Astrotech (ASTC) - 2023 Q3 - Quarterly Report

Financial Performance - Total revenue for the third quarter of fiscal 2023 decreased by $62 thousand to $35 thousand compared to $97 thousand in the same quarter of fiscal 2022[124]. - Gross profit for the third quarter of fiscal 2023 was $11 thousand, resulting in a gross margin of 31%, down from 53% in the same quarter of fiscal 2022[124]. - Total revenue decreased by $509 thousand to $336 thousand for the nine months ended March 31, 2023, compared to $845 thousand in the same period of 2022[130]. - Gross profit was $125 thousand with a gross margin of 37%, an increase of 15% from 22% in the previous year, attributed to a higher proportion of recurring revenue[130][131]. Operating Expenses - Operating expenses increased by $563 thousand, or 25.6%, in the third quarter of fiscal 2023, primarily due to a significant rise in research and development expenses, which increased by $633 thousand, or 87.7%[126]. - Operating expenses increased by $1.8 million, or 27.2%, totaling $8.453 million for the nine months ended March 31, 2023, compared to $6.643 million in the prior year[131]. - Research and development expenses surged by $1.8 million, or 91.1%, driven by technology improvements and increased headcount[132]. Other Income - Other income increased by $328 thousand in the third quarter of fiscal 2023 due to higher income from capital-preservation investments as interest rates rose[126]. - Other income increased by $855 thousand, totaling $1.006 million for the nine months ended March 31, 2023, due to higher income from short-term investments[132]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $12 million to $14.4 million as of March 31, 2023, compared to $26.4 million as of June 30, 2022[137]. - Net cash used in operating activities was $6.34 million for the nine months ended March 31, 2023, an increase of $1.176 million from $5.164 million in the prior year[136]. - The company authorized a share repurchase program of up to $1 million, with 5,821 shares repurchased at a cost of $69,070 during the three and nine months ended March 31, 2023[141][142]. Tax Positions - The effective tax rate for the nine months ended March 31, 2023, is 0%, with a full valuation allowance on deferred tax assets due to expected future losses[144]. - The company has approximately $400 thousand of uncertain tax positions as of March 31, 2023, all accounted as contra-deferred tax assets[147]. Product Development and Market Expansion - The TRACER 1000 has been deployed in approximately 21 locations across 14 countries in Europe and Asia as of March 31, 2023[113]. - AgLAB's field trials demonstrated an average yield improvement of 30% in the distillation process for THC and CBD oil[116]. - BreathTech is developing the BreathTest-1000 to screen for VOC metabolites, with ongoing studies expanding to various diseases beyond COVID-19[117]. - The company plans to launch a family of "process control" methods and solutions to enhance its offerings in the nutraceutical distillation market[115]. Shipping and Supply Chain - The gross margin decreased by 22% in the third quarter of fiscal 2023 compared to the same quarter in fiscal 2022, attributed to increased shipping expenses[125]. - The company is focused on securing alternative supplies to mitigate the impact of global semiconductor shortages on production[119].