Astrotech (ASTC) - 2025 Q4 - Annual Report

Forward-Looking Statements This section highlights that the Form 10-K contains forward-looking statements subject to risks and uncertainties Forward-Looking Statements This section highlights that the Form 10-K contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections - The Form 10-K contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from projections[10][12] - Key risks include adverse global economic conditions, inflation, potential recession, geopolitical tensions, product demand and market acceptance, technological difficulties, supply chain availability and cost inflation, and uncertainty in government funding[10] - The company may be detrimentally affected by changes in federal or state government enforcement regarding cannabis, given the evolving regulatory area and associated uncertainties[11] PART I Item 1. Business Astrotech Corporation (ASTC) commercializes its proprietary Astrotech Mass Spectrometer Technology™ (AMS Technology) and ATi Gas Chromatography Column (GC) through wholly-owned subsidiaries, focusing on real-time, on-site chemical compound detection - Astrotech Corporation (ASTC) commercializes its proprietary Astrotech Mass Spectrometer Technology™ (AMS Technology) and ATi Gas Chromatography Column (GC) through wholly-owned subsidiaries[15][16] - The company's mission is to expand access to mass spectrometry by simplifying operation for real-time testing in diverse environments like airports, border checkpoints, military bases, and industrial locations[16][251][321] - Products include TRACER 1000™, BreathTest-1000™, AgLAB 1000™, and Pro-Control 1000™, along with related accessories and consumables[15] Our Company The company commercializes its proprietary AMS Technology through application-specific subsidiaries - Astrotech Corporation (Nasdaq: ASTC) was organized in 1984 in Delaware[15] - The company is commercializing its Astrotech Mass Spectrometer Technology™ platform ("AMS Technology") through application-specific, wholly-owned subsidiaries[15] Our Business Units This section describes the company's six wholly-owned subsidiaries and their respective focus areas Astrotech Technologies, Inc. (ATI) ATI owns and licenses the AMS Technology, designed to be inexpensive, smaller, and easier to use than traditional mass spectrometers - ATI owns and licenses the AMS Technology, which was originally developed by 1st Detect and designed to be inexpensive, smaller, and easier to use than traditional mass spectrometers[19][322] - The AMS Technology operates under ultra-high vacuum, yielding higher resolution and fewer false alarms, and is protected by 16 granted patents and extensive trade secrets[19][56] 1st Detect Corporation 1st Detect developed the TRACER 1000™, the world's first MS-based Explosive Trace Detector (ETD) certified by ECAC and approved by the U.S. TSA for air cargo - 1st Detect developed the TRACER 1000™, the world's first MS-based Explosive Trace Detector (ETD) certified by ECAC and approved by the U.S. TSA for air cargo[20][323] - The TRACER 1000 is designed to outperform IMS-based ETDs by offering a virtually unlimited and easily expandable threat library without degrading detection capabilities, addressing issues of false positives and limited threat libraries in competing technologies[20][323] - As of June 30, 2025, TRACER 1000 units are deployed in approximately 34 locations across 16 countries in the USA, Europe, and Asia[21][253] - In June 2024, TSA approved TRACER 1000 for the Air Cargo Security Technology List, advancing it to Stage II field trials, and in April 2025, the first TSA-approved sale of six TRACER 1000 ETDs was made to Intuitive Research and Technology[22][27] - 1st Detect was awarded a research and development contract with the DHS in January 2025 to mature the TRACER 1000 for next-generation explosives trace detection[25][254] - In March 2025, the enhanced TRACER 1000 Narcotic Trace Detector (NTD) was launched to screen for synthetic opiates and novel psychoactive substances, with its first international deployment in Vietnam in June 2025[26][28][257][258] AgLAB Inc. AgLAB develops the AgLAB 1000™ series of mass spectrometers for the hemp and cannabis markets, focusing on optimizing yields in distillation processes - AgLAB develops the AgLAB 1000™ series of mass spectrometers for the hemp and cannabis markets, focusing on optimizing yields in distillation processes, using the Maximum Value Process solution (MVP) for real-time analysis[30][324] - Field trials demonstrated that the AgLAB 1000-D2™ can improve ending-weight yields by 20% or more for THC and CBD oil during distillation[30][34] - In June 2024, AgLAB partnered with SC Laboratories for joint marketing of the AgLAB 1000-D2™ and MVP testing method to SC Labs' clients[35] BreathTech Corporation BreathTech was developing the BreathTest-1000™ for breath analysis, but commercialization requires significant investment and regulatory approval - BreathTech was developing the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites indicating compromised health conditions, but commercialization requires significant investment and regulatory approval, leading the company to deploy capital to other subsidiaries[36][38][325] - A pilot study with The Cleveland Clinic Foundation for lung and systemic diseases concluded in February 2025, with no active or anticipated studies under the CCF JDA[37] Pro-Control, Inc. Pro-Control applies AMS Technology to industrial process control for chemical distillation, using the Pro-Control 1000-D2™ mass spectrometer for real-time monitoring - Formed in December 2023, Pro-Control applies AMS Technology to industrial process control for chemical distillation outside agriculture, using the Pro-Control 1000-D2™ mass spectrometer and Maximum Value Processing to monitor and control manufacturing processes in real-time[39][40][327] - The technology aims to increase reaction intermediates, purity, and percent yields while significantly improving efficiency in industrial processes[39][40] EN-SCAN, Inc. EN-SCAN develops advanced environmental testing and monitoring solutions, integrating proprietary ATi Gas Chromatography and AMS Technology into rugged, portable designs - Formed in February 2025, EN-SCAN develops advanced environmental testing and monitoring solutions, integrating proprietary ATi Gas Chromatography and AMS Technology into rugged, portable designs for on-site, real-time air, water, and soil analysis[41][256][328] - Products include Handheld GC, Fenceline Monitor, and Rugged Lab GC-MS, designed to provide instant feedback for accurate contamination source location and migration, reducing testing costs and delays[41][50] Our Strategy The company's strategy leverages its core AMS Technology through specialized subsidiaries to address distinct market needs - Astrotech's strategy involves leveraging its core AMS Technology through specialized subsidiaries to address distinct market needs, focusing on product development, market penetration, and strategic partnerships[18][42][43][44][45][50] 1st Detect Corporation 1st Detect's strategy focuses on marketing the TRACER 1000 ETD and NTD to countries accepting ECAC certification or TSA approval for air cargo - 1st Detect's strategy focuses on marketing the TRACER 1000 ETD and NTD to countries accepting ECAC certification or TSA approval for air cargo, targeting markets needing broader compound detection and better accuracy[42][43] - Key target markets include passenger airports, cargo airports, event venues, military bases, government office buildings, courthouses, border checkpoints, law enforcement agencies, and critical infrastructure security checkpoints[46] AgLAB Inc. AgLAB's strategy targets the hemp and cannabis industry, focusing on maximizing final product quality and yield in distillation processes - AgLAB's strategy targets the hemp and cannabis industry, focusing on maximizing final product quality and yield in distillation processes, with initial efforts in the U.S. market and future expansion into international markets[43][44] - Agricultural companies involved in plant material harvesting, ingredient processing, oil distillation, contaminate detection, inspection and certification, and formulation and packaging are expected to benefit from increased MS use[47] BreathTech Corporation BreathTech's strategy involves designing the BreathTest-1000 as an inexpensive, non-invasive screening device for compromised conditions - BreathTech's strategy involves designing the BreathTest-1000 as an inexpensive, non-invasive screening device for compromised conditions, targeting high-density and critical locations due to the need for quick and painless airborne disease detection[44] - Target markets include hospitals, military, nursing homes, sporting events, cruise lines, schools, airlines, performing arts venues, hotels, and convention and conference centers[48] Pro-Control, Inc. Pro-Control leverages AgLAB's technology and processes to offer "process control" methods and solutions, aiming to increase yields and quality - Pro-Control leverages AgLAB's technology and processes to offer "process control" methods and solutions, aiming to increase yields and quality by integrating MS directly into manufacturing lines for real-time analysis[45] - Markets likely to adopt Pro-Control's products include pharmaceutical manufacturing, petroleum refining, industrial chemical manufacturing, food processing, and nutraceutical manufacturing[49] EN-SCAN, Inc. EN-SCAN's strategy focuses on providing ultra-portable, rugged GC and MS technology for continuous on-site environmental monitoring and immediate response - EN-SCAN's strategy focuses on providing ultra-portable, rugged GC and MS technology for continuous on-site environmental monitoring and immediate response, offering lab-grade accuracy in demanding field conditions[50][60] - Target markets include environmental equipment rental, industrial hygienists, environmental consulting firms, chemical plants, and refineries[58] Products and Services The company's products primarily consist of mass spectrometry and gas chromatography equipment - Astrotech's products are primarily mass spectrometry and gas chromatography equipment, leveraging its core AMS Technology for diverse applications[51][57] Mass Spectrometry Mass spectrometry (MS) is an analytical technique measuring mass-to-charge ratio of ions to identify sample composition - Mass spectrometry (MS) is an analytical technique measuring mass-to-charge ratio of ions to identify sample composition, offering advantages in speed, specificity, and detection of minute quantities[52][53] - The core AMS Technology originated from a device for the International Space Station, designed to be inexpensive, smaller, and easier to use than traditional MS, operating under ultra-high vacuum for higher resolution and fewer false alarms[56] Gas Chromatography Gas chromatography (GC) separates, analyzes, and quantifies vaporizable compounds, offering real-time, on-site data for various applications - Gas chromatography (GC) separates, analyzes, and quantifies vaporizable compounds, offering real-time, on-site data for applications like fence-line monitoring, disaster response, and contamination tracking[59][60] - The combined GC and MS technology in rugged, portable designs delivers lab-grade accuracy for on-site air, water, and soil analysis[60] Customers, Sales, and Marketing The company employs direct and channel sales strategies tailored to each business unit's market and regulatory environment - Astrotech employs both direct and channel sales strategies across its subsidiaries, adapting to the specific market needs and regulatory environments of each business unit[61][62][64][65] 1st Detect Corporation 1st Detect's marketing focuses on markets seeking increased uptime, expanded libraries of detectable compounds, and near-zero false alarms - 1st Detect's marketing focuses on markets seeking increased uptime, expanded libraries of detectable compounds, near-zero false alarms, high uptime, fast cleardown, and confirmatory technology[61][66][73] - Sales are conducted through direct sales and distributors, with units deployed in 34 locations across 16 countries, though sales cycles in regulated and government markets are long[61] AgLAB Inc. AgLAB uses direct and channel sales, including a lease program with SC Labs, and plans to engage additional channel partners - AgLAB uses direct and channel sales, including a lease program with SC Labs, and plans to engage additional channel partners with existing distribution in the hemp and cannabis market[62] BreathTech Corporation Commercialization of BreathTech's AMS Technology is deemed to require significant investment and time due to regulatory requirements - Commercialization of BreathTech's AMS Technology is deemed to require significant investment and time due to regulatory requirements, leading to capital deployment to other subsidiaries[63] Pro-Control, Inc. Pro-Control currently uses direct sales, conducting proof-of-concept and trial engagements near its Austin headquarters - Pro-Control currently uses direct sales, conducting proof-of-concept and trial engagements near its Austin headquarters, with intentions to use regional sales teams in manufacturing-dense geographic territories[64] EN-SCAN, Inc. EN-SCAN targets industries like environmental consulting, government agencies, and industrial facilities, offering training and data integration - EN-SCAN targets industries like environmental consulting, government agencies, industrial facilities, and academic institutions, offering training, data integration, and a centralized portal to enhance customer experience[65] Competition The company's subsidiaries differentiate themselves through superior technology attributes against larger competitors - Astrotech's subsidiaries face competition from larger, established companies with broader product ranges, but differentiate themselves through superior technology attributes like lower false alarm rates, expanded detection libraries, and real-time, on-site analysis capabilities[67][68][70][72] 1st Detect Corporation Competition for TRACER 1000 primarily comes from larger IMS-based ETD manufacturers, but 1st Detect believes its product offers superior attributes - Competition for TRACER 1000 primarily comes from larger IMS-based ETD manufacturers, but 1st Detect believes its product offers superior attributes such as near-zero false alarms, limitless library expansion, high uptime, fast cleardown, and confirmatory technology[67][73] AgLAB Inc. AgLAB's MS-based system competes with High-Performance Liquid Chromatography (HPLC), offering a more user-friendly interface and quicker results - AgLAB's MS-based system competes with High-Performance Liquid Chromatography (HPLC), offering a more user-friendly interface, quicker results, and future closed-loop process control for maximized yield and quality[68] BreathTech Corporation The BreathTest-1000 is designed to supplement, not compete with, traditional medical tests by providing quick, inexpensive screening - The BreathTest-1000 is designed to supplement, not compete with, traditional medical tests by providing a quick, inexpensive, and painless screening for VOC metabolites indicating compromised conditions[69] Pro-Control, Inc. Pro-Control competes with legacy MS equipment and off-site laboratory testing by simplifying MS for factory floor use and real-time analysis - Pro-Control competes with legacy, sophisticated MS equipment from global OEMs and off-site laboratory testing, differentiating itself by simplifying MS for factory floor use, enabling real-time analysis in minutes versus hours or days[70][71] EN-SCAN, Inc. EN-SCAN competes with established environmental testing equipment providers by emphasizing its proprietary ATi GC and AMS Technology and rugged on-site design - EN-SCAN competes with established environmental testing equipment providers, particularly those offering portable GC-MS devices, by emphasizing its proprietary ATi GC and AMS Technology, rugged on-site design, and a product lineup spanning handheld, fenceline, and lab-grade instruments for real-time, cost-efficient analysis[72] Research and Development The company invests significantly in R&D for new products, system improvements, and cost optimization - Astrotech invests significant resources in R&D, primarily focused on the cross-platform AMS Technology to develop new derivative products, improve system functionality, optimize design, reduce cost, and streamline user experience[74] Astrotech Technologies, Inc. (ATI) ATI's R&D continually works on cross-platform AMS Technology, developing new derivative products and improving system functionality - ATI's R&D continually works on cross-platform AMS Technology, developing new derivative products, improving system functionality and reliability, optimizing design, reducing cost, and simplifying software and user experience[74] 1st Detect Corporation While TRACER 1000 is commercialized, 1st Detect continues to invest in library development, leading to the launch of its narcotics detector - While TRACER 1000 is commercialized, 1st Detect continues to invest in library development, leading to the launch of its narcotics detector and ongoing enhancements[75] AgLAB Inc. AgLAB continues to develop its AgLAB-1000 series, using core AMS Technology, to include other valuable products specific to the hemp and cannabis industry - AgLAB continues to develop its AgLAB-1000 series, using core AMS Technology, to include other valuable products specific to the hemp and cannabis industry, with plans for an inline process control unit (AgLAB-1000-D1) integrated directly into distillation equipment[76] BreathTech Corporation BreathTech's R&D focuses on sample introduction and library development for the BreathTest-1000 to identify specific compounds in breath - BreathTech's R&D focuses on sample introduction and library development for the BreathTest-1000 to identify specific compounds in breath indicative of compromised conditions, including infections[77] Pro-Control, Inc. Pro-Control is in early stages of refining its product line using core AMS Technology and developing its library for chemical manufacturers - Pro-Control is in early stages of refining its product line using core AMS Technology and developing its library for chemical manufacturers[78] En-Scan, Inc. EN-SCAN's R&D efforts are focused on manufacturing and selling new environmental testing instruments using proprietary ATi GC and AMS Technology - EN-SCAN's R&D efforts are focused on manufacturing and selling new environmental testing instruments using proprietary ATi GC and AMS Technology for on-site, real-time air, water, and soil analysis, strengthening its competitive edge and opening new market opportunities[79] Certain Regulatory Matters The company is subject to extensive federal, state, and local regulations across its business operations - Astrotech is subject to extensive U.S. federal, state, and local laws and regulations concerning environmental protection, technology transfer, business practices, and federal contracting procedures[80] - Compliance with these regulations has not had a material effect on capital expenditures, earnings, or competitive position, and is not expected to in the future[80] Federal Regulations Key federal regulations impacting operations include the Foreign Corrupt Practices Act, Iran Nonproliferation Act of 2000, and Export Administration Regulations - Key federal regulations impacting operations include the Foreign Corrupt Practices Act, Iran Nonproliferation Act of 2000, Federal Acquisition Regulations (FAR), Truth in Negotiations Act, Export Administration Act, and Export Administration Regulations[81][82][83][84][85] Medical Device Regulation Medical devices in the U.S. require FDA clearance or approval, classified by risk, and are subject to extensive post-market regulations - Medical devices in the U.S. require FDA clearance (510(k)), de novo request, or Premarket Application (PMA) approval, classified into Class I, II, or III based on risk[86][87][88] - Post-market regulations include establishment registration, device listing, Quality System Regulation (QSR) compliance, labeling, marketing, medical device reporting (MDR), and recall reporting[98] - In the EEA, medical devices must meet essential requirements of the Medical Devices Directive, undergo conformity assessment, and apply the CE Mark for market placement[100][101] - The EU Medical Devices Regulation (Regulation 2017/745), effective May 2021, strengthens rules on market placement, surveillance, manufacturer responsibilities, traceability, and assessment of high-risk devices[104][106] Federal, State, and Foreign Fraud and Abuse and Physician Payment Transparency Laws The company is subject to federal and state anti-kickback and false claims laws, and transparency laws regarding payments to healthcare providers - The company is subject to federal and state anti-kickback and false claims laws, and transparency laws regarding payments to healthcare providers, including the federal Anti-Kickback Statute and the federal civil False Claims Act[110][111][113] - Violations can result in significant civil and criminal penalties, exclusion from federal healthcare programs, and "qui tam" whistleblower lawsuits[112][114] Data Privacy and Security Laws The company may be subject to data privacy laws like GDPR, CCPA, and HIPAA, which protect personal and patient health information - The company may be subject to data privacy laws like the EU General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), and HIPAA, which protect personal and patient health information[119][120][124][125] - HIPAA mandates privacy and security standards for Protected Health Information (PHI), breach notification requirements, and can impose civil monetary penalties and criminal penalties for non-compliance[120][121][122] Healthcare Reform U.S. and foreign jurisdictions are considering legislative and regulatory proposals to reform healthcare, which could impact product coverage or reimbursement - U.S. and foreign jurisdictions are considering legislative and regulatory proposals to reform healthcare, aiming to contain costs, improve quality, or expand access, which could limit coverage or lower reimbursement for the company's products[126] US Government Regulation of the Cannabis Industry AgLAB's business in the hemp and cannabis industry faces significant regulatory and operational risks due to marijuana's federal controlled substance status - While Astrotech does not directly sell cannabis products, its AgLAB business serves the hemp and cannabis industry, which is subject to significant regulatory, financial, operational, and reputational risks due to marijuana's Schedule I controlled substance status under federal law[128][193][195] - Federal enforcement of the Controlled Substances Act could lead to fines, imprisonment, or seizure of property, and any unfavorable change in federal enforcement could significantly damage the industry and indirectly affect Astrotech[129][195] - There is a risk that the company's equipment could be deemed to be aiding and abetting illegal activities or considered "drug paraphernalia" under federal law, potentially leading to enforcement actions, though federal authorities have not historically focused on such tangential violations[200][201] - If marijuana is reclassified, the FDA could regulate cannabis under the FDCA, potentially imposing new rules, manufacturing practices, or facility registration requirements, which could impact the AgLAB business[204][205] Regulatory Compliance and Risk Management The company maintains compliance with regulatory requirements and manages risks through a program of compliance, awareness, and insurance - The company maintains compliance with regulatory requirements and manages risks through a program of compliance, awareness, and insurance, with a continued emphasis on safety[137] Employees As of June 30, 2025, Astrotech employed 32 individuals, none of whom were covered by collective bargaining agreements - As of June 30, 2025, Astrotech employed 32 individuals, none of whom were covered by collective bargaining agreements[138] Website Additional information on the company's business operations is available on its website, www.astrotechcorp.com - Additional information on the company's business operations is available on its website, www.astrotechcorp.com[139](index=139&type=chunk) Item 1A. Risk Factors Astrotech faces significant risks, including substantial accumulated losses, uncertain profitability, and the need for additional capital which could dilute existing shareholders - The company has incurred significant losses since inception and anticipates continued losses, with business units in early development stages and uncertain future revenues or profitability[144][145] - There is a need to raise additional capital, which could lead to dilution for existing shareholders, and risks related to obtaining intellectual property protection and defending against infringement claims[147][149][151] - Challenges include successful development of new products (e.g., BreathTest-1000), operational and regulatory risks in international markets, adverse impacts from inflation, and dependence on a limited number of customers[157][159][162][163] - Other risks include competition, reliance on third-party suppliers, warranty costs, extensive governmental regulation (especially for medical devices and the cannabis industry), and potential delisting from Nasdaq[167][173][177][178][193][224] Summary Risk Factors This section summarizes key risks including financial losses, capital needs, IP, and regulatory challenges - The company has incurred significant losses since inception and anticipates continued losses, with business units in early development stages and uncertain future revenues or profitability[144][145] - There is a need to raise additional capital, which could lead to dilution for existing shareholders, and risks related to obtaining intellectual property protection and defending against infringement claims[147][149][151] - Challenges include successful development of new products (e.g., BreathTest-1000), operational and regulatory risks in international markets, adverse impacts from inflation, and dependence on a limited number of customers[157][159][162][163] - Other risks include competition, reliance on third-party suppliers, warranty costs, extensive governmental regulation (especially for medical devices and the cannabis industry), and potential delisting from Nasdaq[167][173][177][178][193][224] Risks Related to Our Business and Industry This section details business risks such as accumulated deficits, funding needs, customer concentration, and supply chain issues - Astrotech has an accumulated deficit of approximately $251 million as of June 30, 2025, and reported a net loss of $13.8 million for fiscal year 2025, with uncertainty about future profitability[144] - Business units are in early development, have limited revenue, and require substantial funding, with no guarantee of product effectiveness, market attractiveness, or regulatory approvals (e.g., TSA for TRACER 1000, FDA for BreathTest-1000)[145][146] - The company may need to raise additional capital through equity or debt, which could dilute stockholders or impose significant operational restrictions[147][148] - International sales expose the company to risks such as import/export laws, exchange rate fluctuations, political instability, anti-corruption law violations, and stringent foreign regulations[159][161] - Inflation could adversely affect financial condition by increasing costs, particularly if price increases cannot be passed to customers, and may exacerbate supply chain disruptions and employee retention challenges[162] - Substantial revenue is generated from a limited number of customers, and the loss of any could materially harm business and financial results[163][164] - Manufacturing operations are highly dependent on third-party and single-source suppliers for critical components, making the company vulnerable to supply shortages, price fluctuations, and production delays[173][174][175] - Product warranties expose the company to future repair and replacement costs, and unforeseen quality issues or higher sales could lead to costs exceeding current estimates[177] Legal and Regulatory Risks This section outlines risks from extensive medical device regulations, cannabis industry laws, and trade policies - The medical technology industry is extensively regulated by governmental authorities like the FDA, with complex and stringent regulations that can limit operations, increase costs, or delay product approvals[178] - Failure to obtain FDA clearance or authorization for products like the BreathTest-1000, or delays in development, would adversely affect business growth, as clinical testing is likely required[183] - Non-compliance with regulatory quality standards (e.g., QSR) by the company or its suppliers could lead to FDA enforcement actions, including warning letters, fines, recalls, and operating restrictions[184][185] - Product modifications to 510(k)-cleared devices may require new clearances or approvals, and off-label promotion could lead to regulatory actions, fines, and product liability claims[186][187] - Healthcare reforms and disruptions at government agencies (like FDA funding shortages) could increase costs, lengthen review times, and negatively impact business[188][190] - The AgLAB business's growth is highly dependent on the U.S. hemp and cannabis market, which faces risks from evolving federal and state laws, potential reclassification of marijuana, and opposition from other industries[193][196][207] - Changes in U.S. trade policy, including tariffs and export license processing pauses, could adversely affect international sales, increase costs, and reduce profitability[212][213] Risks Related to Ownership of Our Common Stock This section addresses risks related to stock price volatility, potential dilution, and Nasdaq listing compliance - The company's stock price has been volatile and may experience rapid and substantial decreases unrelated to operating performance, influenced by factors like investor reaction to strategy, competitive products, regulatory developments, and general economic conditions[214][215] - The company can sell additional shares of common or preferred stock without shareholder consultation, leading to dilution and potential depression of the stock price[217][218] - As a smaller reporting company, reduced disclosure requirements may make its common stock less attractive to investors, potentially leading to a less active trading market and more volatile stock price[223] - Failure to maintain compliance with Nasdaq's listing requirements could result in delisting, significantly reducing liquidity and stock price, and harming the ability to raise capital[224][225] General Risk Factors This section covers general risks including cybersecurity threats, corporate governance costs, and insurance adequacy - Increased cybersecurity threats pose risks to systems, networks, products, services, and data, potentially leading to security breaches, data loss, operational disruptions, reputational damage, and legal actions[226] - Compliance with corporate governance regulations (e.g., Sarbanes-Oxley Act, Dodd-Frank Act) incurs significant legal, accounting, and other expenses, requiring substantial management time and potentially increasing general and administrative costs[228] - The company's insurance coverage may be inadequate to cover all significant risk exposures, potentially forcing it to bear substantial costs for claims or liabilities[229] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments[230] Item 1C. Cybersecurity Astrotech's cybersecurity program, overseen by the Board's audit committee and managed by the IT Manager and COO, focuses on identifying, assessing, and managing risks - Astrotech's cybersecurity program, informed by CIS standards, includes processes for identification, assessment, and management of cybersecurity risks, supported by periodic risk assessments and security testing[235] - The Board of Directors, through its audit committee, provides overall oversight for cybersecurity risk management, while day-to-day administration is handled by the IT Manager and executive management (COO)[231][232][233] - The company assesses third-party vendor cybersecurity practices and has an incident response plan, but has not identified any cybersecurity incidents that have materially affected its business to date[237][239][240] Board of Directors Oversight The Board's audit committee oversees cybersecurity risk management, leveraging diverse expertise - The Board of Directors, through its audit committee, holds overall oversight responsibility for cybersecurity risk management, with committee members possessing diverse expertise in risk management and technology[231] Management's Role Management, led by the IT Manager and COO, administers the cybersecurity program and incident response - Day-to-day cybersecurity program administration is supervised by the IT Manager and executive management (CFO until August 12, 2025, then COO), who inform the audit committee and conduct annual reviews[232] - The COO and IT team are responsible for assessing, monitoring, and managing cybersecurity risks, testing compliance with CIS version 8 standards, remediating risks, and leading employee training[233] - An incident response plan is in place for cybersecurity incidents, including escalation to executive management and the audit committee[234] Cybersecurity Risk Management and Strategy The cybersecurity program identifies, assesses, and manages risks through periodic assessments and testing - The cybersecurity program, informed by CIS, includes processes for identification, assessment, and management of risks, with periodic risk assessments (including external support) and regular security testing[235] Third-Party Risk The company assesses and reviews cybersecurity practices of external experts and major third-party vendors - Astrotech engages external experts for cybersecurity evaluation and testing and assesses and reviews the cybersecurity practices of major third-party vendors and service providers[236][237] Risks from Cybersecurity Threats The company monitors cybersecurity risks, with no material incidents affecting business to date - The company monitors cybersecurity risks through managed security service providers, third-party security software, and internal/external technologies for network monitoring and data loss prevention[238] - No cybersecurity incidents or threats have materially affected the company's business strategy, results of operations, or financial condition to date[240] Item 2. Properties Astrotech leases two facilities in Austin, Texas, and has entered a new lease for a larger 17,628 square foot Metric facility commencing July 1, 2025 - Astrotech leases an R&D facility (5,960 sq ft) and an adjacent subleased facility (3,900 sq ft) in Austin, Texas, collectively known as the "Donley Facilities"[241][242] - The Donley Facilities leases were extended on a month-to-month basis effective May 1, 2025, with a monthly rent of $14,186[242] - A new 89-month lease for a 17,628 sq ft Metric facility in Austin was signed on January 29, 2025, commencing July 1, 2025, with a total contractual base rent obligation of approximately $3.0 million[243] - The company expects to relocate to the Metric facility during fiscal year 2026, consolidating all Austin-based functions[244] Item 3. Legal Proceedings Astrotech is periodically involved in legal and administrative proceedings, but management does not believe any individual or aggregate matters will have a material adverse effect on the company's financial position or results of operations - The company is subject to legal and administrative proceedings, settlements, investigations, claims, and actions from time to time[245] - Management assesses the likely outcome of litigation based on various factors and does not believe any current matters will have a material adverse effect on the company's financial position or results of operations[245] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[246] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Astrotech's common stock trades on The Nasdaq Capital Market under ASTC, with 1,758,953 shares outstanding as of September 24, 2025, and no cash dividends paid or intended - Common stock is traded on The Nasdaq Capital Market under the symbol ASTC[3][248] - As of September 24, 2025, 1,758,953 shares of common stock were issued and outstanding, held by approximately 28 record holders[5][249] - The closing sale price on September 24, 2025, was $5.14 per share[249] - The company has never paid cash dividends and has no intention of paying dividends in the future[248] Item 6. Reserved This item is reserved and contains no information - Item 6 is reserved[250] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Astrotech's MD&A provides an overview of its financial condition and results of operations for fiscal years 2025 and 2024, noting decreased revenue, increased net loss, and the need for additional funding - Astrotech's MD&A covers financial condition and results of operations for fiscal years ended June 30, 2025 and 2024[250] - The company experienced a decrease in total revenue and an increased net loss in fiscal year 2025, primarily due to fewer TRACER 1000 unit sales[274] - R&D expenses increased, contributing to higher operating expenses, while liquidity is supported by cash and short-term investments, though additional funding may be needed for future growth[278][279][280] Overview Astrotech's mission is to advance mass spectrometry and gas chromatography for precise chemical compound detection in high-demand environments - Astrotech's mission is to advance mass spectrometry and gas chromatography for precise chemical compound detection in high-demand environments[251][321] - The company aims to simplify operation and ruggedize devices for real-time, on-site testing in various sectors like security, industrial, and environmental[251][321] Fiscal Year 2025 Business Highlights Key business highlights for fiscal year 2025 include TRACER 1000 deployments, DHS R&D contract, and the launch of the TRACER 1000 Narcotic Trace Detector - As of June 30, 2025, TRACER 1000 units are deployed in approximately 34 locations across 16 countries[253] - 1st Detect Corporation was awarded a DHS R&D contract in January 2025 for next-generation explosives trace detection[254] - Astrotech received and fulfilled a $429,000 purchase order for six TRACER 1000 ETDs from a TSA-approved contractor in January 2025, marking the first TSA-approved sale[255] - EN-SCAN, Inc. was created in February 2025 to manufacture environmental testing instruments using proprietary GC and MS technology[256] - The enhanced TRACER 1000 Narcotic Trace Detector was launched in March 2025, with its first international deployment in Vietnam in June 2025[257][258] - The company has initiated TSA checkpoint testing for the TRACER 1000[259] Critical Accounting Estimates The preparation of financial statements requires significant management judgments and estimates, including those for revenue recognition and inventory valuation - The preparation of financial statements requires significant management judgments and estimates, including those for long-lived assets recoverability, revenue recognition, inventory valuation, and loss contingencies[262] Revenue Recognition Astrotech recognizes revenue following ASC Topic 606, a five-step process based on contract type and product/service delivery - Astrotech recognizes revenue following ASC Topic 606, a five-step process based on contract type and product/service delivery, with revenue sources including product sales, grant revenue, and recurring maintenance/warranty services[263][264][330] - Revenue from product sales is recognized upon shipment or delivery when control transfers to the customer and collection is probable, with specific criteria for subjective customer acceptance[267][336] - For the year ended June 30, 2025, approximately $1.0 million in revenue was generated from nine customers, and for 2024, $1.7 million from three customers, comprising a significant portion of total revenue[264][331] Revenue by Recognition Method (in thousands) | Type | 2025 | 2024 | | :--- | :--- | :--- | | Point in Time | $920 | $1,560 | | Over Time | $130 | $88 | | Total Revenue | $1,049 | $1,664 | Valuation of Inventory Inventories are valued at the lower of cost or net realizable value, with reserves for estimated obsolescence or excess inventory - Inventories are valued at the lower of cost (standard cost, approximating FIFO) or net realizable value, with reserves or write-downs for estimated obsolescence, excess, or unmarketable inventory based on future demand and market conditions[272][350] Inventory Reserves (in thousands) | Year Ended June 30, | Inventory Reserves | | :--- | :--- | | 2025 | $346 | | 2024 | $296 | Warranty Provision The company provides product warranties for repairs and maintenance, recording an estimated warranty expense provision at the time of sale - The company provides product warranties for repairs and maintenance, recording an estimated warranty expense provision at the time of sale, which is adjusted periodically based on historical experience and anticipated expenses[273][342] Warranty Provision Activity (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Balance as of June 30, | $197 | $184 | | Accruals for new warranties issued | $75 | $172 | | Settlements made | $(62) | $(76) | Results of Operations for the Years Ended June 30, 2025 and 2024 This table presents the company's revenue, expenses, and net loss for the fiscal years Consolidated Statements of Operations (in thousands) | Metric | 2025 | 2024 | Variance | | :--- | :--- | :--- | :--- | | Revenue | $1,049 | $1,664 | $(615) | | Cost of revenue | $574 | $913 | $(339) | | Gross profit | $475 | $751 | $(276) | | Gross margin | 45.3% | 45.1% | 0.2% | | Selling, general and administrative | $7,067 | $7,241 | $174 | | Research and development | $8,142 | $6,790 | $(1,352) | | Total operating expenses | $15,209 | $14,031 | $(1,178) | | Loss from operations | $(14,734) | $(13,280) | $(1,454) | | Other income and expense, net | $886 | $1,616 | $(730) | | Income tax expense | $(2) | $(2) | $0 | | Net loss | $(13,850) | $(11,666) | $(2,184) | | Net unrealized gain | $313 | $276 | $37 | | Total comprehensive loss | $(13,537) | $(11,390) | $(2,147) | - Total revenue decreased by $615 thousand (37.0%) to $1.0 million in fiscal year 2025, primarily due to fewer TRACER 1000 units sold compared to the prior year[274] - Gross profit decreased by $276 thousand, but gross margin slightly increased by 0.2% to 45.3% in fiscal year 2025 due to higher margins on device sales[275] - Total operating expenses increased by $1.2 million (8.4%), driven by a $1.4 million (19.9%) increase in R&D expenses for mass spectrometry and gas chromatography offerings, partially offset by a $174 thousand (2.4%) decrease in SG&A[276][278] - Net loss increased by $2.2 million to $(13.85) million in fiscal year 2025, compared to $(11.67) million in fiscal year 2024[274][311] Liquidity and Capital Resources The company's liquidity is primarily financed through public offerings of common stock, with short-term and long-term requirements for working capital and expansion - The company's liquidity is primarily financed through public offerings of common stock, historically raising approximately $67.6 million in net proceeds[279] - Short-term and long-term liquidity requirements include working capital, general corporate expenses, scaling operations, increasing manufacturing capacity, sales and marketing, R&D, and public company costs[279] Sources of Liquidity Liquidity is primarily from cash, cash equivalents, and short-term investments, funding operations for at least twelve months Cash and Cash Equivalents (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,100 | $10,442 | | Short-term investments | $15,108 | $21,474 | | Net working capital | $19,500 | $32,200 | - Cash and cash equivalents decreased by $7.3 million to $3.1 million at June 30, 2025, from $10.4 million at June 30, 2024, due to funding operating expenses[279][291] - The company believes its cash, cash equivalents, and investments will fund operating expenses and capital expenditures for at least twelve months[279] Funding Requirements Future capital needs for R&D and expansion may require additional equity or debt financing - Expenses are expected to increase due to R&D efforts, business expansion, and public company costs, necessitating additional funding[280] - Future capital requirements depend on R&D efforts, collaborations, sales/marketing/manufacturing costs, headcount growth, intellectual property costs, and public company operating costs[281] - Additional cash needs are expected to be financed through equity offerings, debt financing, or strategic partnerships, which could lead to stockholder dilution or restrictive covenants[281][282] Trends and Uncertainties Inflation and changing prices have not materially impacted historical or anticipated future results - Inflation and changing prices have not materially impacted historical results and are not anticipated to materially impact future results of operations[284] Consolidated Balance Sheet Total assets decreased due to cash usage, while liabilities increased from new lease obligations Consolidated Balance Sheet (in thousands) | Assets | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,100 | $10,442 | | Short-term investments | $15,108 | $21,474 | | Accounts receivable | $485 | $77 | | Inventory, net | $2,929 | $2,474 | | Prepaid expenses and other current assets | $353 | $261 | | Total current assets | $21,975 | $34,728 | | Property and equipment, net | $2,395 | $2,763 | | Intangible assets, net | $48 | $0 | | Operating lease right-of-use assets, net | $2,225 | $119 | | Other assets, net | $346 | $30 | | Total Assets | $26,989 | $37,640 | | Liabilities | | | | Accounts payable | $1,066 | $373 | | Payroll related accruals | $529 | $1,174 | | Accrued expenses and other liabilities | $451 | $754 | | Lease liabilities, current | $405 | $227 | | Total current liabilities | $2,451 | $2,528 | | Accrued expenses and other liabilities, net of current portion | $164 | $232 | | Lease liabilities, net of current portion | $2,274 | $73 | | Total Liabilities | $4,889 | $2,833 | | Stockholders' equity | $22,100 | $34,807 | | Total Liabilities and Stockholders' Equity | $26,989 | $37,640 | - Total assets decreased by $10.7 million to $27.0 million at June 30, 2025, primarily due to a $12.8 million decrease in current assets (cash used for operating expenses) and a $0.3 million decrease in property and equipment, partially offset by a $2.1 million increase in operating lease right-of-use assets due to the Metric facility lease[285][286][287] - Total liabilities increased by $2.1 million to $4.9 million, mainly driven by a $2.2 million increase in lease liabilities due to the Metric facility lease[287][308] - Stockholders' equity decreased by $12.7 million to $22.1 million, reflecting the net loss and changes in other comprehensive loss[285][308] Cash Flows Net cash used in operating activities increased, while investing activities provided cash from investments Summary of Cash Flows (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,952) | $(9,725) | | Net cash provided by (used in) investing activities | $5,795 | $6,140 | | Net cash used in financing activities | $(185) | $(181) | | Net change in cash and cash equivalents | $(7,342) | $(3,766) | | Cash and cash equivalents at end of period | $3,100 | $10,442 | Cash and Cash Equivalents Cash and cash equivalents decreased by $7.3 million to $3.1 million at June 30, 2025, primarily due to funding operating expenses - Cash and cash equivalents decreased by $7.3 million to $3.1 million at June 30, 2025, from $10.4 million at June 30, 2024, primarily due to funding continuing operating expenses[291] - Net working capital was approximately $19.5 million at June 30, 2025, down from $32.2 million at June 30, 2024[291] Operating Activities Net cash used in operating activities increased by $3.2 million to $13.0 million in fiscal year 2025, driven by increases in recurring operating expenses - Net cash used in operating activities increased by $3.2 million to $13.0 million in fiscal year 2025, compared to $9.7 million in fiscal year 2024, driven by increases in recurring operating expenses and accounts payable[292] Investing Activities Net cash provided by investing activities decreased by $0.3 million to $5.8 million in fiscal year 2025, due to purchases of property, plant, and equipment - Net cash provided by investing activities decreased by $0.3 million to $5.8 million in fiscal year 2025, compared to $6.1 million in fiscal year 2024, due to purchases of property, plant, and equipment, offset by proceeds from short-term investments[293] Financing Activities Cash used in financing activities was consistent, at $185 thousand in fiscal year 2025 compared to $181 thousand in fiscal year 2024 - Cash used in financing activities was consistent, at $185 thousand in fiscal year 2025 compared to $181 thousand in fiscal yea