing a breath analysis tool to screen for Explosive Trace Detectorsvolatile organic compound (“ETDs”VOC”) metabolites found in the world, we believe certification by either program is a significant endorsementperson’s breath that customers in other vertical markets consider when procuring ETDs.

There is no assurance that any of the further steps detailed above will be achievedcould indicate they may have an infection, including Coronavirus Disease 2019 (“COVID-19”) or that our technology will be approved by any of the programs.pneumonia.

 

Astral Images Corporation

 

Astral Images Corporation (“Astral”) is a developer ofdeveloped advanced film restoration and enhancement software. Astral’s intelligent algorithms remove dust, scratches, and defects from film while converting the content to a digital format with significantly enhanced resolution. In addition, Astral employs Artificial Intelligence to automatically extend the color gamut and enhance the dynamic range to be viewed in 4K and/or high-dynamic range (“HDR”), collectively known as ultra-high definition (“UHD”).

Although we believe Astral has developed valuable technology fortified by patents and trade secrets, the potential market has not evolvedyet advanced as quickly as anticipated. Due to funding constraints, the Company’s mainprimary focus remains on the 1st Detect opportunity.pursuit of opportunities for its platform mass spectrometry technology. Consequently, headcount and expenditures at Astralefforts are minimized and new development is exclusively focused on strategic initiatives that wouldto facilitate the realization of Astral’s value.

Accounting Pronouncements – In February 2016, the Financial Standards Accounting Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02: Leases (“Topic 842” or “ASU 2016-02”) and ASU 2018-10: Codification Improvements to Topic 842, Leases (“ASU 2018-10”) which provide an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. This ASU requires lessees to recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet for all leases, with the exception of short-term leases. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For statement of operations


purposes, leases are still required to be classified as either operating or financing. Operating leases will result in straight-line expense while financing leases will result in a front-loaded expense pattern.

On July 1, 2019, the Company adopted Topic 842 using the modified retrospective approach and the impact of the adoption of Topic 842 resulted in the recognition of an ROU asset and lease obligation on the Company’s condensed consolidated balance sheets of approximately $1.6 million and an adjustment to retained earnings of $230 thousand. This application of the modified retrospective method will result in a balance sheet presentation that will not be comparable to the prior period in the first year of adoption. Results for reporting periods after July 1, 2019 are presented under Topic 842, while prior periods have not been adjusted. The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease classifications. Subsequent to the end of the second quarter of fiscal year 2020, the Company amended its lease for its 1st Detect facility, resulting in a reduction of the associated ROU asset and lease obligation of $414 thousand in the second quarter of fiscal year 2020. See Note 3 Leases for more information.

(2)(2) Going Concern

Financial Condition

The Company’s consolidated financial statements for the three and nine months ended March 31, 20192020 have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2019,2020, the Company hashad cash and cash equivalents of $4.7 million and restricted cash of $0.1 million, and working capital was approximately $2.0 million. Restricted cash consists of $1.5 million.two letters of credit relating to purchase orders for the TRACER 1000 product. The Company reported a net loss of $13.3$7.5 million for the fiscal year 20182019 and a net loss of $5.8$6.2 million for the nine months ended March 31, 2019,2020, along with net cash used in operating activities of $10.8$8.5 million for the fiscal year 20182019 and net cash used in operating activities of $6.6$5.0 million for the nine months ended March 31, 2019.2020. This raises substantial doubt about the Company’s ability to continue as a going concern.

Management’s Plans to Continue as a Going Concern

The Company remains resolute in identifying the optimal solution to its liquidity issue. The Company is currently evaluating several potential sources for additional liquidity. These include, but are not limited to, selling the Company or a portion thereof, licensing some of its technology, raising additional funds through capital markets, debt financing, equity financing, merging, or engaging in a strategic partnership. On July 3, 2018, management filed Form S-3 to raise funds through the capital markets. On October 9, 2018,February 13, 2020, the Company raised $3.0 million inentered into a private placement of equity securities totransaction with Mr. Thomas B. Pickens III, the Company’s Chairman of the Board and Chief Executive Officer, Thomas B.for the issuance and sale of a secured promissory note to Mr. Pickens III, andwith a long-term accredited investor in the Company. Asprincipal amount of $1.0 million. On March 31, 2019,25, 2020, the Company hasentered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 354,000 shares of the Company’s common stock, par value $0.001 per share, at an offering price of $5.00 per share, resulting in net proceeds of approximately $1.6 million. On March 27, 2020, the Company entered into a second securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 873,335 shares of the Company’s common stock, par value $0.001 per share, at an offering price of $3.75 per share, resulting in net proceeds of approximately $2.9 million. The Company received net proceeds of approximately $1.0$2.3 million through the sale of shares of common stock from November 9, 2018 through March 25, 2020 through an “at the market offering” program (the “ATM Offering”)., which was terminated on March 25, 2020. On April 17, 2019, the Company raised $2.0 million in a private placement of equity securities to Mr. Pickens, and a long-term accredited investor in the Company. The Company is currently evaluating potential offerings of any combination of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities. However, additional funding may not be available when needed or on terms acceptable to us.  If we are unable to generate funding within a reasonable timeframe, we may have to delay, reduce or terminate our research and development programs, limit strategic opportunities, or curtail our business activities. Astrotech’s consolidated financial statements as of March 31, 20192020 do not include any adjustments that might result from the outcome of this uncertainty.

COVID-19

In March 2020, the World Health Organization declared COVID-19 a global pandemic. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.


It is possible that the continued spread of COVID-19 could cause disruption in the Company’s  supply chain; cause delay, or limit the ability of customers to perform, including in making timely payments to the Company; cause delay in regulatory certification testing of the Company’s instruments; impact investment performance; and cause other unpredictable events. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity, or results of operations is uncertain.

(3) InvestmentsLeases

 

As of March 31,July 1, 2019, the Company did not hold any investments.adopted Topic 842, using the modified retrospective method of adoption. Astrotech elected to use the transition option that allows the Company to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. Comparable periods continue to be presented under the guidance of the previous standard, Accounting Standards Codification (“ASC”) Topic 840. Topic 842 requires lessees to recognize a lease liability and ROU asset on the balance sheet for operating leases. The following table summarizes unrealized gains and losses relatedadoption of Topic 842 resulted in an adjustment to our investments asretained earnings of June 30, 2018:$230 thousand.

                

 

 

June 30, 2018

 

Available-for-Sale

 

Adjusted

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

(In thousands)

 

Cost

 

 

Gain

 

 

Loss

 

 

Value

 

Mutual Funds - Corporate & Government Debt

 

$

1,751

 

 

$

 

 

$

(23

)

 

$

1,728

 

Fixed Income Bonds

 

 

1,333

 

 

 

 

 

 

(5

)

 

 

1,328

 

Time Deposits

 

 

548

 

 

 

 

 

 

(3

)

 

 

545

 

Total

 

$

3,632

 

 

$

 

 

$

(31

)

 

$

3,601

 

For informationThe Company has two existing facility leases and several small equipment leases. Astrotech leases office space consisting of 5,219 square feet in Austin, Texas that houses executive management, finance and accounting, sales, and marketing and communications. The lease began in November 2016 and expires in December 2023 with a provision to renew and extend the lease for the entire premises for one renewal term of five years. Astrotech must, in writing, advise the landlord of its intention to renew the lease at least eight months before the expiration of its current lease in order to renew the lease.In May 2013, 1st Detect completed build-out of a 16,540 square foot leased research and development and production facility in Webster, Texas. This facility is equipped with state-of-the-art laboratories, a clean room, a production shop, and offices for staff. The term of the lease is 62 months and includes options to extend for two additional five-year periods. In February 2015, 1st Detect exercised its right of first refusal on the unrealized holding losses on available-for-sale investments reclassified outadjoining space of accumulated other comprehensive loss into9,138 square feet. The original lease began in May 2013 and was to expire in June 2018; these dates were amended in October 2014 with the consolidated statementsamended lease beginning February 1, 2015, and expiring April 30, 2020, with provisions to renew and extend the lease for the entire premises, but not less than the entire premises, for two renewal terms of income, see “Note 8: Other Comprehensive Loss.”

As offive years each. On June 30,1, 2018, the Company had certain financial instrumentsentered into its third amendment of the original lease removing 8,118 square feet from its leased space, leaving leased premises with a total square footage of 17,560. On January 21, 2020, the Company entered into its fourth amendment of the original lease, with the amended lease beginning May 1, 2020 and expiring April 30, 2021, with the option to renew and extend the lease for one renewal term of one year. This amendment resulted in an adjustment to the associated ROU asset and operating liability of $414 thousand during the six months ended December 31, 2019. 

Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its condensed consolidatedincremental borrowing rate in determining the present value of lease payments. Significant judgement is required when determining the Company’s incremental borrowing rate. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Upon the adoption of Topic 842, the Company’s accounting for financing leases, previously referred to as capital leases, remains substantially unchanged from prior guidance.

The balance sheet related to interest-bearing time deposits and fixed income bonds. These time deposits are included in “Short-term Investments” if the maturities at the endpresentation of the reporting period were 360 days or less or “Long-term Investments” if the maturities at the end of the reporting period were over 360 days. Fixed income investments, maturing over one to three years, comprised a set of highly diversified bonds issued by various corporationsCompany’s operating and entities that in aggregate represented an above average investment-grade fixed income portfolio.finance leases is as follows:

The following table presents the carrying amounts of certain financial instruments

(In thousands)

 

Classification on the Condensed Consolidated Balance Sheet

 

March 31, 2020

 

Assets:

 

 

 

 

 

 

Operating lease assets

 

Operating leases, right-of-use assets, net

 

$

937

 

Financing lease assets

 

Property and equipment, net

 

 

52

 

Total lease assets

 

 

 

$

989

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Current:

 

 

 

 

 

 

Operating lease obligations

 

Lease liabilities, current

 

$

317

 

Financing lease obligations

 

Lease liabilities, current

 

 

9

 

Non-current:

 

 

 

 

 

 

Operating lease obligations

 

Lease liabilities, non-current

 

 

668

 

Financing lease obligations

 

Lease liabilities, non-current

 

 

43

 

Total lease liabilities

 

 

 

$

1,037

 




Future minimum lease payments as of March 31, 2019, and June 30, 2018:2020 under non-cancellable leases are as follows:

 

 

 

Carrying Value

 

 

 

Short-Term Investments

 

 

Long-Term Investments

 

(In thousands)

 

March 31, 2019

 

 

June 30, 2018

 

 

March 31, 2019

 

 

June 30, 2018

 

Mutual Funds - Corporate & Government Debt

 

$

 

 

$

1,728

 

 

$

 

 

$

 

Time deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities from 91-360 days

 

 

 

 

 

495

 

 

 

 

 

 

 

Maturities over 360 days

 

 

 

 

 

 

 

 

 

 

 

50

 

Fixed Income Bonds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities less than 1 year

 

 

 

 

 

1,328

 

 

 

 

 

 

 

Maturities from 1-3 years

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

 

 

$

3,551

 

 

$

 

 

$

50

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended June 30,

 

Operating Leases

 

 

Financing Leases

 

 

Total

 

2020

 

$

101

 

 

$

3

 

 

$

104

 

2021

 

 

413

 

 

 

12

 

 

 

425

 

2022

 

 

388

 

 

 

12

 

 

 

400

 

2023

 

 

219

 

 

 

12

 

 

 

231

 

2024

 

 

37

 

 

 

12

 

 

 

49

 

Thereafter

 

 

 

 

 

9

 

 

 

9

 

Total lease obligations

 

 

1,158

 

 

 

60

 

 

 

1,218

 

Less: imputed interest

 

 

173

 

 

 

8

 

 

 

181

 

Present value of net minimum lease obligations

 

 

985

 

 

 

52

 

 

 

1,037

 

Less: lease liabilities - current

 

 

317

 

 

 

9

 

 

 

326

 

Lease liabilities - non-current

 

$

668

 

 

$

43

 

 

$

711

 

Other information as of March 31, 2020 is as follows:

Weighted-average remaining lease term (years):

Operating leases

2.8

Financing leases

4.9

Weighted-average discount rate:

Operating leases

11.0

%

Financing leases

6.2

%

Cash payments for operating leases for the three and nine months ended March 31, 2020 totaled $96 thousand and $288 thousand, respectively. Cash payments for financing leases for each of the three and nine months ended March 31, 2020 totaled $1 thousand.

 

(4) Stockholders’ Equity

 

On OctoberFrom November 9, 2018 through March 25, 2020, the Company entered into a Securities Purchase Agreement (“Agreement No. 1”) with Thomas B. Pickens III, the Chief Executive Officer and Chairman of the Board of Directors of the Company, and a long-term accredited investor in the Company (the “Investor”).

Pursuant to Agreement No. 1, the Company agreed to sell an aggregate of 866,950 shares of its series B convertible preferred stock, par value $0.001 per share (the “Preferred Shares”) to Mr. Pickens and 409,645 of its shares of common stock, par value $0.001 per share (the “Common Shares”) to the Investor, at a price per share of $2.35 and for aggregate gross proceeds of approximately $3.0 million. The purchase price of $2.35 per share was equal to the closing price on The NASDAQ Capital Market on October 8, 2018. The Preferred Shares converted into an aggregate of 866,950 shares of common stock on December 7, 2018 upon receipt of shareholder approval in accordance with NASDAQ Listing Rule 5635(b).

As of March 31, 2019, the Company has sold 205,540793,668 shares of common stock pursuant to an At the MarketAt-the-Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley FBR, under which B. Riley FBR actsacted as the sales agent. A prospectus relating to the ATM Offering was filed with the SEC on November 9, 2018. In connection with the sale of these shares of common stock, the Company has received net proceeds of $998,057.$2.3 million. The weighted-average sale price per share was $5.11.$3.04. No additional shares of the Company’s common stock will be sold pursuant to the ATM Agreement. The Company did not incur any termination penalties as a result of its termination of the ATM Agreement.

On March 25, 2020, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Offering No. 1”), 354,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an offering price of $5.00 per share. Registered Offering No. 1 resulted in gross proceeds of approximately $1.77 million before deducting the placement agent’s fees and related offering expenses. The shares from Registered Offering No. 1 were offered by the Company pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-226060), which was initially filed with the SEC on July 3, 2018, and was declared effective on August 20, 2018. Registered Offering No. 1 closed on March 26, 2020, subject to the satisfaction of customary closing conditions. In connection with Registered Offering No. 1, the Company also issued to the placement agent, or its designees, warrants (the “Warrants No. 1”) to purchase up to 24,780 shares of Common Stock, which represents 7.0% of the shares sold in Registered Offering No. 1. The Warrants No. 1 have an exercise price of $6.25 per share, which represents 125% of the per share offering price of the shares and a termination date of March 25, 2025.

On March 27, 2020, the Company entered into a second securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Offering No. 2”), 873,335 shares of the Company’s Common Stock, at an offering price of $3.75 per share. Registered Offering No. 2 resulted in gross proceeds of approximately $3.275 million before deducting the placement agent’s fees and related offering expenses. The shares from Registered Offering No. 2 were offered by the Company pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-226060), which was initially filed with the SEC on July 3, 2018, and was declared effective on August 20, 2018. Registered Offering No. 2 closed on March 30, 2020, subject to the satisfaction of customary closing conditions. In connection with Registered Offering No. 2, the Company also issued to the


placement agent, or its designees, warrants (the “Warrants No. 2” and collective with the Warrants No.1, the “Placement Agent Warrants”) to purchase up to 61,133 shares of Common Stock, which represents 7.0% of the Shares sold in Registered Offering No. 2. The Warrants No. 2 have an exercise price of $4.6875 per share, which represents 125% of the per share offering price of the shares and a termination date of March 27, 2025.

 

(5) Net Loss per Share

 

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


plus the effect of potentially dilutive common shares outstanding during the period using the treasury stock method and the if-converted method. Potentially dilutive common shares include outstanding stock options and share-based awards.Convertible preferred shares issued in October 2018 met the definition of participating securities, however, as a result of these participating securities not having a contractual obligation to share in the losses of the Company, they were not included in the computation of basic earnings per share using the two-class method due to the Company reporting a net loss for the nine months ended March 31, 2019.

 

The following table reconciles the numerators and denominators used in the computations of both basic and diluted net loss per share:

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

(In thousands, except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,394

)

 

$

(2,855

)

 

$

(5,792

)

 

$

(8,998

)

 

$

(2,068

)

 

$

(1,394

)

 

$

(6,219

)

 

$

(5,792

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic and diluted net loss per share — weighted average common stock outstanding

 

 

5,467

 

 

 

4,060

 

 

 

4,734

 

 

 

4,059

 

 

 

6,107

 

 

 

5,467

 

 

 

5,934

 

 

 

4,734

 

Basic and diluted net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(0.25

)

 

$

(0.70

)

 

$

(1.22

)

 

$

(2.22

)

 

$

(0.34

)

 

$

(0.25

)

 

$

(1.05

)

 

$

(1.22

)

 

All unvested restricted stock awards for the nine months ended March 31, 20192020 are not included in diluted net loss per share, as the impact to net loss per share would be anti-dilutive. Options to purchase 325,140326,153 shares of common stock at exercise prices ranging from $1.60$1.85 to $8.35 per share outstanding as of March 31, 20192020 were not included in diluted net loss per share, as the impact to net loss per share would be anti-dilutive.

(6) Revenue Recognition

Astrotech’s

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 the manner in whichhow products and services are provided. The Company currently employsguidelines of Topic 606 establish a five-step process to govern the following generally acceptedrecognition and reporting of revenue from contracts with customers. The five steps are: (i) identify the contract with a customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the performance obligations are satisfied.  

An additional factor is reasonable assurance of collectability. This necessitates deferral of all or a portion of revenue recognition methodology.

Software Licensing Agreements

When recognizing revenue for licensing software for use,until collection. During the three and nine months ended March 31, 2020, the Company will recognize it when it is realized or realizablehad one material revenue source, totaling $118 thousand and earned. The Company considers$324 thousand, respectively, and revenue realized or realizable and earned whenwas recognized at a firm sales contract or invoice ispoint in place, delivery has occurred or services have been provided, and collectability is reasonably assured.time consistent with the guidelines in Topic 606.

(7) Fair Value Measurement

The accounting standard for fair value measurements defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. The standard is applicable whenever assets and liabilities are measured and included in the financial statements at fair value.

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

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

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


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


As of March 31, 2019, the Company did not hold any investments. The following table presents the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of June 30, 2018: 

 

 

June 30, 2018

 

 

 

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

 

$

1,728

 

 

$

1,728

 

 

$

 

 

$

 

 

$

1,728

 

Bonds: 0-1 year

 

 

1,328

 

 

 

 

 

 

1,328

 

 

 

 

 

 

1,328

 

Time deposits: 91-360 days

 

 

495

 

 

 

 

 

 

495

 

 

 

 

 

 

495

 

Time deposits: over 360 days

 

 

50

 

 

 

 

 

 

50

 

 

 

 

 

 

50

 

Total

 

$

3,601

 

 

$

1,728

 

 

$

1,873

 

 

$

 

 

$

3,601

 

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). The2020, the fair value of our bondsthe Company’s cash and time deposits with maturities less than 90 days is considered the amortized value; the faircash equivalents and restricted cash approximate their carrying value measurements used for bonds and time deposits with maturities greater than 90 days is considered Level 2 and uses pricing from third-party pricing vendors who use quoted prices for identical or similar securities in both active and inactive markets.due to their short-term nature. 

 

(8) Other Comprehensive LossTerm Note Payable – Related Party

 

Changes inOn September 5, 2019, the balancesCompany entered into a private placement transaction with Thomas B. Pickens III, the Chief Executive Officer and Chairman of each component included in accumulated other comprehensive lossthe Board of Directors of the Company for the nine months ended March 31,issuance and sale of a secured promissory note (“Note No. 1”) to Mr. Pickens with a principal amount of $1.5 million. Interest on Note No. 1 shall accrue at 11% per annum. The principal amount and accrued interest on Note No. 1 shall become due and payable on September 5, 2020 (the “Maturity Date”). The Company may prepay the principal amount and all accrued interest on Note No. 1 at any time prior to the Maturity Date. In connection with the issuance of Note No. 1, the Company, along with 1st Detect Corporation and Astrotech Technologies, Inc. (the “Subsidiaries”), entered into a security agreement, dated as of September 5, 2019, are presented below.with Mr. Pickens (the “Security Agreement No. 1”), pursuant to which the Company and the Subsidiaries granted to Mr. Pickens a security interest in all of the Company’s and the Subsidiaries’ Collateral, as such term is defined in Security Agreement No. 1. In addition, the Subsidiaries jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay Note No. 1 pursuant to a subsidiary guarantee.

 

(In thousands)

 

Accumulated Other Comprehensive Loss

 

Unrealized Loss in Investments

 

 

 

 

Balance at June 30, 2018

 

$

(31

)

Reclassification to net loss for realized losses

 

 

31

 

Balance at March 31, 2019

 

$

 

On February 13, 2020, the Company entered into a second private placement transaction with Mr. Pickens for the issuance and sale of a secured promissory note (“Note No. 2”) to Mr. Pickens with a principal amount of $1.0 million. Interest on Note No. 2 shall accrue at 11% per annum. The principal amount and accrued interest on Note No. 2 shall become due and payable on the Maturity Date. The Company may prepay the principal amount and all accrued interest on Note No. 2 at any time prior to the Maturity Date. In connection with the issuance of Note No. 2, the Company, along with the Subsidiaries, entered into a second security agreement, dated as of February 13, 2020, with Mr. Pickens (the “Security Agreement No. 2”), pursuant to which the Company and the Subsidiaries granted to Mr. Pickens a security interest in all of the Company’s and the Subsidiaries’ Collateral, as such term is defined in Security Agreement No. 2. In addition, the Subsidiaries jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay Note No. 2 pursuant to a subsidiary guarantee.

 

(9) Business Risk and Credit Risk Concentration Involving Cash

 

During the three and nine months ended March 31, 2020, the Company had one customer that substantially comprised all of the Company’s revenue. During the three and nine months ended March 31, 2019, the Company recognized revenue from one customer. As of March 31, 2020, the Company’s trade accounts receivable balance was related to sales to a global shipping and logistics company.

The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (“FDIC”) of $250 thousand per depositor. The risk of loss attributable to these uninsured balances is mitigated by depositing funds in what we believe to be high credit quality financial institutions. The Company has not experienced any losses in such accounts.

 

(10) Common Stock Compensation

 

Stock Option Activity Summary

 

The Company’s stock option activity for the nine months ended March 31, 2019,2020, is as follows:

 

 

Shares

(in thousands)

 

 

Weighted Average

Exercise Price

 

 

Shares

(in thousands)

 

 

Weighted Average

Exercise Price

 

Outstanding at June 30, 2018

 

 

361

 

 

$

5.48

 

Outstanding at June 30, 2019

 

 

324

 

 

$

5.71

 

Granted

 

 

 

 

 

 

 

 

10

 

 

 

1.85

 

Exercised

 

 

(3

)

 

 

2.25

 

 

 

 

 

 

 

Canceled or expired

 

 

(33

)

 

 

3.45

 

 

 

(8

)

 

 

4.07

 

Outstanding at March 31, 2019

 

 

325

 

 

$

5.71

 

Outstanding at March 31, 2020

 

 

326

 

 

$

5.68

 

 

The aggregate intrinsic value of options exercisable at March 31, 2019,2020 was $17 thousand$0, as the fair value of the Company’s common stock is moreless than the exercise prices of these options. The remaining share-basedstock-based compensation expense of $193$33 thousand related to stock options will be recognized over a weighted-average period of 1.110.57 years.


The table below details the Company’s stock options outstanding as of March 31, 2019:2020:

 

Range of exercise prices

 

Number

Outstanding

 

 

Options

Outstanding

Weighted-

Average

Remaining

Contractual

Life (years)

 

 

Weighted-

Average

Exercise

Price

 

 

Number

Exercisable

 

 

Options

Exercisable

Weighted-

Average

Exercise

Price

 

 

Number

Outstanding

 

 

Options

Outstanding

Weighted-

Average

Remaining

Contractual

Life (years)

 

 

Weighted-

Average

Exercise

Price

 

 

Number

Exercisable

 

 

Options

Exercisable

Weighted-

Average

Exercise

Price

 

$1.60 – 3.55

 

 

70,500

 

 

 

3.23

 

 

$

3.39

 

 

 

70,500

 

 

$

3.39

 

$1.85 – 3.55

 

 

76,500

 

 

 

3.03

 

 

$

3.43

 

 

 

66,500

 

 

$

3.43

 

$5.30 – 5.85

 

 

124,640

 

 

 

8.11

 

 

 

5.48

 

 

 

41,951

 

 

 

5.47

 

 

 

119,653

 

 

 

7.11

 

 

 

5.48

 

 

 

76,909

 

 

 

5.49

 

$6.00 – 8.35

 

 

130,000

 

 

 

5.65

 

 

 

7.19

 

 

 

86,000

 

 

 

6.59

 

 

 

130,000

 

 

 

4.65

 

 

 

7.19

 

 

 

86,000

 

 

 

6.59

 

$1.60 – 8.35

 

 

325,140

 

 

 

6.07

 

 

$

5.71

 

 

 

198,451

 

 

$

5.21

 

$1.85 – 8.35

 

 

326,153

 

 

 

5.17

 

 

$

5.68

 

 

 

229,409

 

 

$

5.31

 

 

Compensation costs recognized related to stock option awards were $43 thousand and $93 thousand for each of the three months ended March 31, 2019,2020 and 2018, respectively,2019, and $128 thousand and $226 thousand for each of the nine months ended March 31, 2019,2020 and 2018, respectively.2019.

 

Restricted Stock

 

The Company’s restricted stock activity for the nine months ended March 31, 2019,2020, is as follows:

 

 

Shares

(in thousands)

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

Shares

(in thousands)

 

 

Weighted

Average

Grant-Date

Fair Value

 

Outstanding at June 30, 2018

 

 

28

 

 

$

10.16

 

Outstanding at June 30, 2019

 

 

208

 

 

$

4.06

 

Granted

 

 

199

 

 

 

3.40

 

 

 

5

 

 

 

2.47

 

Vested

 

 

(4

)

 

 

8.86

 

 

 

(63

)

 

 

3.77

 

Canceled or expired

 

 

(5

)

 

 

9.58

 

 

 

(11

)

 

 

3.97

 

Outstanding at March 31, 2019

 

 

218

 

 

$

4.03

 

Outstanding at March 31, 2020

 

 

139

 

 

$

3.96

 

 

Stock compensation expenses related to restricted stock were $64$52 thousand and $53$64 thousand for the three months ended March 31, 2019,2020 and 2018,2019, respectively, and $77$154 thousand and $161$77 thousand for the nine months ended March 31, 2019,2020, and 2018,2019, respectively. The remaining share-basedstock-based compensation expense of $626$359 thousand related to restricted stock awards granted will be recognized over a weighted-average period of 2.671.74 years.

 

(11) Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of March 31, 2019,2020, the Company established a valuation allowance against most of its net deferred tax assets. As of June 30, 2018, the Company established a full valuation allowance against all of its net deferred tax assets.

For the three months ended March 31, 20192020 and 2018,2019, the Company incurred pre-tax losses in the amount of $2.3$2.1 million and $2.9$2.3 million, respectively. For the nine months ended March 31, 20192020 and 2018,2019, the Company incurred pre-tax losses in the amount of $6.6$6.2 million and $9.0$6.7 million, respectively. The total effective tax rate was approximately 38% and 13% for the three and nine months ended March 31, 2019, respectively. The total effective tax rate was approximately 0% for the each of the three and nine months ended March 31, 2018.2020 and 2019.

For each of the threenine months ended March 31, 2020 and 2019, the Company’s effective tax rate differed from the federal statutory rate of 21% due to the Alternative Minimum Tax (“AMT”) credit referenced below. For the nine months ended March 31, 2019, the Company’s effective tax rate differed from the federal statutory rate of 21% due to the valuation allowance placed against its net deferred tax assets offset by the AMT credit. For the three and nine months ended March 31, 2018, the Company’s effective tax rate differed from the federal statutory rate of 28%, primarily due to the valuation allowance placed against its net deferred tax assets. 

The Tax CutsCoronavirus Aid, Relief, and JobsEconomic Security (“CARES”) Act, was enactedsigned into law on December 22, 2017.March 27, 2020. The CARES Act reducesprovided certain tax relief measures including the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earningsacceleration of certain foreign subsidiaries that werethe alternative minimum credit previously tax deferred, and creates new taxes on certain foreign sourced earnings. In the second quarter of fiscal 2018, the Company revised its estimated annual effective rate to reflect a change in its federal statutory rate from 35% to 21%.paid. The rate change was


effective on January 1, 2018; therefore, the Company’s blended statutory tax rateCARES Act allows for the fiscal year ended June 30, 2018 was 28%. The Tax Cuts and Jobs Act also removedacceleration of the refundable AMT credit up to 100% of the AMT credit. In connection with its analysis of the impact of the CARES Act and therefore any AMT previously paid will be a refundable credit. The AMT credit will be refunded 50% inpursuant to filing the current year for an amount of $429 thousand. The remaining AMT amount will be deferred and received according to the percentage schedule set forth by the Tax Cuts and Jobs Act until all the AMT amount is paid in full by 2021. Due to this,Form 1139, the Company has a current federalreclassed the refundable AMT credit of $429K from long-term to short-term receivable and recorded no income tax benefiteffects on the other tax relief measures of $429 thousand and a deferred federal income tax benefit of $429 thousandthe CARES Act.

for the three and nine months ended March 31, 2019.  

FASB Accounting Standards Codification (“ASC”)ASC 740, “Income Taxes” addresses the accounting for uncertainty in income tax recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions


taken or expected to be taken on a tax return. The Company had no unrecognized tax benefit for the three and nine months ended March 31, 2019 and 2018.2020 or 2019.

Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized; as such, the Company is subject to examination for the fiscal years ended 2000 through present for federal purposes and fiscal years ended 2006 through present for state purposes. The reason for this extended examination period is due to the utilization of the loss carryovers generated by the sale of our Astrotech Space Operations business unit in fiscal year 2015.

 

(12) Commitments and Contingencies

 

The Company is subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.

 

The Company establishes reserves for the estimated losses on specific contingent liabilities, for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, the Company is not able to make a reasonable estimate of liability because of the uncertainties related to the outcome or the amount or range of potential loss.

 

Litigation, Investigations, and Audits – We are not party to, nor are our properties the subject of, any material pending legal proceedings.proceedings or investigations.

 

(13) Segment Information

 

The Company currently has one reportable business unit: 1st Detect Corporation. In prior periods, the Company had two reportable business units: 1st Detect Corporation and Astral Images Corporation.

1st Detect Corporation

1st Detect Corporation is a manufacturer As of explosivesMarch 31, 2020, Astral no longer meets the criteria for segment reporting as both its assets and narcotics trace detectors developed for use at airports, secured facilities, and borders worldwide.

Astral Images Corporation

Astral Images is a developer of advanced film restoration and enhancement software.

All intercompany transactions between business units have been eliminated in consolidation.

Keyoperations are minimal. For more information on key financial metrics of the Company’s segments are as follows:in prior reporting periods, refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.

 

 

 

Three Months Ended

March 31, 2019

 

 

Three Months Ended

March 31, 2018

 

Revenue, Depreciation, and Income

(In thousands)

 

Revenue

 

 

Depreciation

 

 

Loss before

Income Taxes

 

 

Revenue

 

 

Depreciation

 

 

Loss before

Income Taxes

 

1st Detect

 

$

 

 

$

56

 

 

$

(2,048

)

 

$

 

 

$

99

 

 

$

(2,363

)

Astral Images

 

 

 

 

 

8

 

 

 

(204

)

 

 

 

 

 

91

 

 

 

(492

)

Total

 

$

 

 

$

64

 

 

$

(2,252

)

 

$

 

 

$

190

 

 

$

(2,855

)


 

 

Nine Months Ended

March 31, 2019

 

 

Nine Months Ended

March 31, 2018

 

Revenue, Depreciation, and Income

(In thousands)

 

Revenue

 

 

Depreciation

 

 

Loss before

Income Taxes

 

 

Revenue

 

 

Depreciation

 

 

Loss before

Income Taxes

 

1st Detect

 

$

 

 

$

174

 

 

$

(5,918

)

 

$

 

 

$

305

 

 

$

(7,380

)

Astral Images

 

 

40

 

 

 

26

 

 

 

(732

)

 

 

41

 

 

 

271

 

 

 

(1,618

)

Total

 

$

40

 

 

$

200

 

 

$

(6,650

)

 

$

41

 

 

$

576

 

 

$

(8,998

)

 

 

March 31, 2019

 

 

June 30, 2018

 

Assets

(In thousands)

 

Fixed Assets,

Net

 

 

Total Capital

Expenditures

(1)

 

 

Total Assets

 

 

Fixed Assets,

Net

 

 

Total Capital

Expenditures

(2)

 

 

Total Assets

 

1st Detect

 

$

511

 

 

$

 

 

$

3,317

 

 

$

699

 

 

$

8

 

 

$

5,075

 

Astral Images

 

 

20

 

 

 

 

 

 

46

 

 

 

34

 

 

 

11

 

 

 

65

 

Total

 

$

531

 

 

$

 

 

$

3,363

 

 

$

733

 

 

$

19

 

 

$

5,140

 

(1)

Total capital expenditures are for the nine months ended March 31, 2019.

(2)

Total capital expenditures are for the twelve months ended June 30, 2018.

(14) Subsequent Events

 

On April 17,NASDAQ Notice

As previously noted by the Company in its Form 10-Q for the fiscal quarter ended December 31, 2019, the Company entered intowas not in compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because the Company’s stockholders’ equity was below the required minimum of $2.5 million at December 31, 2019. On February 18, 2020, the Company received a Securities Purchase Agreementnotice (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Agreement No. 2”Nasdaq”) stating that the Company was not in compliance with Mr. Pickens, and an accredited investor.the required stockholder’s equity of $2.5 million.

 

Pursuant to Agreement No. 2,The Notice had no immediate effect on the Company’s listing on the Nasdaq Capital Market. On April 14, 2020, the Company agreedsubmitted a plan to sellregain compliance with the minimum stockholders’ equity requirement. If the Company’s plan to regain compliance is accepted, Nasdaq may grant an aggregateextension of 280,898 sharesup to 180 calendar days from the date of its series C convertible preferred stock, par value $0.001 per sharethe Notice to evidence compliance (the “Series C Preferred Shares”“Compliance Period”).

Paycheck Protection Program Loan

On April 14, 2020, the Company received the proceeds from a loan in the amount of $541,500 (the “PPP Loan”) from Pioneer Bank SSB (the “Lender”) pursuant to the accredited investorPaycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and 280,898 of its series D convertible preferred stock, par value $0.001 per share (the “Series D Preferred Shares”) to Mr. Pickens for aggregate gross proceeds of approximately $2.0 million, eachEconomic Security Act administered by the U.S. Small Business Administration. The PPP Loan matures on April 1, 2022 and bears interest at a purchase pricerate of 1.0% per annum. Commencing November 10, 2020, the Company is required to pay the Lender equal monthly payments of principal and interest as necessary to $3.56 per share,fully amortize by April 1, 2022 the principal amount outstanding on the PPP Loan as of October 14, 2020. The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The PPP Loan is evidenced by a promissory note dated April 14, 2020, which was equalcontains various certifications and agreements related to the closing consolidated bid price on The NASDAQ Capital Market on April 16, 2019. The holder of the Series C Preferred Shares has agreed to restrict its ability to convert the Series C Preferred Shares such that the number of shares of the Company’s common stock held by such holderPPP, as well customary default and its affiliates after such conversion does not exceed 9.99% of the Company’s then issued and outstanding shares of common stock. The Series D Preferred Shares are convertible into an aggregate of 280,898 shares of common stock at the option of the holder.other provisions.

 

 



 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws. Forward-looking statements may include the words “may,” “will,” “plans,” “believes,” “estimates,” “expects,” “intends,” and other similar expressions. Such statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in the statements. Such risks and uncertainties include, but are not limited to:

The impact of the COVID-19 outbreak on the global economy, including the possibility of a global recession, and more specifically the impact to our business, suppliers, consumers, customers, and employees;

Our ability to raise sufficient capital to meet our long and short-term liquidity requirements;

Our ability to continue as a going concern;

The effect of economic and political conditions in the United States or other nations that could impact our ability to sell our products and services or gain customers;

Product demand and market acceptance risks, including our ability to develop and sell products and services to be used by governmental or commercial customers;

The impact of trade barriers imposed by the U.S. government, such as import/export duties and restrictions, tariffs and quotas, and potential corresponding actions by other countries in which the Company conducts its business;

Our ability to continue as a going concern;

Our ability to raise sufficient capital to meet our long- and short-term liquidity requirements;

Our ability to successfully pursue our business plan and execute our strategy;

Technological difficulties and potential legal claims arising from any technological difficulties;

Uncertainty in government funding and support for key programs, grant opportunities, or procurements;

The impact of competition on our ability to win new contracts; and

Our ability to meet technological development milestones and overcome development challenges.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate; therefore, we cannot assure you that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Some of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described in our 20182019 Annual Report on Form 10-K, elsewhere in this Quarterly Report on Form 10-Q, or in the documents incorporated by reference herein. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events, or otherwise. In making these statements, we disclaim any obligation to address or update each factor in future filings with the Securities and Exchange Commission (“SEC”) or communications regarding our business or results, and we do not undertake to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. In addition, any of the matters discussed above may have affected our past results and may affect future results, so that our actual results may differ materially from those expressed in this Quarterly Report on Form 10-Q and in prior or subsequent communications.

 


ITITEMEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Report.

Business Overview

Astrotech Corporation (NASDAQ:(Nasdaq: ASTC) (“Astrotech,” the “Company,” “we,” “us,” or “our”), a Delaware corporation organized in 1984, is a science and technology development and commercialization company that launches, manages, and builds scalable companies based on innovative technology in order to maximize shareholder value.

The Company currently operates two reportable business units, 1st Detect Corporation and Astral Images Corporation, and theirCompany’s efforts are focused on commercializing its platform mass spectrometry technology through its wholly-owned subsidiaries:

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

 

1st Detect Corporation (“1st Detect”) is a manufacturer of explosives and narcotics trace detectors developed for use at airports, secured facilities, and borders worldwide.

Astral Images CorporationAgLAB Inc. (“Astral”AgLAB”) is a developermanufacturer of advanced film restoration and enhancement software.mass spectrometers for use in the agriculture market.

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 an infection, including Coronavirus Disease 2019 (“COVID-19”) or pneumonia.

 

Our Business Units

Astrotech Technology, Inc.

ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1st Detect. The intellectual property includes 37 granted patents and five additional patents in process. With a number of diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of use to the other wholly-owned subsidiaries of Astrotech, 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 the healthcare industry.

 

1st Detect Corporation

 

1st Detect, Corporationa licensee of ATI, has developed a small, laboratory-performancethe 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 explosives and narcotics trace detectors used at airports, secured facilities, and borders worldwide. We believe that government and airport customers are unsatisfied with the currently deployed Explosives Trace Detector (“ETD”)ETD technology, which is driven by an antiquated technology known as Ion Mobility Spectrometryion mobility spectrometry (“IMS”). We 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 unnecessary passenger delays and frustration, significant wasted security resources, and lack of security personnel confidence in ETDs. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those several explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument’s performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds does not degrade the TRACER 1000’s detection capabilities, as it has a virtually unlimited and easily expandable threat library. With terrorist threats becoming more numerous, sophisticated, and lethal, security professionals have been looking for better instrumentation to address the evolving threats. MS could provide an alternative solution, but it has historically been reserved for highly trained professionals in high-end laboratories with large budgets. 1st Detect has overcome the significant challenge of making this sophisticated MS technology powerful, yet simple to use, with an easy to understand red light or green light output, at an affordable price. In addition to an increased probability of detection, decreased false alarm rate, and a virtually unlimited threat library that is field-upgradable, we believe that the 1st Detect ETD can increase passenger throughput and save billions of dollars in wasted airport security personnel resources. With more than 30,000 IMS instruments installed in the field, many of which are nearing their end of life or are unable to be updated to the newest standards, 1st Detect is positioned to be a leader in securing worldwide checkpoints.

 

Either Transportation Security Administration (“TSA”) or European Civil Aviation Conference (“ECAC”)ECAC certification is necessary to sell the TRACER 1000 to the airport market. On June 19, 2018, the Company announced thatmarket and the TRACER 1000 had entered thereceived ECAC Common Evaluation Process (“CEP”) to obtain certification in Europe. On December 12, 2018, the Company announced that the TRACER 1000 passed the ECAC CEP tests for airport checkpoint screening of passengers. On January 9, 2019, the Company subsequently announced that the TRACER 1000 passed the CEP tests for airport cargo screening. Finally, on February 21, 2019 the Company announced that 1st Detect received ECAC certification for both passenger and cargo screening forscreening. After receiving ECAC certification, we can now sell the TRACER 1000 andto the majority of airports outside of the U.S., including all of Europe. On June 26, 2019, the Company can now begin selling its product internationally. Theannounced the official launch of the TRACER 1000. On November 22, 2019, we announced our first commercial sale of TRACER 1000 units to a global shipping and logistics company. As the TRACER 1000 is the first MS-based ETD to have ever passed either U.S. or European regulatory testing.testing, there has been considerable interest from prospective customers, which has yielded a number of successful demonstrations and field trials.

 


In addition, onthe United States, we are working with both TSA and TSA Air Cargo towards certification. 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 Companywe announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports. Both programsOn November 14, 2019, Astrotech announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force (“ITF”) to conduct live screening at Miami International Airport. With similar protocols as ECAC testing, we have received valuable feedback from all programs. With the current COVID-19 crisis, testing with the TSA has been put on indefinite hold. We expect to resume following the path for ETD certification once TSA employees are currently progressing as expected.allowed to return to work.

 

With TSAAgLAB Inc.

AgLAB, a licensee of ATI, is developing the AgLAB-1000™ series of mass spectrometers for use in the agriculture industry for both chemical detection and ECAC having twoprocess control. The AgLAB product line is a derivative of the most rigorous technology review programsCompany’s AMS Technology.  The AMS Technology provides a significant competitive advantage due to its small size, rugged design, quick analysis, ease of use, and affordability. These attributes are valuable for ETDsagriculture applications in both the field and processing facilities.

The AgLAB product line that is currently under development is the AGLAB-1000-D2 and the AGLAB-1000-C2. These systems are being designed for applications in the world, we believe certification by either program is a significant endorsement that customers in other verticalhemp and cannabis markets consider when procuring ETDs.to maximize processing efficiencies and to detect pesticides.  

 

ThereCOVID-19 has caused some disruptions in our supply chain and the completion of AgLAB test systems has been delayed.    

BreathTech Corporation

BreathTech, a licensee of ATI, is no assurancedeveloping a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that anycould indicate they may have an infection, including Coronavirus Disease 2019 (“COVID-19”) or pneumonia.

The product is being designed to test healthcare providers, factory floor workers, and the general public in drive-up testing facilities and to provide a result in less than one minute. It is also being designed to be easy to use with minimal training by low skill operators.

Development of the further steps detailed above will be achieved orBreathTest-1000 follows the Company’s positive results in pre-clinical trials for the BreathDetect-1000™, a rapid bedside breathalyzer that our technology will be approved by any ofdetects bacterial infections in the programs.



Astral Images Corporationrespiratory tract, including pneumonia.  The trials were conducted in collaboration with UT Health San Antonio.

 

Astral Images is a developer ofCorporation

Astral Images (“Astral”) developed advanced film restoration and enhancement software. Astral’s intelligent algorithms remove dust, scratches, and defects from film while converting the content to a digital format with significantly enhanced resolution. In addition, Astral employs Artificial Intelligence to automatically extend the color gamut and enhance the dynamic range to be viewed in 4K and/or high-dynamic range (“HDR”), collectively known as ultra-high definition (“UHD”).

Although we believe Astral has developed valuable technology fortified by patents and trade secrets, the potential market has not evolvedadvanced as quickly as anticipated. Due to funding constraints, the Company’s mainprimary focus remains on the 1st Detect opportunity.pursuit of opportunities for its platform mass spectrometry technology. Consequently, headcount and expenditures at Astralefforts are minimized and new development is exclusively focused on strategic initiatives that wouldto facilitate the realization of Astral’s value.

Trends and Uncertainties - COVID-19

In March 2020, the World Health Organization declared COVID-19 a global pandemic.

We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the responses that we, other businesses, and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

To date, the pandemic has caused supply chain issues as noted above with respect to AgLAB and has impacted our revenue as noted below.

It is possible that the continued spread of COVID-19 could cause further disruption in  our supply chain; cause delay, or limit the ability of customers to perform, including in making timely payments to the Company; cause delay in regulatory


certification testing of our instruments; impact investment performance; and cause other unpredictable events. The extent to which the COVID-19 pandemic may in the future materially impact on our financial condition, liquidity, or results of operations is uncertain.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principlesgenerally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities.disclosures. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions are reviewed periodically. Actual results may differ from these estimates under different assumptions or conditions.

 

Management believes there have been no significant changes duringAs of July 1, 2019, the nine months ended March 31, 2019Company adopted ASU 2016-02, Leases (“Topic 842”) using the modified retrospective method of adoption. Astrotech elected to use the transition option that allows the Company to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the items that we disclosed as our critical accounting policiesopening balance of retained earnings in the year of adoption. Comparable periods continue to be presented under the guidance of the previous standard, Accounting Standards Codification (“ASC”) Topic 840. Topic 842 requires lessees to recognize a lease liability and estimatesright-of-use asset on the balance sheet for operating leases. The adoption of Topic 842 resulted in Management’s Discussion and Analysisan adjustment to retained earnings of Financial Condition and Results of Operations in our 2018 Annual Report on Form 10-K.$230 thousand.

 

Results of Operations

 

Three months ended March 31, 2019,2020, compared to three months ended March 31, 20182019:

 

Selected consolidated financial data for the quarters ended March 31, 2019,2020, and 20182019 is as follows:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

(In thousands)

 

2019

 

 

2018

 

 

2020

 

 

2019

 

Revenue

 

$

 

 

$

 

 

$

118

 

 

 

 

Cost of revenue

 

 

 

 

 

 

 

 

111

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

7

 

 

 

 

Gross margin

 

 

%

 

 

%

 

 

6

%

 

 

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

1,238

 

 

 

1,363

 

 

 

1,193

 

 

 

1,238

 

Research and development

 

 

1,026

 

 

 

1,495

 

 

 

814

 

 

 

1,026

 

Total operating expenses

 

 

2,264

 

 

 

2,858

 

 

 

2,007

 

 

 

2,264

 

Loss from operations

 

 

(2,264

)

 

 

(2,858

)

 

 

(2,000

)

 

 

(2,264

)

Interest and other income, net

 

 

12

 

 

 

3

 

Interest and other expense, net

 

 

(68

)

 

 

12

 

Income tax benefit

 

 

858

 

 

 

 

 

 

 

 

 

858

 

Net loss

 

$

(1,394

)

 

$

(2,855

)

 

$

(2,068

)

 

$

(1,394

)

 

RevenueThe Company had noTotal revenue increased $118 thousand during the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019. Revenue generated in the third quarter of fiscal 2019 or 2018.2020 was related to the TRACER 1000 product launch. This is a deceleration from the second quarter of fiscal 2020 due to delays in the acceptance of our products caused by COVID-19.

Cost of Revenue – Gross profit is comprised of revenue less cost of revenue. In the third quarter of fiscal 2020, cost of revenue was comprised of labor, materials, overhead, and shipping related to the above sales. Gross margin for the third quarter of fiscal 2020 was 6%, driven by the first-in-first-out (“FIFO”) inventory methodology where much of the inventory used to build the TRACER 1000 had R&D volume pricing. As we receive more purchase orders for the TRACER 1000, we expect the cost of materials to decline as we recognize the benefits of scale.

 

Operating Expenses – As a result of management’s ongoing commitment to optimize our available resources, operating expenses decreased $0.6 million,$257 thousand, or 21%11%, during the third quarter of fiscal 2019,2020, compared to the third quarter of fiscal 2018.2019. Selling, general and administrative expenses remained consistent in the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019. Research and development expenses decreased $0.1 million,$212 thousand, or 9%21%, in the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019 due to decreases in expenses relating to lobbying, equity compensation,subcontractors, consultants, depreciation, and headcount. Research and developmentheadcount as well as decreased $0.5 million, or 31%, during the third quarter of fiscal 2019, compared to the third quarter of fiscal 2018, primarily due to decreased headcount and less depreciationmaterials expense.

 


Income Taxes Income tax benefit increaseddecreased $858 thousand during the third quarter of fiscal 2019,2020, compared to the third quarter of fiscal 2018,2019 due to the recognition of an Alternative Minimum Tax (“AMT”) credit fromin the removalprior period. Half of the AMT credit was received in the Tax Cutssecond quarter of fiscal 2020 and Jobs Act.the remainder is expected to be received during the first quarter of fiscal 2021. The realization of tax benefits depends on the existence of future taxable income. Pursuant to ASC 740 “Income Taxes” (“ASC 740”), a valuation allowance has been established on all the Company’s deferred tax assets.


 

Nine months ended March 31, 2019,2020, compared to nine months ended March 31, 20182019:

 

Selected consolidated financial data for the nine months ended March 31, 20192020, and 20182019 is as follows (in thousands):follows:

 

 

Nine Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

(In thousands)

 

2019

 

 

2018

 

 

2020

 

 

2019

 

Revenue

 

$

40

 

 

$

41

 

 

$

324

 

 

$

40

 

Cost of revenue

 

 

11

 

 

 

24

 

 

 

307

 

 

 

11

 

Gross profit

 

 

29

 

 

 

17

 

 

 

17

 

 

 

29

 

Gross margin

 

 

73

%

 

 

41

%

 

 

5

%

 

 

73

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,667

 

 

 

4,397

 

 

 

3,505

 

 

 

3,667

 

Research and development

 

 

3,027

 

 

 

4,721

 

 

 

2,608

 

 

 

3,027

 

Total operating expenses

 

 

6,694

 

 

 

9,118

 

 

 

6,113

 

 

 

6,694

 

Loss from operations

 

 

(6,665

)

 

 

(9,101

)

 

 

(6,096

)

 

 

(6,665

)

Interest and other income, net

 

 

15

 

 

 

103

 

 

 

(123

)

 

 

15

 

Income tax benefit

 

 

858

 

 

 

 

 

 

 

 

 

858

 

Net loss

 

$

(5,792

)

 

$

(8,998

)

 

$

(6,219

)

 

$

(5,792

)

 

Revenue – Total revenue remained consistentincreased $284 thousand during the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018.2019. During the nine months ended March 31, 2020, substantially all of the revenue generated was related to the TRACER 1000 product launch. All of the revenue generated during the nine months ended March 31, 2019 was associated with the Company’sAstral’s now-discontinued agreement with ColorTime, a post-production house specializing in media content creation, restoration, and distribution.The revenue generated during the nine months ended March 31, 2018 was from a software license agreement with a large post-production film company. This agreement was used to correct defects and restore one film.

 

Gross ProfitCost of Revenue – Gross profit is comprised of revenue less cost of revenue. During the nine months ended March 31, 2020, cost of revenue was comprised of labor, materials, overhead, travel, and shipping related to the above sales. During the nine months ended March 31, 2019, cost of revenue was comprised of labor related to the agreement with ColorTime. DuringGross margin for the nine months ended March 31, 2019,2020 was 5%, driven by the FIFO inventory methodology where much of the inventory used to build the TRACER 1000 had R&D volume pricing. As we receive more purchase orders for the TRACER 1000, we expect the cost of revenues decreased $13 thousand, comparedmaterials to decline as we recognize the nine months ended March 31, 2018, and gross profit increased $12 thousand during the same period due to the decrease in costbenefits of revenue as described above.scale.

 

Operating Expenses – As a result of management’s ongoing commitment to optimize our available resources, operating expenses decreased $2.4 million,$581 thousand, or 27%9%, during the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018.2019. Selling, general and administrative decreased $0.7 million, or 17%, due to decreases in expenses relating to legal, lobbying, directors’ fees, office rent, equity compensation, and headcount.remained consistent. Research and development expenses decreased $1.7 million,$419 thousand, or 36%14%, during the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018, primarily2019, due to decreases in expenses relating to subcontractors, consultants, depreciation, and headcount as well as decreased headcount and less depreciationmaterials expense.

 

Income Taxes – Income tax benefit increaseddecreased $858 thousand during the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018,2019 due to the AMT credit from the removalrecognition of the AMT credit in the Tax Cutsprior period. Half of the AMT credit was received in the second quarter of fiscal 2020 and Jobs Act.the remainder is expected to be received during the first quarter of fiscal 2021.The realization of tax benefits depends on the existence of future taxable income. Pursuant to ASC 740, a valuation allowance has been established on all the Company’s deferred tax assets.

 


Liquidity and Capital Resources

 

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

 

 

Nine Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

(In thousands)

 

2019

 

 

2018

 

 

change

 

 

2020

 

 

2019

 

 

Change

 

Change in cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(6,550

)

 

$

(8,641

)

 

$

2,091

 

 

$

(4,956

)

 

$

(6,550

)

 

$

1,594

 

Net cash provided by investing activities

 

 

3,597

 

 

 

7,093

 

 

 

(3,496

)

 

 

 

 

 

3,597

 

 

 

(3,597

)

Net cash provided by (used in) financing activities

 

 

3,925

 

 

 

(3

)

 

 

3,928

 

Net cash provided by financing activities

 

 

8,150

 

 

 

3,925

 

 

 

4,225

 

Net change in cash and cash equivalents

 

$

972

 

 

$

(1,551

)

 

$

2,523

 

 

$

3,194

 

 

$

972

 

 

$

2,222

 

 

Cash and Cash Equivalents and Restricted Cash

 

As of March 31, 2019,2020, we held cash and cash equivalents of $1.5$4.7 million and restricted cash of $0.1 million, and our working capital was approximately $1.5$2.0 million. As of June 30, 2018,2019, we had cash and cash equivalents of $0.6$1.6 million, and our working capital was approximately $3.3$1.9 million. Cash and cash equivalents and restricted cash increased by approximately $1.0$3.2 million as of March 31, 2019, as2020, compared to June


30, 2018,2019, due to a private placement of equity securities, the salesales of shares of the Company’s common stock through an “at the market offering” program (the “ATM Offering”),in two registered direct offerings and the sale and/or maturities of our available-for-sale securities,notes payable from a related party, partially offset by funding our normal operating activities and research and development initiatives.

 

Operating Activities

 

Cash used in operating activities decreased $2.1$1.6 million for the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018,2019, primarily caused bydue to a reduction in our expenses.expenses as well as an increase in deferred tax asset due to the refundable credit of previously paid AMT.

Investing Activities

 

Cash provided by investing activities decreased $3.5$3.6 million for the nine months ended March 31, 2019,2020, compared to the nine months ended March 31, 2018,2019, due to fewer maturities and sales ofliquidating our available-for-sale investments.investments in the first quarter of fiscal 2019.

 

Financing Activities

 

Cash provided by financing activities was $3.9increased $4.2 million for the nine months ended March 31, 20192020, compared to cash used in financing activities of $3 thousand for the nine months ended March 31, 2018. This change was2019 due to a private placement of equity securities on October 9, 2018 as well as the salesales of shares of the Company’s common stock through the ATM Offering.in two registered direct offerings for net proceeds of approximately $4.5 million.

 

Liquidity

 

As of March 31, 2019,2020, we had cash and cash equivalents and restricted cash of $1.5$4.8 million, and our working capital was approximately $1.5$2.0 million. Restricted cash consists of two letters of credit relating to purchase orders for the TRACER 1000 product. For the fiscal year 2018,2019, the Company reported a net loss of $13.3$7.5 million and net cash used in operating activities of $10.8$8.5 million. For the nine months ended March 31, 2019,2020, the Company reported a net loss of $5.8$6.2 million and net cash used in operating activities of $6.6$5.0 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company remains resolute in identifying the optimal solution to its liquidity issue. The Company is currently evaluating several potential sources for additional liquidity. These include, but are not limited to, selling the Company or a portion thereof, licensing some of our technology, raising additional funds through the capital markets, debt financing, equity financing, merging, or engaging in a strategic partnership. On July 3, 2018, management filed Form S-3 to raise funds through the capital markets. On October 9, 2018,February 13, 2020, the Company entered into a Securities Purchase Agreement (the “Agreement No. 1”)private placement transaction with Thomas B.Mr. Pickens III,for the Chief Executive Officerissuance and Chairmansale of the Board of Directors of the Company, and a long-term accredited investor in the Company (the “Investor”). Pursuant to Agreement No. 1, the Company agreed to sell an aggregate of 866,950 shares of its series B convertible preferred stock, par value $0.001 per share (the “Series B Preferred Shares”)secured promissory note to Mr. Pickens and 409,645with a principal amount of its shares of common stock, par value $0.001 per share (the “Common Shares”) to the Investor, at a price per share of $2.35 and for aggregate gross proceeds of approximately $3.0$1.0 million. The purchase price of $2.35 per share was equal to the closing price on The NASDAQ Capital Market on OctoberFrom November 8, 2018. The Series B Preferred Shares converted into an aggregate of 866,950 shares of common stock on December 7, 2018 upon receipt of shareholder approval in accordance with NASDAQ Listing Rule 5635(b). 2019 tAs of hrough March 31, 2019,25, 2020, the Company has sold 205,540793,668 shares of common stock pursuant to an At the MarketAt-the-Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley FBR through the ATM Offering under which B. Riley FBR actsacted as the sales agent. A prospectus relating to the ATM Offering was filed with the SEC on November 9, 2018. In connection with the sale of these shares of common stock, the Company has received net proceeds of $998,057.$2.3 million. The weighted-average sale price per share was $5.11. $3.04. On April 17, 2019,March 25, 2020, the Company entered into another Securities Purchase Agreement (the “Agreement No. 2”)a securities purchase agreement with Mr. Pickens and the Investor. Pursuantcertain purchasers named therein, pursuant to Agreement No. 2,which the Company agreed to issue and sell, an aggregate of 280,898in a registered direct offering, 354,000 shares of its series C convertible preferredthe Company’s common stock, par value $0.001 per share, (the “Series C Preferred Shares”)at an offering price of $5.00 per share resulting in net proceeds of approximately $1.6 million. On March 27, 2020, the Company entered into


a second securities purchase agreement with certain purchasers named therein, pursuant to which the InvestorCompany agreed to issue and 280,898sell, in a registered direct offering, 873,335 shares of its series D convertible preferredthe Company’s common stock, par value $0.001 per share, (the “Series D Preferred Shares”) to Mr. Pickens, at aan offering price of $3.75 per share of $3.56 and for aggregate grossresulting in net proceeds of approximately $2.0$2.9 million. The purchase priceOn April 14, 2020, the Company received the proceeds from a loan in the amount of $3.56 per share was equal$541,500 (the “PPP Loan”) from Pioneer Bank SSB (the “Lender”) pursuant to the closing consolidated bid price onPaycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act administered by the U.S. Small Business Administration. The NASDAQ Capital MarketPPP Loan matures on April 16, 2019. The holder1, 2022 and bears interest at a rate of the Series C Preferred Shares has agreed to restrict its ability to convert the Series C Preferred Shares such that the number of shares of the Company’s common stock held by such holder and its affiliates after such conversion does not exceed 9.99% of the Company’s then issued and outstanding shares of common stock. The Series D Preferred Shares are convertible into an aggregate of 280,898 shares of common stock at the option of the holder.1.0% per annum.

 

The Company is currently evaluating potential offerings of any combination of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities. However, additional funding may not be available when needed or on terms acceptable to us.  If we are unable to generate funding within a reasonable timeframe, we may have to delay, reduce or


terminate our research and development programs, limit strategic opportunities, or curtail our business activities. Astrotech’s consolidated financial statements as of March 31, 20192020 do not include any adjustments that might result from the outcome of this uncertainty.

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of March 31, 2019,2020, the Company established a valuation allowance against most of its net deferred tax assets. As of June 30, 2018, the Company established a full valuation allowance against all of its net deferred tax assets.

For the three months ended March 31, 20192020 and 2018,2019, the Company incurred pre-tax losses in the amount of $2.3$2.1 million and $2.9$2.3 million, respectively. For the nine months ended March 31, 20192020 and 2018,2019, the Company incurred pre-tax losses in the amount of $6.6$6.2 million and $9.0$6.7 million, respectively. The total effective tax rate was approximately 38% and 13% for the three and nine months ended March 31, 2019, respectively. The total effective tax rate was approximately 0% for the each of the three and nine months ended March 31, 2018.

2020 and 2019.

For each of the threenine months ended March 31, 2020 and 2019, the Company’s effective tax rate differed from the federal statutory rate of 21% due to the AMT credit referenced below. For the nine months ended March 31, 2019, the Company’s effective tax rate differed from the federal statutory rate of 21% due to the valuation allowance placed against its net deferred tax assets offset by the AMT credit. For the three and nine months ended March 31, 2018, the Company’s effective tax rate differed from the federal statutory rate of 28%, primarily due to the valuation allowance placed against its net deferred tax assets.

 

The Tax CutsCoronavirus Aid, Relief, and JobsEconomic Security (“CARES”) Act, was enactedsigned into law on December 22, 2017.March 27, 2020. The CARES Act reducesprovided certain tax relief measures including the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earningsacceleration of certain foreign subsidiaries that werethe alternative minimum credit previously tax deferred, and creates new taxes on certain foreign sourced earnings. In the second quarter of fiscal 2018, the Company revised its estimated annual effective rate to reflect a change in its federal statutory rate from 35% to 21%.paid. The rate change was effective on January 1, 2018; therefore, the Company’s blended statutory tax rateCARES Act allows for the fiscal year ended June 30, 2018 was 28%. The Tax Cuts and Jobs Act also removedacceleration of the refundable AMT credit up to 100% of the AMT credit. In connection with our analysis of the impact of the CARES Act and therefore any AMT previously paid will be apursuant to filing the Form 1139, we have reclassed the refundable credit. The AMT credit will be refunded 50% in the current year for an amount of $429 thousand. The remaining AMT amount will be deferred$429K from long-term to short-term receivable and received according to the percentage schedule set forth by the Tax Cuts and Jobs Act until all the AMT amount is paid in full by 2021. Due to this, the Company has a current federalrecorded no income tax benefiteffects on the other tax relief measures of $429 thousand and a deferred federal income tax benefit of $429 thousand for the three and nine months ended March 31, 2019.CARES Act.

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)FASB ASC 740, “Income Taxes” addresses the accounting for uncertainty in income tax recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The Company had no unrecognized tax benefit for the three and nine months ended March 31, 2019 and 2018.

2020 or 2019.

Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized; as such, the Company is subject to examination for the fiscal years ended 2000 through present for federal purposes and fiscal years ended 2006 through present for state purposes. The reason for this extended examination period is due to the utilization of the loss carryovers generated by the sale of our Astrotech Space Operations business unit in fiscal year 2015.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2019, and2020, or June 30, 2018.2019.



 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report. Based on the evaluation and criteria of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

 

Changes in Internal Control over Financial Reporting

 

There waswere no changechanges in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the nine months ended March 31, 20192020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 



PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

 

As of March 31, 2019,2020, we are not involved in any pending or threatened legal proceedings that we believe could reasonably be expected to have a material adverse effect on our financial condition, results of operations, or cash flows. From time to time, we are subject to legal proceedings and business disputes involving ordinary routine legal matters and claims incidental to our business. The ultimate legal and financial liability with respect to such matters generally cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements or awards against us. Estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, we may be required to record either more or less litigation expense.

 

ITEM 1A. RISK FACTORS

 

Not applicableOur business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.

There have been no material changes to smaller reporting companies.the Risk Factors previously disclosed in our Form 10-K, except as noted below.

No assurances can be given that we will be able to successfully develop the BreathTest-1000™.

Our business strategy outlines the use of the decades of experience we have accumulated to expand the services and products we offer to both U.S. government agencies and commercial industries. These services and products involve new and untested technologies and business models. These technologies and business models may not be successful, which could result in the loss of any investment we make in developing them, including the development of the BreathTest-1000™.

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 we will ever have a marketable product;

to the extent that there are additional detection methods available for COVID-19, to be commercially successful, customers must be persuaded that using our products are effective alternatives to other existing products;

if we fail to comply with healthcare regulations, we could face substantial enforcement actions, including civil and criminal penalties and our business, operations, and financial condition could be adversely affected.

We face various risks related to health epidemics, pandemics, and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations, and/or cash flows.

We face various risks related to health epidemics, pandemics, and similar outbreaks, including the global outbreak of COVID-19. In recent weeks, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures, or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted. We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak. These cost increases may not be fully recoverable or adequately covered by insurance.

It is possible that the continued spread of COVID-19 could also further cause disruption in our supply chain; cause delay, or limit the ability of customers to perform, including in making timely payments to us; cause delay in regulatory certification testing of our instruments; impact investment performance; and cause other unpredictable events.

We continue to work with our stakeholders (including customers, employees, suppliers, and local communities) to responsibly address this global pandemic. We continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences.

We cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial position, results of operations, and/or cash flows.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.On March 27 and March 30, 2020, the Company issued the Placement Agent Warrants to the Placement Agent. The Placement Agent Warrants and the shares of Common Stock underlying the Placement Agent Warrants have not been registered under the Securities Act and were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) thereof. 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 

None.

ITEM 4.  MINE SAFETY DISCLOSURE

 

Not applicable.

ITEM 5.  OTHER INFORMATION

 

None.


ITEM 6.  EXHIBITS

 

The following exhibits are filed herewith:

 

Exhibit No.

 

Description

 

Incorporation by Reference

 

 

 

 

 

4.1

Promissory Note due September 5, 2020.

Exhibit 4.1 to Form 8-K filed on February 18, 2020

 

 

 

 

 

4.2

Form of Placement Agent's Warrant, issued on March 27, 2020.

Exhibit 4.1 to Form 8-K filed on March 26, 2020

4.3

Form of Placement Agent's Warrant, issued on March 30, 2020.

Exhibit 4.1 to Form 8-K filed on March 30, 2020

10.1

Security Agreement, dated February 13, 2020, by and among the Company, certain of the Company’s subsidiaries and Thomas B. Pickens III.

Exhibit 10.1 to Form 8-K filed on February 18, 2020

10.2

Subsidiary Guarantee, dated February 13, 2020, made by certain of the Company’s subsidiaries in favor of Thomas B. Pickens III.

Exhibit 10.2 to Form 8-K filed on February 18, 2020

10.3

Form of Securities Purchase Agreement, dated March 25, 2020.

Exhibit 10.1 to Form 8-K filed on March 26, 2020

10.4

Form of Securities Purchase Agreement, dated March 27, 2020.

Exhibit 10.1 to Form 8-K filed on March 30, 2020

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

 

Filed herewith.

 

 

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

 

Filed herewith.

 

 

 

 

 

32.1

 

Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.

 

Filed herewith.

 

 

 

 

 

99.1

Press Release, dated March 25, 2020.

Exhibit 99.1 to Form 8-K filed on March 26, 2020

99.2

Press Release, dated March 27, 2020.

Exhibit 99.1 to Form 8-K filed on March 30, 2020

101

 

The following financial information from the Company’s Quarterly Report on Form 10-Q, for the period ended March 31, 20192020 formatted in eXtensible Business Reporting Language: (i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated Statements of Cash Flows, (iv) Notes to Unaudited Condensed Consolidated Financial Statements.

 

Filed herewith.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Astrotech Corporation

 

 

 

 

 

 

 

 

Date: May 13, 201914, 2020

 

/s/ Eric Stober

 

 

Eric Stober

 

 

Chief Financial Officer and Principal Accounting Officer

 

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