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

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.

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 ☑

As of ~~May 13,~~November 9, 2020, the number of shares of the registrant’s common stock outstanding was: ~~7,575,464.~~18,557,754.

	March 31, 2020			June 30, 2019			September 30, 2020			June 30, 2020
	(Unaudited)			(Note)			(Unaudited)			(Note)
Assets
Current assets
Cash and cash equivalents	$	4,660		$	1,588		$	1,853		$	3,349
Restricted cash		122			—
Accounts receivable, net of allowance of $0		85			3
Accounts receivable								52			101
Inventory:
Raw materials		374			150			114			416
Work-in-process		155			181			337			38
Finished goods		64			—			161			222
Income tax receivable		429			429			—			429
Prepaid expenses and other current assets		239			371			283			117
Total current assets		6,128			2,722			2,800			4,672
Property and equipment, net		371			469			100			99
Assets held for disposal								—			237
Operating leases, right-of-use assets, net		937			—			287			851
Long-term tax receivable		-			429
Other assets		72			72			—			71
Total assets	$	7,508		$	3,692		$	3,187		$	5,930
Liabilities and stockholders’ equity
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable		188			160			75			239
Payroll related accruals		412			319			473			433
Accrued expenses and other liabilities		718			357			676			627
Income tax payable		2			2			2			2
Term note payable - related party		2,500			—			2,500			2,500
Lease liabilities, current		326			—
Term note payable								330			210
Lease liabilities								198			339
Total current liabilities		4,146			838			4,254			4,350
Lease liabilities, non-current		711			—
Term note payable, net of current portion								211			332
Lease liabilities, net of current portion								166			623
Other liabilities		—			146			—			—
Total liabilities		4,857			984			4,631			5,305
Commitments and contingencies (Note 12)
Stockholders’ equity
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	)
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit)
Convertible preferred stock, $0.001 par value, 2,500,000 shares authorized; 280,898 shares of Series D issued and outstanding at September 30, 2020 and June 30, 2020								—			—
Common stock, $0.001 par value, 50,000,000 shares authorized; 8,243,686 and 8,250,286 shares issued at September 30, 2020 and June 30, 2020, respectively; 7,843,770 and 7,850,362 shares outstanding at September 30, 2020 and June 30, 2020, respectively								190,599			190,599
Treasury stock, 399,916 shares at cost at September 30, 2020 and June 30, 2020								(4,129	)		(4,129	)
Additional paid-in capital		13,868			7,964			13,976			13,934
Accumulated deficit		(197,687	)		(191,698	)		(201,890	)		(199,779	)
Total stockholders’ equity		2,651			2,708
Total liabilities and stockholders’ equity	$	7,508		$	3,692
Total stockholders’ equity (deficit)								(1,444	)		625
Total liabilities and stockholders’ equity (deficit)							$	3,187		$	5,930

Note: The balance sheet at June 30, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by the United States generally accepted accounting principles for complete financial statements.

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended March 31,						Nine Months Ended March 31,						Three Months Ended September 30,
	2020			2019			2020			2019			2020			2019
Revenue	$	118			—		$	324		$	40		$	140		$	1
Cost of revenue		111			—			307			11			113			—
Gross profit		7			—			17			29			27			1
Operating expenses:
Selling, general and administrative		1,193			1,238			3,505			3,667			926			1,202
Research and development		814			1,026			2,608			3,027			609			855
Disposal of corporate lease														544			—
Total operating expenses		2,007			2,264			6,113			6,694			2,079			2,057
Loss from operations		(2,000	)		(2,264	)		(6,096	)		(6,665	)		(2,052	)		(2,056	)
Interest and other expense, net		(68	)		12			(123	)		15			(59	)		(12	)
Loss from operations before income taxes		(2,068	)		(2,252	)		(6,219	)		(6,650	)		(2,111	)		(2,068	)
Income tax benefit		—			858			—			858			—			—
Net loss	$	(2,068	)	$	(1,394	)	$	(6,219	)	$	(5,792	)	$	(2,111	)	$	(2,068	)
Weighted average common shares outstanding:
Basic and diluted		6,107			5,467			5,934			4,734			7,719			5,591
Basic and diluted net loss per common share:
Net loss	$	(0.34	)	$	(0.25	)	$	(1.05	)	$	(1.22	)	$	(0.27	)	$	(0.37	)
Other comprehensive loss, net of tax:
Net loss	$	(2,068	)	$	(1,394	)	$	(6,219	)	$	(5,792	)
Available-for-sale securities:
Reclassification adjustment for realized loss		—			—			—			31
Total comprehensive loss	$	(2,068	)	$	(1,394	)	$	(6,219	)	$	(5,761	)	$	(2,111	)	$	(2,068	)

See accompanying notes to unaudited condensed consolidated financial statements.

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

	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			Total Stockholders’ Equity (Deficit)
Balance at June 30, 2020		—	$	—		281	$	—		7,850		$	190,599	$	(4,129	)	$	13,934		$	(199,779	)	$	625
Stock offering costs		—		—		—		—		—			—		—			(2	)		—			(2	)
Stock-based compensation		—		—		—		—		—			—		—			49			—			49
Restricted stock cancellation		—		—		—		—		(6	)		—		—			(5	)		—			(5	)
Net loss		—		—		—		—		—			—		—			—			(2,111	)		(2,111	)
Balance at September 30, 2020		—	$	—		281	$	—		7,844		$	190,599	$	(4,129	)	$	13,976		$	(201,890	)	$	(1,444	)

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, 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

—

—

—

—

—

—

—

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 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

—

—

—

—

—

—

—

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

	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			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

See accompanying notes to unaudited condensed consolidated financial statements.

	Nine Months Ended March 31,						Three Months Ended September 30,
	2020			2019			2020			2019
Cash flows from operating activities:
Net loss	$	(6,219	)	$	(5,792	)	$	(2,111	)	$	(2,068	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		282			205
Stock-based compensation, net of forfeitures								44			104
Depreciation and amortization		327			206			81			141
Deferred income tax benefit		—			(429	)
Net loss on sale of available-for-sale investments		—			31
Loss on disposal of assets								194			—
Changes in assets and liabilities:
Accounts receivable		(82	)		(29	)		49			—
Income tax receivable								429			—
Inventory		(262	)		—			64			1
Income tax receivable		—			(429	)
Accounts payable		28			27			(164	)		(61	)
Other assets and liabilities		970			(340	)		(66	)		53
Net cash used in operating activities		(4,956	)		(6,550	)		(1,480	)		(1,830	)
Cash flows from investing activities:
Proceeds from sale of available-for-sale investments		—			3,345
Proceeds from maturities of securities		—			250
Sale of property and equipment		—			2
Net cash provided by investing activities		—			3,597
Purchases of property and equipment								(16	)		—
Net cash used in investing activities								(16	)		—
Cash flows from financing activities:
Payments for purchase of treasury stock		—			(1	)
Proceeds from term note payable - related party		2,500			—			—			1,500
Proceeds from exercise of stock options		—			7
Proceeds from issuance of stock, net of offering issuance costs		5,650			3,919			—			321
Net cash provided by financing activities		8,150			3,925			—			1,821

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			—
Net change in cash and cash equivalents								(1,496	)		(9	)
Cash and cash equivalents at beginning of period								3,349			1,588
Cash and cash equivalents at end of period							$	1,853		$	1,579
	$	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		$	—		$	—		$	230
Operating right-of-use assets and associated liabilities	$	1,608		$	—		$	—		$	1,608

See accompanying notes to unaudited condensed consolidated financial statements.

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 in accordance with United States generally 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~~three months ended ~~March 31,~~September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending June 30, ~~2020.~~2021. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2019.~~2020.

Astrotech Technology, Inc. (“ATI”) owns and licenses the Astrotech Mass Spectrometer Technology™ (the “AMS ~~Technology™”~~Technology”), the platform mass spectrometry technology originally developed by 1^st Detect Corporation (“1^st Detect”). The intellectual property includes 37 patents granted ~~patents and five~~with three additional patents in ~~process.~~process along with extensive trade secrets. With a number of diverse market opportunities for the core technology, ATI ~~licenses~~is structured to license the intellectual property for different fields of use. ATI currently licenses the ~~intellectual property~~AMS Technology to three wholly-owned subsidiaries of Astrotech, including to 1^st Detect for use in the security and detection market, to AgLAB Inc. (“AgLAB”) for use in the agriculture market, and to BreathTech Corporation (“BreathTech”) for use in ~~the healthcare industry.~~ breath analysis.

1^st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ~~explosives trace detectors~~ETDs used at airports, cargo facilities, secured facilities, and borders worldwide. The Company believes that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry (“IMS”). The Company believes 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 delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those 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 expandable threat library.

In order to sell the TRACER 1000 to airport and cargo security customers in the European Union, ECAC certification is required. Certain other countries also accept ECAC certification. After receiving ECAC certification for the TRACER 1000 on February 21, 2019, the Company is now marketing to and taking orders from airports and cargo facilities outside of the U.S. that accept ECAC certification.

On June 26, 2019, the Company announced the official launch of the TRACER 1000, and on November 22, 2019, also announced the first commercial sale of TRACER 1000 units to a global shipping and logistics company.

In the United States, the Company is working with the Transportation Security Administration (“TSA”) towards Air Cargo 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 Company announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports. On November 14, 2019, the Company announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force (“ITF”) to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, the Company has received valuable feedback from all programs. Following ECAC certification and the Company's early traction within the cargo market, testing for cargo security continued with the TSA. With the COVID-19 pandemic, all testing within the TSA was put on hold; however, cargo non-detection testing resumed this summer, and the Company subsequently announced on September 9, 2020 that the TRACER 1000 passed the TSA’s ACSQT non-detection testing. TSA cargo detection testing is expected to resume this fall. Given the deterioration in air traffic caused by the pandemic, TSA certification testing for passenger checkpoint security has been put on indefinite hold.

Finally, on October 28, 2020, the Company announced that it had surpassed $1.0 million in purchase orders for the TRACER 1000 and an additional $1.0 million in future service and support commitments, also announcing DHL (Deutsche Post AG) as its largest flagship customer.

~~AgLAB,~~is a licensee of ATI ~~is developing~~and has developed the AgLAB-1000™ series of mass spectrometers for use in the agriculture ~~market.~~ ~~These systems are being designed~~industry for ~~applications in~~both process control and the ~~hemp~~detection of trace amounts of solvents and ~~cannabis markets to maximize processing efficiencies and to detect~~ pesticides. The AgLAB product line is a derivative of the Company’s core AMS Technology.

BreathTech ~~a licensee of ATI,~~ is developing the BreathTest-1000™, a breath analysis tool to screen for volatile organic compound (“VOC”) metabolites found in a person’s breath that could indicate they may have an infection, including ~~Coronavirus Disease 2019 (“COVID-19”)~~COVID-19 or pneumonia.

Astral Images Corporation (“Astral”) developed advanced film restoration and enhancement software. Although we believe Astral has developed valuable technology fortified by patents and trade secrets,Development of the ~~potential market has not yet advanced as quickly as anticipated. Due to funding constraints,~~BreathTest-1000 follows the Company’s ~~primary focus remains on~~results in pre-clinical trials for the ~~pursuit of opportunities for its platform mass spectrometry technology. Consequently, efforts are exclusively focused on strategic initiatives~~BreathDetect-1000™, a rapid self-serve breathalyzer that is designed to ~~facilitate~~detect bacterial infections in 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,respiratory tract, including pneumonia. The pre-clinical trials were conducted in collaboration 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~~UT Health San Antonio in ~~straight-line expense while financing leases will result in a front-loaded expense pattern.~~2017.

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 yearOctober 20, 2020, the Company ~~amended its lease~~announced a joint development agreement with the Cleveland Clinic Foundation to explore leveraging the BreathTest-1000 to rapidly screen for ~~its 1~~^st ~~Detect facility, resulting in a reduction~~COVID-19 or related indicators. The goal of the ~~associated ROU asset and lease obligation of $414 thousand in~~agreement is to develop a non-invasive device that will use breath samples to identify COVID-19 strains, with the ~~second quarter of fiscal year 2020. See Note 3 Leases for more information.~~potential to provide a low-cost, self-service screening option that could be deployed on a large-scale.

The Company’s ~~consolidated financial statements for the three and nine months ended March 31, 2020 have been prepared~~annual report 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, 2020, the Company had 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 two letters of credit relating to purchase orders for the TRACER 1000 product. The Company reported a net loss of $7.5 millionForm 10-K for the fiscal year ~~2019 and a net loss of $6.2 million for the nine months~~ ended ~~March 31,~~June 30, 2020 along with net cash used in operating activities of $8.5 million for the fiscal year 2019 and net cash used in operating activities of $5.0 million for the nine months ended March 31, 2020. This raisesindicated substantial doubt ~~about the Company’s~~as to its 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 its technology, raising additional funds through capital markets, debt financing, equity financing, merging, or engaging in a strategic partnership. On ~~February 13,~~October 23, 2020, the Company ~~entered into~~completed a ~~private placement transaction with Mr. Thomas B. Pickens III, the Company’s Chairman~~public offering of ~~the Board~~its common stock, raising gross proceeds of $18.0 million, and ~~Chief Executive Officer,~~ ~~for the issuance and sale of a secured promissory note to Mr. Pickens with a principal amount of $1.0 million. On March 25,~~on October 30, 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~~also completed a registered direct offering ~~354,000 shares~~ of ~~the Company’s~~its common stock, ~~par value $0.001 per share,~~ ~~at an offering price of $5.00~~ ~~per share,~~ ~~resulting in net~~raising gross proceeds of ~~approximately $1.6 million. On March 27, 2020,~~$6.2 million (see Note 15 for more information). The Company believes that this solves its liquidity issue, and the Company ~~entered into~~no longer has substantial doubt about its ability to continue as 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, going concern.~~at an offering price of $3.75~~ ~~per share,~~ ~~resulting in net proceeds of approximately $2.9 million. T~~he Company received net proceeds of approximately $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. ~~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, 2020 do not include any adjustments that might result from the outcome of this uncertainty.~~

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

The Company ~~is subject~~has taken what it believes are necessary precautions to ~~risks and uncertainties as a result of~~safeguard its employees from the COVID-19 pandemic. The ~~extent~~Company continues to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities. All of the Company’s employees who do not work in a lab setting are currently on a telecommunication work arrangement and have been able to successfully work remotely. The Company’s lab requires in-person staffing and the Company has been able to continue to operate its lab, minimizing infection risk to lab staff through a combination of social distancing and appropriate protective equipment. There can be no assurance, however, that key employees will not become ill or that the Company will be able to continue to operate its labs.

The continuing impact ofthat the COVID-19 pandemic will have on the Company’s ~~business is~~operations, including duration, severity, and scope, remains highly uncertain and ~~difficult to predict, as~~cannot be fully predicted at this time. Accordingly, the ~~responses~~Company believes that the ~~Company, other businesses and governments are taking~~COVID-19 pandemic could continue to ~~evolve. Furthermore, capital markets~~adversely impact its results of operations, cash flows, and ~~economies worldwide have also been negatively~~financial condition in the future.

As the Company’s business operations continue to be impacted by the ~~COVID-19~~ pandemic, the Company continues to monitor the situation and the guidance that is being provided by relevant federal, state, and local public health authorities. The Company may take additional actions based upon their recommendations. However, it is possible that ~~it could cause a local and/or global economic recession. Policymakers around~~ the ~~globe~~Company may 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~~make further adjustments to its operating plans in reaction to developments 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.are beyond its control.

As of July 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02 Leases: Topic 842 (“Topic 842”), using the modified retrospective method of adoption. Astrotech elected to use the transition option that ~~allows~~allowed 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 adoption of Topic 842 resulted in an adjustment to ~~retained earnings~~accumulated deficit of $230 ~~thousand.~~thousand at the beginning of fiscal year 2020.

The Company ~~has~~had two existing facility leases and several small equipment leases. Astrotech ~~leases~~leased office space consisting of 5,219 square feet in Austin, Texas that ~~houses~~housed executive management, finance and accounting, sales, and marketing and communications. The lease began in November 2016 and ~~expires~~originally expired in December ~~2023 with~~2023. On August 3, 2020, the Company decided to terminate the lease. Upon lease termination, the Company recognized a ~~provision to renew~~decrease in the related operating right-of-use (“ROU”) asset and ~~extend the~~operating lease ~~for the entire premises for one renewal term~~liability 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.~~approximately $506 thousand and $540 thousand, respectively.

In May 2013, 1^st 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, 1^st Detect exercised its right of first refusal on the adjoining space of 9,138 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 amended 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 five years each. On June 1, 2018, the Company entered 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 incremental 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 presentation of the Company’s operating and finance leases is as follows:

Future minimum lease payments ~~as of March 31, 2020~~ under non-cancellable leases are as follows:

Cash payments for operating leases for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 and September 30, 2019 totaled ~~$96~~$70 thousand and ~~$288~~$96 thousand, respectively. Cash payments for financing leases for ~~each~~the three months ended September 30, 2020 and September 30, 2019 totaled $3 thousand and $0, respectively.

As of September 30, 2020 and June 30, 2020, property and equipment, net consisted of the ~~three~~following:

Depreciation expense of property and ~~nine~~equipment for the three months ended ~~March 31,~~September 30, 2020 ~~totaled $1~~and September 30, 2019 were $22 thousand and $59 thousand, respectively.

On August 3, 2020, the Company terminated its corporate office lease in Austin, Texas and wrote-off the remaining net book value of the related leasehold improvement assets in the amount of $229 thousand.

From November 9, 2018 through March 25, 2020, the Company sold 793,668 shares of common stock pursuant to an At-the-Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley FBR, under which B. Riley FBR acted as the sales agent. In connection with the sale of these shares of common stock, the Company received net proceeds of $2.3 million. The weighted-average sale price per share was $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.

A summary of the common stock warrant activity for the three months ended September 30, 2020 is presented below:

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

As previously noted in our Form 10-K for the fiscal year ended June 30, 2020, the Company was 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 its stockholders’ equity was below the required minimum of $2.5 million at June 30, 2020. On September 11, 2020, the Company received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) stating that it was not in compliance with the required stockholder’s equity of $2.5 million.

The Notice had no immediate effect on the Company’s listing on The Nasdaq Capital Market. The Company originally had until October 26, 2020 to submit a plan to regain compliance with the minimum stockholders’ equity requirement; however, Nasdaq granted an extension of the deadline to submit a plan until November 2, 2020.

On ~~March 25,~~October 23, 2020, the Company ~~entered into~~closed a ~~securities purchase agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct~~public offering ~~(the “Registered Offering No. 1”), 354,000 shares~~ of ~~the Company’s~~its 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~~for gross proceeds of ~~approximately $1.77 million before deducting the placement agent’s fees and related~~$18.0 million. The Company believes that, following this 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 filedit is now in compliance 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.

minimum stockholders’ equity requirement. On ~~March 27,~~October 30, 2020, the Company ~~entered into~~filed Form 8-K disclosing this information as part of an alternative proposed by Nasdaq to its submitting a ~~second securities purchase agreement with certain purchasers named therein, pursuant~~plan 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 theregain compliance. See Note 15 for more information.

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.

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.

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

All unvested restricted stock awards for the ~~nine~~three months ended ~~March 31,~~September 30, 2020 are not included in diluted net loss per share, as the impact to net loss per share would be anti-dilutive. Options to purchase ~~326,153~~324,661 shares of common stock at exercise prices ranging from $1.85 to $8.35 per share outstanding as of ~~March 31,~~September 30, 2020 were not included in diluted net loss per share, as the impact to net loss per share would be anti-dilutive.

Astrotech recognizes revenue employing the generally accepted revenue recognition methodologies described under the provisions of ~~ASC~~Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“Topic 606”), which was adopted by the Company in fiscal year 2019. The methodology used is based on contract type and how products and services are provided. The guidelines of Topic 606 establish a five-step process to govern the recognition and reporting of revenue from contracts with customers. The five steps are: (i) identify the contract with a customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the performance obligations are satisfied.

An additional factor is reasonable assurance of collectability. This necessitates deferral of all or a portion of revenue recognition until collection. During the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020, the Company had one material revenue source ~~totaling $118 thousand and $324 thousand, respectively, and~~that comprised $134 thousand. During the three months ended September 30, 2019, the Company had one revenue source. Revenue was recognized at a point in time consistent with the guidelines in Topic 606.

The Company disaggregates revenue by reporting segment to depict the nature of revenue in a manner consistent with its business operations and to be consistent with other communications and public filings. Refer to Note 14 for additional details of revenues by reporting segment.

Contract Assets and Liabilities. The Company enters into contracts to sell products and provide services, and it recognizes contract assets and liabilities that arise from these transactions. The Company recognizes revenue and corresponding accounts receivable according to Topic 606 and, at times, recognize revenue in advance of the time when contracts give us the right to invoice a customer. The Company may also receive consideration, per the terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as deferred revenue. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before services have been performed. In such instances, the Company records a deferred revenue liability. The Company recognizes these contract liabilities as sales after all revenue recognition criteria are met.

Practical Expedients. In cases where the Company is responsible for shipping after the customer has obtained control of the goods, the Company has elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation. Additionally, the Company has elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. The Company only gives consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year.

Product Sales. The Company recognizes revenue from sales of products upon shipment or delivery when control of the product transfers to the customer, depending on the terms of each sale, and when collection is probable. In the circumstance where terms of a product sale include subjective customer acceptance criteria, revenue is deferred until the Company has achieved the acceptance criteria unless the customer acceptance criteria are perfunctory or inconsequential. The Company generally offers customers payment terms of less than one year.

Freight. The Company records shipping and handling fees that it charges to its customers as revenue and related costs as cost of goods sold.

Multiple Performance Obligations. Certain agreements with customers include the sale of equipment involving multiple elements in cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met.

The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire amount of consideration is attributed to that obligation. When a contract contains multiple performance obligations the standalone selling price is first estimated using the observable price, which is generally a list price net of applicable discount or the price used to sell the good or service in similar circumstances. In circumstances when a selling price is not directly observable, the Company will estimate the standalone selling price using information available to it including its market assessment and expected cost plus margin.

The timetable for fulfilment of each of the distinct performance obligations can range from completion in a short amount of time and entirely within a single reporting period to completion over several reporting periods. The timing of revenue recognition for each performance obligation may be dependent upon several milestones, including physical delivery of equipment, completion of site acceptance test, and in the case of after-market consumables and service deliverables, the passage of time.

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 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,~~September 30, 2020, the fair value of the Company’s cash and cash equivalents ~~and restricted cash~~ approximate their carrying value due to their short-term nature.

On September 5, 2019, the Company entered into a private placement transaction with Thomas B. Pickens III, the Chief Executive Officer and Chairman of the Board of Directors of the Company for the issuance and sale of a secured promissory note (“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 1^st Detect Corporation and Astrotech Technologies, Inc. (the “Subsidiaries”), entered into a security agreement, dated as of September 5, 2019, 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.

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.

On August 24, 2020, the Company and Mr. Pickens agreed to extend the Maturity Date of both the notes and payment of accrued interest to September 5, 2021.

On April 14, 2020, the Company entered into the PPP Promissory Note for $542 thousand with a commercial bank under the CARES Act. The PPP Promissory Note bears interest at a rate of 1.0% per annum. Payments are due monthly beginning November 10, 2020. The remaining principal amount of the PPP Promissory Note along with any unpaid interest is due on April 1, 2022. The principal and interest may be forgiven if the proceeds are used for forgivable purposes as defined by the terms in the PPP Promissory Note, and the Company has used the proceeds from the PPP Promissory Note for forgivable purposes as defined by the terms of the PPP Promissory Note. Interest expense for the three months ended September 30, 2020 was approximately $1 thousand.

Subsequent to the end of the quarter, the Company has applied for forgiveness under the provisions of the CARES Act and escrowed the balance of the note with the lender. Forgiveness is subject to the sole approval of the Small Business Administration and it may deny our application for forgiveness in whole or in part. See Note 15 for more information.

~~During~~For the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020, the Company had one customer that ~~substantially~~materially comprised all of the Company’s revenue. ~~During~~All of the Company’s revenue for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 ~~the Company recognized revenue~~came from ~~one~~a single different 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 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.

The Company’s stock option activity for the ~~nine~~three months ended ~~March 31,~~September 30, 2020 is as follows:

The aggregate intrinsic value of options exercisable at ~~March 31,~~September 30, 2020 was $0, as the fair value of the Company’s common stock is less than the exercise prices of these options. The remaining stock-based compensation expense of ~~$33~~$2 thousand related to stock options will be recognized over a weighted-average period of ~~0.57~~2.03 years.

The table below details the Company’s stock options outstanding as of ~~March 31,~~September 30, 2020:

Compensation costs recognized related to stock option awards were ~~$43~~$0 and $44 thousand for ~~each of~~ the three months ended ~~March 31,~~September 30, 2020, and 2019, ~~and $128 thousand for each of the nine months ended March 31, 2020 and 2019.~~respectively.

The Company’s restricted stock activity for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, is as follows:

Stock compensation expenses related to restricted stock were ~~$52~~$44 thousand and ~~$64~~$60 thousand for the three months ended ~~March 31, 2020 and 2019, respectively, and $154 thousand and $77 thousand for the nine months ended March 31,~~September 30, 2020, and 2019, respectively. The remaining stock-based compensation expense of ~~$359~~$232 thousand related to restricted stock awards granted will be recognized over a weighted-average period of ~~1.74~~1.23 years.

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,~~September 30, 2020, the Company established a valuation allowance against all of its net deferred tax assets.

For the each of the three months ended ~~March 31,~~September 30, 2020 and 2019, the Company incurred pre-tax losses in the amount of $2.1 ~~million and $2.3 million, respectively. For the nine months ended March 31, 2020 and 2019, the Company incurred pre-tax losses in the amount of $6.2 million and $6.7 million, respectively.~~million. The total effective tax rate was approximately 0% for the each of the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 and 2019.

For the each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019, the Company’s effective tax rate differed from the federal statutory rate of 21%, primarily due to the valuation allowance placed against its net deferred tax assets.

The ~~Coronavirus Aid, Relief, and Economic Security (“CARES”)~~CARES Act was signed into law on March 27, 2020. The CARES Act provided certain tax relief measures including the acceleration of the alternative minimum tax (“AMT”) credit previously paid. The CARES Act allows for the acceleration of the refundable AMT credit up to 100% of the AMT credit. In ~~connection with its analysis of~~response to the impact of the CARES Act, ~~and pursuant to filing the Form 1139,~~ the Company ~~has reclassed~~received the ~~refundable~~remaining AMT credit of ~~$429K from long-term to short-term receivable and recorded no income tax effects on~~$429 thousand for AMT previously paid during the ~~other tax relief measures of the CARES Act.~~three months ended September 30, 2020.

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,~~September 30, 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~~2001 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.~~

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 or investigations.~~proceedings.

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

1^st Detect is a manufacturer of ~~March 31, 2020, Astral no longer meets~~explosives and narcotics trace detectors developed for use at airports, secured facilities, and borders worldwide.

AgLAB is developing a series of mass spectrometers for use in the ~~criteria~~agriculture market for ~~segment reporting as both its assets~~process control and ~~operations are minimal. For more information on key~~the detection of trace amounts of solvents and pesticides.

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

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

As previously ~~noted~~reported, on April 14, 2020, the Company entered into the PPP Promissory Note with a commercial bank (the “Bank”) under the CARES Act. On October 19, 2020, the Company and the Bank entered into a Cash Reserve Agreement wherein the Company agreed to deliver to the Bank an amount equal to $541,500 (the “Cash Amount”), to be held in in a separate account in accordance with the terms and conditions of the Cash Reserve Agreement for the purpose of establishing a source of payment for the Company’s obligations to repay and/or obtain forgiveness of the PPP Promissory Note.

On October 20, 2020, the Company issued a press release announcing that its subsidiary BreathTech Corporation signed a joint development and option agreement (the “Agreement”) with the Cleveland Clinic Foundation (the “Cleveland Clinic”). Pursuant to the Agreement, the Company and the Cleveland Clinic will collaborate in efforts to develop a rapid breath test for coronavirus infection or related indicators, using the Company’s mass spectrometry technology and collection of data related thereto through an investigator initiated clinical study performed by the ~~Company in its Form 10-Q for the fiscal quarter ended December 31, 2019,~~Cleveland Clinic.

On October 21, 2020, the Company ~~was not~~entered into a Securities Purchase Agreement (the “First Purchase Agreement”) with certain purchasers named therein, pursuant to which the Company agreed to issue and sell 7,826,086 shares (the “Public Offering Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an offering price of $2.30 per share (the “Public Offering”).

The Public Offering resulted in ~~compliance~~gross proceeds of approximately $18.0 million before deducting the placement agent’s fees and related offering expenses.

Pursuant to an engagement agreement dated July 23, 2020, as amended, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as the Company’s exclusive placement agent in connection with the ~~minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on~~Public Offering. The ~~Nasdaq Capital Market because~~Company will issue to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants No. 1”) to purchase up to 469,565

shares of Common Stock, which represents 6.0% of the Public Offering Shares sold in the Public Offering. The Placement Agent’s Warrants No. 1 have an exercise price of $2.875 per share, which represents 125% of the per share offering price of the Public Offering Shares and a termination date of October 21, 2025.

On October 28, 2020, the Company entered into a Securities Purchase Agreement (the “Second 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”), 2,887,906 shares (the “Registered Offering Shares”) of the Company’s ~~stockholders’ equity was below~~Common Stock, at an offering price of $2.15 per share.

The Registered Offering resulted in gross proceeds of approximately $6.2 million before deducting the ~~required minimum~~placement agent’s fees and related offering expenses.

Pursuant to an engagement agreement dated July 23, 2020, as amended, the Company engaged the Placement Agent to act as the Company’s exclusive placement agent in connection with the Registered Offering. The Company will also issue to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants No. 2”) to purchase up to 173,274 shares of ~~$2.5 million at December 31, 2019.~~ Common Stock, which represents 6.0% of the Registered Offering Shares sold in the Registered Offering. The Placement Agent’s Warrants No. 2 have an exercise price of $2.6875 per share, which represents 125% of the per share offering price of the Registered Offering Shares and a termination date of October 28, 2025.

On ~~February 18,~~November 3, 2020, the Company received a ~~notice (the “Notice”)~~letter from NASDAQ stating that based on the ~~Listing Qualifications Department of~~Form 8-K filed by the Company on October 30, 2020, Nasdaq ~~Stock Market LLC (“Nasdaq”) stating~~has determined that the Company ~~was not in compliance~~complies with the ~~required stockholder’s equity of $2.5 million.~~

The Notice had no immediate effect on the Company’s listing on the Nasdaq Capital Market. On April 14, 2020, the Company submitted a plan to regain compliance with the minimum stockholders’ equity requirement. If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance (the “Compliance Period”)Listing Rule 5550(b)(1).

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 Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act administered by the U.S. Small Business Administration. The PPP Loan matures on April 1, 2022 and bears interest at a rate 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 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 contains various certifications and agreements related to the PPP, as well customary default and other provisions.

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:

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 ~~2019~~2020 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.

ITEM 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.

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.

The Company’s efforts are focused on commercializing its platform mass spectrometry technology through its wholly-owned subsidiaries:

ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1^st Detect. The intellectual property includes 37 granted patents and ~~five~~three additional patents in ~~process.~~process along with extensive trade secrets. With a number of diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of ~~use~~use. ATI currently licenses the AMS Technology to ~~the other~~three wholly-owned subsidiaries of Astrotech, including to 1^st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in ~~the healthcare industry.~~breath analysis.

1^st Detect, aan exclusive licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world’s first mass spectrometer (“MS”) based explosives trace detector (“ETD”) certified by the European Civil Aviation Conference (“ECAC”), designed to replace the ~~explosives trace detectors~~ETDs used at airports, cargo facilities, secured facilities, and borders worldwide. We believe that ~~government and airport~~ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion 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, frustration, and ~~frustration,~~ significant wasted security ~~resources, and lack of security personnel confidence in ETDs.~~resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those 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, and specifically for mass spectrometry, to address the evolving ~~threats.~~threats, but mass spectrometry has long been too expensive, too cumbersome, and not practical for security applications until the launch of the TRACER 1000.

~~Either Transportation Security Administration (“TSA”) or ECAC certification is necessary~~In order to sell the TRACER 1000 to airport and cargo security customers in the ~~airport market and~~European Union, ECAC certification is required. Certain other countries also accept ECAC certification. After receiving ECAC certification for the TRACER 1000 ~~received ECAC certification~~ on February 21, 2019, ~~for both passenger~~we are now marketing to and taking orders from airports and cargo ~~screening. After receiving ECAC certification, we can now sell the TRACER 1000 to the majority of airports~~facilities outside of the U.S.~~, including all of Europe.~~ that accept ECAC certification.

On June 26, 2019, the Company announced the official launch of the TRACER ~~1000. On~~1000, and 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, there has been considerable interest from prospective customers, which has yielded a number of successful demonstrations and field trials.

In the United States, we are working with ~~both TSA and TSA~~the Transportation Security Administration (“TSA”) towards Air Cargo ~~towards~~ certification. On March 27, 2018, ~~the Company~~we announced that the TRACER 1000 was accepted into TSA’s Air Cargo Screening Technology Qualification Test (“ACSQT”) and, on April 4, 2018, we announced that the TRACER 1000 was beginning testing with TSA for passenger screening at airports. On November 14, 2019, ~~Astrotech~~we announced that the TRACER 1000 had been selected by the TSA’s Innovation Task Force ~~(“ITF”)~~ to conduct live checkpoint screening at Miami International Airport. With similar protocols as ECAC testing, we have received valuable feedback from all programs. Following ECAC certification and the Company's early traction within the cargo market, testing for cargo security continued with the TSA. With the ~~current~~ COVID-19 ~~crisis,~~pandemic, all testing ~~with~~within the TSA was put on hold; however, cargo non-detection testing resumed this summer, and we subsequently announced on September 9, 2020 that the TRACER 1000 passed the TSA’s ACSQT non-detection testing. We expect TSA cargo detection testing to resume this fall. Given the deterioration in air traffic caused by the pandemic, TSA certification testing for passenger checkpoint security has been put on indefinite hold. ~~We expect to resume following~~

Finally, on October 28, 2020, the ~~path~~Company announced that it had surpassed $1.0 million in purchase orders for ~~ETD certification once TSA employees are allowed to return to work.~~the TRACER 1000 and an additional $1.0 million in future service and support commitments, also announcing DHL (Deutsche Post AG) as its largest flagship customer.

AgLAB, aan exclusive licensee of ATI ~~is developing~~for the agriculture market, has developed the AgLAB-1000™ series of mass spectrometers for ~~use~~process control and in the ~~agriculture industry for both chemical~~ detection of trace levels of solvents and ~~process control.~~pesticides. The AgLAB product line is a derivative of the Company’s core 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 agriculture applications in both ~~the field~~processing facilities 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 ~~hemp and cannabis markets to maximize processing efficiencies and to detect pesticides.~~

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

BreathTech, aan exclusive licensee of ATI for breath analysis, is developing the BreathTest-1000™, a breath analysis tool to screen for ~~volatile organic compound (“VOC”)~~VOC metabolites found in a person’s breath that could indicate they may have an infection, including ~~Coronavirus Disease 2019 (“COVID-19”)~~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 BreathTest-1000 follows the Company’s positive results in pre-clinical trials for the BreathDetect-1000™, a rapid ~~bedside~~self-serve breathalyzer that detects bacterial infections in the respiratory tract, including pneumonia. The pre-clinical trials were conducted in collaboration with UT Health San ~~Antonio.~~Antonio in 2017.

~~Astral Images (“Astral”) developed advanced film restoration and enhancement software. Although~~On October 20, 2020, we ~~believe Astral has developed valuable technology fortified by patents and trade secrets,~~announced a joint development agreement with the Cleveland Clinic Foundation to explore leveraging the BreathTest-1000 to rapidly screen for COVID-19 or related indicators. The goal of the agreement is to develop a non-invasive device that will use breath samples to identify COVID-19 strains, with the potential ~~market has not advanced as quickly as anticipated. Due~~ to ~~funding constraints, the Company’s primary focus remains~~provide a low-cost, self-service screening option that could be deployed on ~~the pursuit of opportunities for its platform mass spectrometry technology. Consequently, efforts are exclusively focused on strategic initiatives to facilitate the realization of Astral’s value.~~a large-scale.

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~~prolonged 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~~we have seen delays with respect to ~~AgLAB~~the TSA certification process and ~~has impacted~~parts of our ~~revenue~~supply chain as ~~noted below.~~a result of COVID-19. In addition, operational fees throughout Europe largely come from airline ticket fees, and with a reduction in air travel caused by the pandemic, we are seeing a reduction in near-term demand for ETDs at checkpoints.

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 further 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.

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 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 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.

As of July 1, 2019, the Company 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 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 right-of-use asset on the balance sheet for operating leases. The adoption of Topic 842 resulted in an adjustment to retained earnings of $230 thousand.

Three months ended ~~March 31,~~September 30, 2020, compared to three months ended ~~March 31,~~September 30, 2019:

Selected consolidated financial data for the quarters ended ~~March 31,~~September 30, 2020, and 2019 is as follows:

Revenue – Total revenue increased ~~$118~~$139 thousand during the ~~third~~first quarter of fiscal ~~2020,~~2021, compared to the ~~third~~first quarter of fiscal ~~2019. Revenue~~2020. Substantially all of the revenue generated in the ~~third~~first quarter of fiscal 2021 was from the sales of our TRACER 1000 units. All of the revenue generated in the first quarter of fiscal 2020 was associated with the sale of components related to ~~the TRACER 1000 product launch. This is a deceleration from the second quarter of fiscal 2020 due to delays in the acceptance~~prior iterations of our ~~products caused by COVID-19.~~MS technology.

Cost of Revenue – Gross profit is comprised of revenue less cost of revenue. In the ~~third~~first quarter of fiscal ~~2020,~~2021, cost of revenue was comprised of labor, materials, ~~overhead,~~shipping, and ~~shipping~~overhead related to the ~~above sales. Gross margin for~~sale of TRACER 1000 units. No such costs were recognized during the ~~third~~first 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.2020.

Operating Expenses – ~~As a result of management’s ongoing commitment to optimize our resources, operating~~Operating expenses ~~decreased $257~~increased $22 thousand, or ~~11%~~1%, during the third quarter of fiscal 2020, compared to the third quarter of fiscal 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 $212 thousand, or 21%, in the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019 due to decreases in expenses relating to subcontractors, consultants, depreciation, and headcount as well as decreased materials expense.

~~Income Taxes~~ –Income tax benefit decreased $858 thousand during the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019 due to the recognition of an Alternative Minimum Tax (“AMT”) credit in the prior period. Half of the AMT credit was received in the second quarter of fiscal 2020 and the remainder is expected to be received during the first quarter of fiscal ~~2021.~~2021, compared to the first quarter of fiscal 2020. Significant changes to operating expenses include the following:

Income Taxes –Income tax benefit did not change during the first quarter of fiscal 2021, compared to the first quarter of fiscal 2020. 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, 2020, compared to nine months ended March 31, 2019~~:

~~Selected consolidated financial data for the nine months ended March 31, 2020, and 2019 is as follows:~~

~~Revenue~~ – Total revenue increased $284 thousand during the nine months ended March 31, 2020, compared to the nine months ended March 31, 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 Astral’s now-discontinued agreement with ColorTime, a post-production house specializing in media content creation, restoration, and distribution.

~~Cost 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. Gross margin for the nine months ended March 31, 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 materials to decline as we recognize the benefits of scale.

~~Operating Expenses~~ – As a result of management’s ongoing commitment to optimize our resources, operating expenses decreased $581 thousand, or 9%, during the nine months ended March 31, 2020, compared to the nine months ended March 31, 2019. Selling, general and administrative expenses remained consistent. Research and development expenses decreased $419 thousand, or 14%, during the nine months ended March 31, 2020, compared to nine months ended March 31, 2019, due to decreases in expenses relating to subcontractors, consultants, depreciation, and headcount as well as decreased materials expense.

~~Income Taxes~~ – Income tax benefit decreased $858 thousand during the nine months ended March 31, 2020, compared to the nine months ended March 31, 2019 due to the recognition of the AMT credit in the prior period. Half of the AMT credit was received in the second quarter of fiscal 2020 and 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.

As of ~~March 31,~~September 30, 2020, we held cash and cash equivalents of ~~$4.7 million and restricted cash of $0.1~~$1.9 million, and our working capital was approximately ~~$2.0~~($1.5) million. As of June 30, ~~2019,~~2020, we had cash and cash equivalents of ~~$1.6~~$3.3 million, and our working capital was approximately ~~$1.9~~$0.3 million. Cash and cash equivalents ~~and restricted cash increased $3.2~~decreased $1.5 million as of ~~March 31,~~September 30, 2020, compared to June 30, ~~2019,~~2020, due to ~~sales of shares of the Company’s common stock in two registered direct offerings and notes payable from a related party, partially offset by~~ funding our normal operating activities and research and development initiatives.

Cash used in operating activities decreased ~~$1.6~~$0.4 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, compared to the ~~nine~~three months ended ~~March 31,~~September 30, 2019, primarily due to a ~~reduction~~decrease in ~~our expenses as well as an increase in deferred tax asset~~accounts receivable due to receiving the ~~refundable credit of previously paid AMT.~~remaining alternative minimum tax (“AMT”) credit.

Cash ~~provided by~~used in investing activities ~~decreased $3.6 million~~increased $16 thousand for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, compared to the ~~nine~~three months ended ~~March 31,~~September 30, 2019, due to ~~liquidating our available-for-sale investments in the first quarter~~purchases of ~~fiscal 2019.~~property and equipment.

Cash provided by financing activities ~~increased $4.2~~decreased $1.8 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, compared to the ~~nine~~three months ended ~~March 31,~~September 30, 2019, due to a note payable from a related party as well as the ~~sales~~sale of shares of ~~the Company’s~~ common stock through an “at the market offering” program (the “ATM Offering”) in ~~two registered direct offerings for net proceeds of approximately $4.5 million.~~the prior period.

As of March 31, 2020, we had cash and cash equivalents and restricted cash of $4.8 million, and our working capital was approximately $2.0 million. Restricted cash consists of two letters of credit relating to purchase ordersOur annual report on Form 10-K for ~~the TRACER 1000 product. For~~ the fiscal year ~~2019, the Company reported a net loss of $7.5 million and net cash used in operating activities of $8.5 million. For the nine months~~ ended ~~March 31,~~June 30, 2020 ~~the Company reported a net loss of $6.2 million and net cash used in operating activities of $5.0 million. These factors raise~~indicated substantial doubt ~~about the Company’s~~as to our ability to continue as a going concern.

~~The Company remains resolute in identifying the optimal solution~~ On October 23, 2020, we completed a public offering of our common stock, raising gross proceeds of $18.0 million, and on October 30, 2020, we also completed a registered direct offering of our common stock, raising gross proceeds of $6.2 million. We believe this solves our liquidity issue, and we no longer have substantial doubt about our ability to ~~its~~continue as a going concern. We will continue to evaluate opportunities to further strengthen our liquidity, ~~issue. The Company is currently evaluating several potential sources for additional liquidity. These include, but are not limited to,~~including 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 February 13, 2020, the Company entered into a private placement transaction with Mr. Pickens for the issuance and sale of a secured promissory note to Mr. Pickens with a principal amount of $1.0 million. From November 8, 2019 through March 25, 2020, the Company sold 793,668 shares of common stock pursuant to an At-the-Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley FBR through the ATM Offering under which B. Riley FBR acted as the sales agent. In connection with the sale of these shares of common stock, the Company received net proceeds of $2.3 million. The weighted-average sale price per share was $3.04. 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, 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. 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 Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act administered by the U.S. Small Business Administration. The PPP Loan matures on April 1, 2022 and bears interest at a rate of 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, 2020 do not include any adjustments that might result from the outcome of this uncertainty.~~

For the each of the ~~nine~~three months ended ~~March 31, 2020~~September 30, 2019 and 2019, the Company’s effective tax rate differed from the federal statutory rate of 21%, primarily due to the valuation allowance placed against its net deferred tax assets.

The ~~Coronavirus Aid, Relief, and Economic Security (“CARES”)~~CARES Act was signed into law on March 27, 2020. The CARES Act provided certain tax relief measures including the acceleration of the alternative minimum tax (“AMT”) credit previously paid. The CARES Act allows for the acceleration of the refundable AMT credit up to 100% of the AMT credit. In ~~connection with our analysis of~~response to the impact of the CARES Act, ~~and pursuant to filing~~ the ~~Form 1139, we have reclassed~~Company received the ~~refundable~~remaining AMT credit of ~~$429K from long-term to short-term receivable and recorded no income tax effects on~~$429 thousand for AMT previously paid during the ~~other tax relief measures of the CARES Act.~~three months ended September 30, 2020.

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,~~September 30, 2020 or 2019.

We did not have any off-balance sheet arrangements as of ~~March 31,~~September 30, 2020, or June 30, ~~2019.~~2020.

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.

There ~~were~~was no ~~changes~~change in our internal control over financial reporting ~~(as defined in Rule 13a-15(f) under~~during the ~~Exchange Act) during~~ ~~the nine~~three months ended ~~March 31,~~September 30, 2020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As of ~~March 31,~~September 30, 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.

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.

As of September 30, 2020, we had an accumulated deficit of approximately $201.9 million and a reported net loss of $2.1 million for the three months ended September 30, 2020. We are unable to predict the extent of any future losses or when we will become profitable, if at all. If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline.

Our business units are in development stage. They have earned limited revenues and it is uncertain whether they will earn any revenues in the future or whether any of them will ultimately be profitable.

Our business units are in an early stage with a limited operating history. Their future operations are subject to all of the risks inherent in the establishment of a new business including, but not limited to, risks related to capital requirements, failure to establish business relationships, and competitive disadvantages against larger and more established companies. These business units will require substantial amounts of funding to continue to commercialize their products. If such funding comes in the form of equity financing, such equity financing may involve substantial dilution to existing shareholders. Even with funding, our products may fail to be effective or attractive to the market or lack the necessary financial ~~condition, results of operations,~~or other resources or relationships to be successful.

These business units can be expected to experience continued operating losses until they can generate sufficient revenues to cover their operating costs. Furthermore, these business units may not be able to develop, manufacture, or market additional products in the future, that future revenues will be significant, that any sales will be profitable, or that the business units will have sufficient funds available to complete their commercialization efforts.

Any products and ~~cash flows~~technologies developed and manufactured by our business units 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~~require regulatory approvals prior to being made, marketed, sold, and used. Regulatory approval of any ~~one~~products may not be obtained. In particular, FDA approval will be required to market the BreathTest-1000 in the United States. Obtaining FDA approval is a complex and lengthy process, and FDA approval for the BreathTest-1000 may not be granted on a timely basis or at all.

The commercial success of ~~which~~any of our business units will depend, in part, on obtaining patent and other intellectual property protection for the technologies contained in any products it developed. In addition, our business units may need to license intellectual property to commercialize future products or avoid infringement of the intellectual property rights of others. Licenses may not be available on acceptable terms and conditions, if at all. Our business units may suffer if any licenses terminate, if the licensors fail to abide by the terms of the license or fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid, or if our respective business unit is unable to enter into necessary licenses on acceptable terms. If such business unit, or any third-party, from whom it licenses intellectual property, fails to obtain adequate patent or other intellectual property protection for intellectual property covering its products, or if any protection is reduced or eliminated, others could use the intellectual property covering the products, resulting in harm to the competitive business position of this business unit. In addition, patent and other intellectual property protection may not provide our business units with a competitive advantage against competitors that devise ways of making competitive products without infringing any patents that this business unit owns or has rights to. Such competition could adversely affect the prices for any products or the market share of any of our business units and could have a material adverse effect on ~~our actual results.~~its results of operations and financial condition.

~~There have been no material changes~~Our cash and cash equivalents may not be sufficient to ~~the Risk Factors previously disclosed in~~fund our ~~Form 10-K, except as noted below.~~operating expenses, capital equipment requirements, and other expected liquidity requirements.

~~No assurances can be given~~Our future capital requirements will depend on a number of factors, including our success in developing and expanding markets for our products, payments under possible future strategic arrangements, continued progress of our research and development of potential products, the need to acquire licenses to new technology, costs associated with increasing our manufacturing and development facilities, costs associated with strategic acquisitions including integration costs and assumed liabilities, litigation expense, the status of competitive products, and potential cost associated with both protecting and defending our intellectual property. Additionally, actions taken as a result of the ongoing internal evaluation of our business could result in expenditures that ~~we will~~are not currently contemplated. Factors that could affect our capital requirements, in addition to those listed above include

continued collections of accounts receivable consistent with our historical experience and our ability to manage product development efforts.

We may not be able to successfully develop the BreathTest-1000™. or any other new products or services.

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 are in the development stage and 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™.~~BreathTest-1000.

Furthermore, we are subject to risks including, but not limited to, the following with respect to the development of the ~~BreathTest-1000™:~~BreathTest-1000:

Product development involves a high degree of risk and uncertainty, and our potential products may not be successfully developed, achieve their intended benefits, receive full market authorization, or be commercially successful. Moreover, as the COVID-19 pandemic persists and further information continues to develop, we are learning of increased risks and uncertainties in developing and commercializing new products and services in these unprecedented and evolving circumstances.

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 COVID-19 pandemic has significantly reduced airline passenger traffic, which reduces demand for certain of our security screening products and services. To slow and limit the transmission of COVID-19, governments across the world have imposed significant air travel restrictions and businesses and individuals have canceled air travel plans. These restrictions and cancelations have reduced demand for security screening products and related services at airport checkpoints globally as the number of airline passengers requiring screening has fallen. The pandemic has also hampered our ability to meet with our customers and prospective customers. The continued spread of COVID-19 has also led to recent 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~~costs 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~~ If any of our ~~stakeholders (including customers, employees, suppliers, and local communities) to responsibly address this global pandemic. We continue to monitor~~supply chain phases were interrupted or terminated, we could experience delays in our product development including the ~~situation, to assess further possible implications to~~availability of products for clinical testing. The occurrence of one or more of these items could have a material adverse effect on 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~~liquidity, financial condition, and/or results of operations. The effects of the COVID-19 pandemic may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

In addition, any future clinical trials may be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Also, some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.

If we fail to comply with the continued listing requirements of The Nasdaq Capital Market LLC, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

As previously noted in our Form 10-K for the fiscal year ended June 30, 2020, we were 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 our stockholders’ equity was below the required minimum of $2.5 million at June 30, 2020. On September 11, 2020, we received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) stating that we were not in compliance with the required stockholder’s equity of $2.5 million.

The Notice has no immediate effect on our listing on The Nasdaq Capital Market. The Company originally had until October 26, 2020 to submit a plan to regain compliance with the minimum stockholders’ equity requirement; however, Nasdaq granted an extension of the deadline to submit a plan until November 2, 2020. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance (the “Compliance Period”).

On October 23, 2020, the Company closed a public offering of its common stock for gross proceeds of $18.0 million. On November 3, 2020, the Company received a letter from NASDAQ stating that based on the Form 8-K filed by the Company on October 30, 2020, Nasdaq has determined that the Company complies with the Listing Rule 5550(b)(1).

There is substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to operate in the future. The report of our independent registered public accounting firm also includes an explanatory paragraph about our ability to continue as a going concern.

Our annual report on Form 10-K for the fiscal year ended June 30, 2020 indicated substantial doubt as to our ability to continue as a going concern. On October 23, 2020, we completed a public offering of our common stock, raising gross proceeds of $18.0 million, and on October 30, 2020, we also completed a registered direct offering of our common stock, raising gross proceeds of $6.2 million. We believe this solves our liquidity issue, and we no longer have substantial doubt about our ability to continue as a going concern.

Our success depends significantly on the establishment and maintenance of successful relationships with our customers.

Our customer base is limited; therefore, we continue to work on diversifying our customer base, while going to great lengths to satisfy the needs of our current customer base. Due to the limited number of customers, if any of our customers terminate their relationship with us, it could materially harm our business and results of operations.

Third parties may claim we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products.

As we introduce any new and potentially promising product or service, or improve existing products or services with new features or components, companies possessing competing technologies, or other companies owning patents or other intellectual property rights, may be motivated to assert infringement claims in order to generate royalty revenues, delay or diminish potential sales, and challenge our right to market such products or services. Even if successful in defending against such claims, patent and other intellectual property related litigation is costly and time consuming. In addition, we may find it necessary to initiate litigation in order to protect our patent or other intellectual property rights, and even if the claims are well-founded and ultimately successful, such litigation is typically costly and time-consuming and may expose us to counterclaims, including claims for intellectual property infringement, antitrust, or other such claims. Third parties could also obtain patents or other intellectual property rights that may require us to either redesign products or, if possible, negotiate licenses from such third parties. Adverse determinations in any such litigation could result in significant liabilities to third parties or injunctions, or could require us to seek licenses from third parties, and if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, importing, distributing, selling, or using certain products, any one of which could have a material adverse effect on us. In addition, some licenses may be non-exclusive, which could provide our competitors access to the same technologies. Under any of these circumstances, we may incur significant expenses.

Our ongoing success is dependent upon the continued availability of certain key employees.

We are dependent in our operations on the continued availability of the services of our employees, many of whom are individually key to our current and future success, and the availability of new employees to implement our growth plans. The market for skilled employees is highly competitive, especially for employees in technical fields. While our compensation programs are intended to attract and retain the employees required for us to be successful, ultimately, we may not be able to retain the services of all of our key employees or a sufficient number to execute on our plans. In addition, we may not be able to continue to attract new employees as required.

We generally sell our products in industries that have increased competition through frequent new product and service introductions, rapid technological changes, and changing industry standards. Without the timely introduction of new products, services, and enhancements, our products and services will become technologically obsolete over time, in which case our revenue and operating results would suffer. The success of our new products and services will depend on several factors, including our ability to:

Our insurance coverage may be inadequate to cover all significant risk exposures.

We are exposed to liabilities that are unique to the products and services we provide. We maintain insurance for certain risks, and we believe our insurance coverage is consistent with general practices within our industry. However, the amount of our insurance coverage may not cover all claims or liabilities and we may be forced to bear substantial costs.

Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, services, and data.

Increased global cybersecurity vulnerabilities, threats, and more sophisticated and targeted cyber-related attacks pose a risk to the security of our and our customers’, suppliers’, and third-party service providers’ products, systems, and networks and the confidentiality, availability, and integrity of our and our customers’ data. Although we have implemented policies, procedures, and controls to protect against, detect, and mitigate these threats, we remain potentially vulnerable to additional known or unknown threats. We also have access to sensitive, confidential, or personal data or information that is subject to privacy and security laws, regulations, and customer-imposed controls. Despite our efforts to protect sensitive, confidential, or personal data or information, we may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee errors, and/or malfeasance that could potentially lead to the compromising of sensitive, confidential, or personal data or information, improper use of our systems or networks, unauthorized access, use, disclosure, modification, or destruction of information, defective products, production downtimes, and operational disruptions. In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness and remediation or increased protection costs, and could subject us to fines, damages, litigation, and enforcement actions.

Our facilities located in Houston are susceptible to damage caused by hurricanes or other natural disasters.

Our 1^st Detect facilities in Houston are susceptible to damage caused by hurricanes or other natural disasters. Although we insure our properties and maintain business interruption insurance, there can be no guarantee that the coverage would be sufficient or a claim will be fulfilled. A natural disaster could result in a temporary or permanent closure of our business operations, thus impacting our future financial performance.

If we are unable to anticipate technological advances and customer requirements in the commercial and governmental markets, our business and financial condition may be adversely affected.

Our business strategy employs our personnel’s decades of experience to expand the services and products we offer to our customers. We believe that our growth and future financial performance depend upon our ability to anticipate technological advances and customer requirements. We may not be able to achieve the necessary technological advances for us to remain competitive. Our failure to anticipate or respond adequately to changes in technological and market requirements, or delays in additional product development or introduction, could have a material adverse effect on our business and financial performance. Additionally, the cost of capital to fund these businesses will likely require dilution of shareholders.

Significant safety concerns could arise for our BreathTest-1000™ product, which could have a material adverse effect on our future revenues and financial condition.

If the development of the BreathTest-1000 is successfully completed, FDA approval will need to be obtained to market the BreathTest-1000 in the United States. Health care products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new safety issues are reported, we may be required to amend the conditions of use. For example, we may be required to provide additional warnings on the BreathTest-1000 label or narrow its approved intended use, either of which could reduce the product’s market acceptance. If serious safety issues arise with the BreathTest-1000 product, sales of the product could be halted by us or by regulatory authorities. Safety issues affecting suppliers’ or competitors’ products also may reduce the market acceptance of our products.

We incur substantial upfront, non-reimbursable costs in preparing proposals to bid on contracts or to receive research and development grants that we may not be awarded.

Preparing a proposal to bid on a contract or to receive a research and development grant is labor-intensive and results in the incurrence of substantial costs that are generally not retrievable. Additionally, although we may be awarded a contract or grant, work performance does not commence for several months following completion of the bidding process. If funding problems by the party awarding the contract or grant or other matters further delay our commencement of work, these delays may lower the value of the contract or grant, or possibly render it unprofitable.

A failure of a key information technology system, process, or site could have a material adverse impact on our ability to conduct business.

We rely extensively on information technology systems to interact with our employees and our customers. These interactions include, but are not limited to, ordering and managing materials from suppliers, converting materials to finished products, shipping product to customers, processing transactions, summarizing and reporting results of operations, transmitting data used by our service personnel and by and among our personnel and facilities, complying with regulatory, legal, and tax requirements, and other processes necessary to manage our business. If our systems are damaged or cease to function properly due to any number of causes, ranging from the failures of third-party service providers, to catastrophic events, to power outages, to security breaches, and our business continuity plans do not effectively compensate on a timely basis, we may suffer interruptions in our ability to manage operations which may adversely impact our results of operations and/or financial condition.

A sale of a substantial number of shares of the common stock may cause the price of our common stock to decline.

If our shareholders sell, or the market perceives that our shareholders intend to sell for various reasons, substantial amounts of our common stock in the public market may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

We are a smaller reporting company and, as a result of the reduced disclosure and governance requirements applicable to such companies, our common stock may be less attractive to investors.

We are a smaller reporting company, (i.e. a company with less than $250 million of public float) and we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as a result of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.

We are required to evaluate the effectiveness of our internal control over financial reporting on an annual basis and publicly disclose any material weaknesses in our controls. Any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and significant expense to remediate, and ultimately could have an adverse effect on our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to assess the effectiveness of our internal control over financial reporting and to disclose if such controls were unable to provide assurance that a material error would be prevented or detected in a timely manner. We have an ongoing program to review the design of our internal controls framework in keeping with changes in business needs, implement necessary changes to our controls design, and test the system and process controls necessary to comply with these requirements. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company will have been detected.

If we or our independent registered public accounting firm identifies material weaknesses in our internal controls, the disclosure of that fact, even if quickly remedied, may cause investors to lose confidence in our financial statements and our stock price may decline. Remediation of a material weakness could require us to incur significant expenses and, if we fail to remedy any material weakness, our ability to report our financial results on a timely and accurate basis may be adversely affected, our access to the capital markets may be restricted, our stock price may decline, and we may be subject to sanctions or investigation by regulatory authorities, including the SEC or Nasdaq. We may also be required to restate our financial statements from prior periods. Execution of restatements create a significant strain on our internal resources and could cause delays in our filing of quarterly or annual financial results, increase our costs, and cause management distraction. Restatements may also significantly affect our stock price in an adverse manner.

We can sell additional shares of common stock without consulting shareholders and without offering shares to existing shareholders, which would result in dilution of shareholders’ interests in the Company and could depress our stock price.

Our Certificate of Incorporation authorizes 50,000,000 shares of common stock, of which 18,557,754 were outstanding as of November 9, 2020, and our Board is authorized to issue additional shares of our common stock. In addition, our Certificate of Incorporation authorizes 2,500,000 shares of “blank check preferred stock.” Shares of “blank check preferred stock” may be issued in such series and with such rights, privileges, and limitations as the Board may, in its sole discretion, determine. Our Board has designated 300,000 shares as Series A Junior Preferred Stock, none of which are outstanding. The Board has also designated Series C and Series D Preferred Stock, of which no shares and 280,898 shares are outstanding, respectively, as of November 9, 2020.

Although our Board intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing shareholders in connection with any future issuance of our capital stock, the future issuance of additional shares of our capital stock would cause immediate, and potentially substantial, dilution to our existing shareholders, which could also have a material effect on the market value of the shares. Furthermore, our Board may authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock, and the right to the redemption of the shares, together with a premium, prior to

the redemption of the common stock. In addition, our Board could authorize the issuance of a series of preferred stock that has greater voting power than the common stock or that is convertible into our common stock, which could decrease the relative voting power of the common stock or result in dilution to our existing shareholders.

Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for many disputes between us and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers.

Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery for the State of Delaware is the sole and exclusive forum for claims brought by a stockholder, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity or (ii) as to which the Delaware General Corporation Law (the “DGCL”) confers jurisdiction upon the Court of Chancery of the State of Delaware. The provision indicates that if the Court of Chancery does not have jurisdiction, then the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware, shall be the exclusive forum for such action.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors and officers. Alternatively, if a court were to find our choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer.

The medical technology industry is regulated extensively by governmental authorities, principally the FDA, and state regulatory agencies with oversight of various aspects of drug and device distribution, sale, and use. The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations. Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales. The FDA and other federal and state governmental agencies regulate numerous elements of our business, including:

Before we can market or sell a new regulated product or a significant modification to an existing product in the United States, we must obtain either clearance under Section 510(k) of the FDCA, grant of a de novo classification request, or approval of a pre‑market approval, or PMA, application from the FDA, unless an exemption from pre‑market review applies. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a legally marketed “predicate” device (in most cases Class II devices, with a few exceptions), with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing. Class III devices approved under the PMA process cannot serve as predicates. Clinical data are sometimes required to support substantial equivalence. In the de novo process, the FDA must determine that general and special controls are sufficient to provide reasonable assurance of the safety and effectiveness of a device, which is low to moderate risk and has no predicate (in other words, the applicant must justify the “down-classification” to Class I or II for a new product type that would otherwise automatically be placed into Class III, but is lower risk). The PMA process requires an applicant to demonstrate the safety and effectiveness of the device based on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life‑sustaining, life‑supporting or implantable devices. Products that are approved through a PMA application generally need FDA approval before they can be modified. Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k). The 510(k), de novo, and PMA processes can be expensive and lengthy and require the payment of significant fees, unless an exemption applies. The FDA’s 510(k) clearance process usually takes from 3 to 12 months, but may take longer. The FDA’s stated goal is to review de novo classification requests within 150 days, 50% of the time, but in reality the process for many applicants generally takes even longer, up to a year or more. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or longer, from the time the application is submitted to the FDA until an approval is obtained. The process of obtaining regulatory clearances, approvals, and emergency use authorization to market a medical device can be costly and

time‑consuming, and we may not be able to obtain these clearances, approvals, or authorizations on a timely basis, or at all for our proposed products.

If the FDA requires us to go through a lengthier, more rigorous examination for marketing authorization of the BreathTest-1000 or future modifications to the BreathTest-1000 than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our forecasts. In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain PMA process. Although we do not market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future products. Further, even with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k) clearances with respect to those products.

The FDA can delay, limit or deny clearance, approval, or authorization of a device for many reasons, including:

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development. Any delay in, or failure to obtain or maintain, clearance or approval for our products under development could prevent us from generating revenue from these products and adversely affect our business operations and financial results. Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some customers from using our products and adversely affect our reputation and the perceived safety and efficacy of our product. Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil penalties, injunctions, warning letters, recalls of products, delays in the introduction of products into the market, refusal of the FDA or other regulators to grant future clearances or approvals, and the suspension or withdrawal of existing clearances or approvals by the FDA or other regulators. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and negatively impact our reputation, business, financial condition and operating results. Furthermore, any operations or product applications outside of the United States will subject us to various additional regulatory and legal requirements under the applicable laws and regulations of the international markets we enter. These additional regulatory requirements may involve significant costs and expenditures and, if we are not able to comply with any such requirements, our international expansion and business could be significantly harmed.

Failure to obtain clearance or authorization for the BreathTest-1000, or other delays in the development of the BreathTest-1000, would adversely affect our ability to grow our business.

Commercialization of the BreathTest-1000 may require an Emergency Use Authorization (EUA), FDA clearance of a 510(k) premarket notification submission, or authorization of a de novo submission. The process for submitting and obtaining FDA clearance of a 510(k), authorization of a de novo submission, or EUA can be expensive and lengthy. The FDA’s review process can take several months or longer, and we may not be able to obtain FDA clearance, de novo authorization, or Emergency use Authorization for the BreathTest-1000 on a timely basis, if at all. The FDA’s refusal of, or any significant delays in receiving 510(k) clearance, de novo authorization, or Emergency use Authorization of the BreathTest-1000, would have an adverse effect on our ability to expand our business. Thus far, we have not performed any clinical testing of the BreathTest-1000, which will likely be required before the device can be marketed. Even if a clinical trial is completed, there can be no assurance that the data generated during a clinical trial will meet the safety and effectiveness endpoints or otherwise produce results that will lead the FDA to grant marketing clearance, approval, or authorization. In addition, any other delays in the development of the BreathTest-1000, for example, unforeseen issues during product validation, would have an adverse effect on our ability to commercialize the BreathTest-1000.

FDA’s policy with respect to Emergency Use Authorizations is evolving and may limit the ability for medical products, including the BreathTest-1000, to be eligible for commercialization under an Emergency Use Authorization.

We intend to submit an application with the FDA for Emergency Use Authorization (EUA) for the BreathTest-1000. The FDA has the authority to grant an Emergency Use Authorization to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives. If we are granted an Emergency Use Authorization for the BreathTest-1000 for the diagnosis of COVID-19, we would be able to commercialize the BreathTest-1000 for the diagnosis of COVID-19 prior to FDA clearance or authorization of a 510(k) or de novo submission, respectively. However, the FDA does not have review deadlines with respect to such submissions and, therefore, the timing of any approval of an EUA submission is uncertain. We cannot guarantee that the FDA will review our data in a timely manner, or that the FDA will accept the data when reviewed. The FDA may decide that our data are insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application. In addition, the FDA may revoke an Emergency Use Authorization where it is determined that the underlying health emergency no longer exists or warrants such authorization, and we cannot predict how long, if ever, an Emergency Use Authorization would remain in place. Further, the FDA’s policy with respect to EUAs related to COVID-19 is continuously evolving and may in the future limit the ability for medical products, including the BreathTest-1000, to be eligible for an EUA. If we are unsuccessful in obtaining an EUA for the BreathTest-1000 in a timely manner or at all, or if any granted EUA is revoked after a short period of time, it could have a material adverse effect on our future business, financial condition, operating results and cash flows.

Modifications to our products may require new 510(k) clearances, de novo submissions, or pre‑market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.

Any modification to a 510(k)‑cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a de novo or PMA. The FDA requires every manufacturer to make this determination in the first instance, and provides some guidance on decision making, but the FDA may review any manufacturer’s decision at any time. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. If the FDA disagrees with our determination and requires us to submit new 510(k) notifications, de novo submissions or PMAs for modifications to our previously cleared or approved products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.

If we or our third‑party suppliers fail to comply with the FDA’s good manufacturing practice regulations or fail to adequately, timely, or sufficiently respond to an FDA Form 483 or subsequent Warning Letter, this could impair our ability to market our products in a cost‑effective and timely manner and could result in FDA enforcement action.

We and our third‑party suppliers are required to comply with the FDA’s Quality System Regulation, or QSR, and Current Good Manufacturing Practices (cGMP) which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our product. The FDA audits compliance with the QSR, cGMP and related regulations through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may conduct these inspections or audits at any time. If, during the inspection, FDA identifies issues which, in FDA’s judgment, may constitute violations of the Federal Food, Drug, and Cosmetic Act or FDA’s regulations, the FDA inspector may issue an FDA Form 483 listing these observations.

Note that if an entity does not address observations found in an FDA Form 483 to FDA’s satisfaction, the FDA could take enforcement action, including any of the following sanctions:

Any of the foregoing actions could have a material adverse effect on our reputation, business, financial condition and operating results.

A recall of our product, or the discovery of serious safety issues with our product, could have a significant adverse impact on us.

The FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product poses an unacceptable risk to health.

Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government‑mandated or voluntary recall by us or one of our distributors could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of our products would divert managerial and financial resources and have an adverse effect on our reputation, financial condition and operating results, which could impair our ability to produce our products in a cost‑effective and timely manner.

Further, under the FDA’s medical device reporting, or MDR regulations, we are required to report to the FDA any incident in which our products may have caused or contributed to a death or serious injury or in which our products malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost‑effective and timely manner and have an adverse effect on our reputation, financial condition and operating results. Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device. Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.

Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action. Any

corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

We may be liable if the FDA or other U.S. enforcement agencies determine we have engaged in the off‑label promotion of our products or have disseminated false or misleading labeling or promotional materials.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including laws and regulations prohibiting marketing claims that promote the off‑label use of our products or that make false or misleading statements. Healthcare providers may use our products off‑label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine. FDA also could conclude that a performance claim is misleading if it determines that there are inadequate non‑clinical and/or clinical data supporting the claim. If the FDA determines that our promotional materials or training promote of an off‑label use or make false or misleading claims, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fines and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they determine that our promotional or training materials promote an unapproved use or make false or misleading claims, which could result in significant fines or penalties. Although our policy is to refrain from statements that could be considered off‑label promotion of our products or false or misleading, the FDA or another regulatory agency could disagree. Violations of the FDCA may also lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws, which may lead to costly penalties and may adversely impact our business. Recent court decisions have impacted FDA’s enforcement activity regarding off-label promotion in light of First Amendment Considerations; however, there are still significant risks in this area, in part due to the potential for False Claims Act exposure. In addition, the off‑label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could result in substantial damage awards against us and harm our reputation.

Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain reimbursement for our products or regulatory clearance or approval of our future products, and to produce, market and distribute those products after clearance or approval is obtained.

Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes. Both the federal and state governments in the United States and foreign governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare. Such legislation and regulations may result in decreased reimbursement for our product, which may further exacerbate industry‑wide pressure to reduce the prices charged for our product. This could harm our ability to market our products and generate sales. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our current products and future products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products. Delays in receipt of or failure to receive regulatory clearances or approvals for any future products would negatively impact our long‑term business strategy.

In the U.S., there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that restrict or regulate post‑approval activities, which may affect our ability to profitably sell product candidates for which we obtain marketing approval. Such government‑adopted reform measures may adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from third‑party payors.

Our financial performance may be adversely affected by medical device tax provisions in healthcare reform laws.

The Patient Protection and Affordable Care Act (the “PPACA”) imposed, among other things, an excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States. Under these provisions, the Congressional Research Service predicted that the total cost to the medical device industry may be up to $20 billion over a decade. The Internal Revenue Service issued final regulations implementing the tax in December 2012, which required, among other things, bi-monthly payments and quarterly reporting. The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), signed into law in December 2015, included a two-year moratorium on the medical device excise tax. A second two-year moratorium on the medical device excise tax was signed into law in January 2018 as part of the Extension of Continuing Appropriations Act, 2018 (Pub. L. 115-120), extending the moratorium through December 31, 2019. On December 20, 2019, President Trump signed into law a permanent repeal of the medical device tax under the PPACA, but there is no guarantee that Congress or the President will not reverse course in the future. If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, ~~financial position,~~ results of operations ~~and/or cash flows.~~and financial condition.

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. None.

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.

Delaware		91-1273737
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

~~201 West 5th Street,~~2028 E. Ben White Blvd., Suite ~~1275,~~240-9530, Austin, Texas		~~78701~~78741
Address of Principal Executive Offices		Zip Code

		Page
PART I:	FINANCIAL INFORMATION	43

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	43
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1918
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2523
ITEM 4.	CONTROLS AND PROCEDURES	2523

PART II:	OTHER INFORMATION	2624

ITEM 1.	LEGAL PROCEEDINGS	2624
ITEM 1A.	RISK FACTORS	2624
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2732
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2732
ITEM 4.	MINE SAFETY DISCLOSURES	2732
ITEM 5.	OTHER INFORMATION	2733
ITEM 6.	EXHIBITS	2834

(In thousands)	September 30, 2020			June 30, 2020
Furniture, fixtures, equipment & leasehold improvements	$	1,935		$	2,522
Software		315			326
Capital improvements in progress		8			—
Gross property and equipment		2,258			2,848
Accumulated depreciation		(2,158	)		(2,512	)
Property held for disposal, net		—			(237	)
Property and equipment, net	$	100		$	99

	Shares (in thousands)			Weighted Average Exercise Price		Shares (in thousands)			Weighted Average Exercise Price
Outstanding at June 30, 2019		324		$	5.71
Outstanding at June 30, 2020							325		$	5.68
Granted		10			1.85		—			—
Exercised		—			—		—			—
Canceled or expired		(8	)		4.07		(1	)		5.30
Outstanding at March 31, 2020		326		$	5.68
Outstanding at September 30, 2020							324		$	5.68

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☐

(In thousands)	Classification on the Condensed Consolidated Balance Sheet	March 31, 2020		Classification on the Condensed Consolidated Balance Sheet	September 30, 2020
Assets:
Operating lease assets	Operating leases, right-of-use assets, net	$	937	Operating leases, right-of-use assets, net	$	287
Financing lease assets	Property and equipment, net		52	Property and equipment, net		52
Total lease assets		$	989		$	339

Liabilities:
Current:
Operating lease obligations	Lease liabilities, current	$	317	Lease liabilities, current	$	188
Financing lease obligations	Lease liabilities, current		9	Lease liabilities, current		10
Non-current:
Operating lease obligations	Lease liabilities, non-current		668	Lease liabilities, non-current		129
Financing lease obligations	Lease liabilities, non-current		43	Lease liabilities, non-current		37
Total lease liabilities		$	1,037		$	364

(In thousands)
For the Year Ended June 30,	Operating Leases		Financing Leases		Total		Operating Leases		Financing Leases		Total
2020	$	101	$	3	$	104
2021		413		12		425	$	160	$	9	$	169
2022		388		12		400		182		12		194
2023		219		12		231		6		12		18
2024		37		12		49		—		12		12
2025								—		8		8
Thereafter		—		9		9		—		—		—
Total lease obligations		1,158		60		1,218		348		53		401
Less: imputed interest		173		8		181		31		6		37
Present value of net minimum lease obligations		985		52		1,037		317		47		364
Less: lease liabilities - current		317		9		326		188		10		198
Lease liabilities - non-current	$	668	$	43	$	711	$	129	$	37	$	166

	Shares (In thousands)		Weighted Average Exercise Price		Aggregate Fair Market Value at Issuance (In thousands)		Weighted Average Remaining Contractual Term (Years)
Outstanding June 30, 2020		86	$	5.14	$	194		4.74
Warrants issued		—		—		—		—
Warrants exercised		—		—		—		—
Warrants expired		—		—		—		—
Outstanding September 30, 2020		86	$	5.14	$	194		4.49

					Number of Shares Underlying Warrants
Issue Date	Classification	Exercise Price		Expiration Date	September 30, 2020		June 30, 2020
March 26, 2020	Equity	$	6.25	March 25, 2025		24,780		24,780
March 30, 2020	Equity	$	4.69	March 27, 2025		61,133		61,133
Total Outstanding						85,913		85,913

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
$1.85 – 3.55		76,500		3.03	$	3.43		66,500	$	3.43		76,500		2.53	$	3.43		66,500	$	3.43
$5.30 – 5.85		119,653		7.11		5.48		76,909		5.49		118,161		6.61		5.49		113,203		5.49
$6.00 – 8.35		130,000		4.65		7.19		86,000		6.59		130,000		4.14		7.19		86,000		6.59
$1.85 – 8.35		326,153		5.17	$	5.68		229,409	$	5.31		324,661		4.66	$	5.68		265,703	$	5.33

	Shares (in thousands)			Weighted Average Grant-Date Fair Value		Shares (in thousands)			Weighted Average Grant-Date Fair Value
Outstanding at June 30, 2019		208		$	4.06
Outstanding at June 30, 2020							133		$	3.95
Granted		5			2.47		—			—
Vested		(63	)		3.77		(1	)		2.47
Canceled or expired		(11	)		3.97		(7	)		3.59
Outstanding at March 31, 2020		139		$	3.96
Outstanding at September 30, 2020							125		$	3.99

	Three Months Ended September 30, 2020							Three Months Ended September 30, 2019
(In thousands)	Revenue		Depreciation		Loss before Income Taxes			Revenue		Depreciation		Loss before Income Taxes
1st Detect	$	140	$	22	$	(1,410	)	$	1	$	59	$	(2,068	)
AgLAB		—		—		(701	)		—		—		—
Total	$	140	$	22	$	(2,111	)	$	1	$	59	$	(2,068	)

	Three Months Ended March 31,						Three Months Ended September 30,
(In thousands)	2020			2019			2020			2019
Revenue	$	118			—		$	140		$	1
Cost of revenue		111			—			113			—
Gross profit		7			—			27			1
Gross margin		6	%		—	%		19	%		100	%
Operating expenses:
Selling, general and administrative		1,193			1,238			926			1,202
Research and development		814			1,026			609			855
Disposal of corporate lease								544			—
Total operating expenses		2,007			2,264			2,079			2,057
Loss from operations		(2,000	)		(2,264	)		(2,052	)		(2,056	)
Interest and other expense, net		(68	)		12			(59	)		(12	)
Income tax benefit		—			858			—			—
Net loss	$	(2,068	)	$	(1,394	)	$	(2,111	)	$	(2,068	)

Exhibit No.	Description	Incorporation by Reference
3.1
~~4.1~~	~~Promissory Note due September 5, 2020.~~Certificate of Amendment to the Certificate of Incorporation of Astrotech Corporation.	Exhibit ~~4.1~~3.1 to Form 8-K filed on ~~February 18, 2020~~

~~4.2~~	~~Form of Placement Agent's Warrant, issued on March 27,~~July 1, 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	Omnibus Amendment to Promissory Notes, dated August 24, 2020.	Exhibit 10.1 to Form 8-K filed on August 25, 2020.

10.2	Acknowledgment, Consent and Affirmation of Guarantors, dated August 24, 2020.	Exhibit 10.2 to Form 8-K filed on August 25, 2020.

10.3	Omnibus Amendment to Security ~~Agreement,~~Agreements, dated ~~February 13,~~August 24, 2020, by and among the Company, certain of the Company’s subsidiaries and Thomas B. Pickens III.	Exhibit ~~10.1~~10.3 to Form 8-K filed on ~~February 18, 2020~~August 25, 2020.

~~10.2~~10.4	Omnibus Amendment to Subsidiary ~~Guarantee,~~Guarantees, dated ~~February 13,~~August 24, 2020, made by certain of the Company’s subsidiaries in favor of Thomas B. Pickens III.	Exhibit ~~10.2~~10.4 to Form 8-K filed on ~~February 18, 2020~~

~~10.3~~	~~Form of Securities Purchase Agreement, dated March~~August 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,~~September 30, 2020 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.

		Astrotech Corporation



Date: ~~May 14,~~November 13, 2020		/s/ Eric Stober
		Eric Stober
		Chief Financial Officer and Principal Accounting Officer

Weighted-average remaining lease term (years):

Operating leases

~~2.8~~1.2

Financing leases

~~4.9~~4.4

Weighted-average discount rate:

Operating leases

Financing leases