Astrotech Corporation (ASTC) — FY2022 Form 10-K
Period clarification: The supplied filing is the annual report for the fiscal year ended June 30, 2022, compared with FY2021; it is not a 2020 Q4 filing. Financial amounts below are in U.S. dollars unless noted.
Business context
Astrotech develops and commercializes mass spectrometry technology through ATI, 1st Detect, AgLAB and BreathTech. 1st Detect sells the TRACER 1000 explosives trace detector in markets accepting European Civil Aviation Conference certification. AgLAB is developing instruments for hemp and cannabis processing; BreathTech is developing a breath-based infection screening device with Cleveland Clinic. The TRACER 1000 was deployed at approximately 20 locations in 11 countries. The company had 14 employees at June 30, 2022.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $869,000 | $334,000 |
| Gross profit / gross margin | $192,000 / 22% | $36,000 / 11% |
| Operating expenses | $8.787 million | $7.946 million |
| Operating loss | $8.595 million | $7.910 million |
| Net loss | $8.330 million | $7.603 million |
| Loss per share, basic and diluted | $0.17 | $0.35 |
| Net cash used in operating activities | $6.792 million | $7.398 million |
- Revenue increased 160%, entirely from TRACER 1000 sales to distributors and DHL. Two customers substantially comprised FY2022 revenue, indicating significant customer concentration.
- Gross margin improved as production volume increased, volume discounts were obtained, and system reliability improvements were implemented. Despite higher sales, the company remained substantially loss-making.
- FY2022 comprehensive loss was $9.506 million, including $1.176 million of unrealized losses on available-for-sale investments.
- At June 30, 2022, cash and cash equivalents were $26.453 million and short-term investments were $26.173 million. Working capital was approximately $52.3 million; current liabilities were $2.682 million. Total assets were $56.221 million.
- Cash declined $9.483 million during FY2022. Operating cash use was $6.792 million; investing cash use was $596,000, primarily equipment purchases; financing cash use was $2.095 million, including related-party debt repayments.
- At year-end, the balance sheet included $500,000 of related-party note principal. The remaining note and $55,000 accrued interest were paid on September 5, 2022, after year-end. Lease liabilities were $537,000.
- Management stated cash, cash equivalents and investments were expected to fund operating expenses and capital requirements for at least 12 months following issuance of the financial statements. The company also said additional funding may be needed; future equity financing could dilute shareholders.
Changes, outlook and risks
- Compared with FY2021, revenue and gross profit rose, but net loss widened by $727,000. SG&A increased $1.265 million, mainly from non-cash equity compensation, director fees and legal expenses. R&D rose $89,000. FY2021 included a $542,000 PPP loan forgiveness gain and a $513,000 corporate lease disposal expense; no comparable items were recorded in FY2022.
- There is no quantified revenue, earnings or cash-flow guidance in the filing. Management’s liquidity statement is not a profitability forecast. Management is pursuing commercialization and acquisition opportunities, but timing and outcomes are uncertain.
- TRACER 1000’s U.S. TSA cargo certification remained incomplete; cargo detection testing was ongoing and delayed. BreathTest-1000 remained in development, with FDA classification and required approval pathway undetermined. The company had not submitted an EUA request and reported no clinical testing of that product.
- COVID-19 and semiconductor/electronics shortages delayed certification and affected supply and costs. Management intended to seek alternative suppliers and believed it could pass higher input and shipping costs to customers, but acknowledged prolonged shortages could harm results.
- Principal risks include continued losses, uncertain product adoption and regulatory approvals, customer concentration, dependence on suppliers, potential need for capital and dilution, competition, and regulatory uncertainty around AgLAB’s cannabis-related market.
- Nasdaq had granted an extension through December 19, 2022 to regain the $1.00 minimum bid-price requirement. Failure could lead to delisting; management said it would assess actions, including a reverse split if necessary.
- A stockholder class and derivative action concerning a 2020 charter amendment had reached a settlement in principle; court validation of the amendment had been obtained, with settlement approval anticipated after the fiscal year-end.
- The independent auditor gave an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of June 30, 2022; the auditor did not attest to internal control effectiveness.
Most important facts for investors to verify
- Subsequent filings: actual cash and investment balances, operating cash burn, and whether management’s stated 12-month liquidity expectation remains supportable.
- Commercial traction: recurring TRACER orders, customer concentration, deployments, margins, and progress toward TSA approval.
- BreathTech milestones: clinical evidence, FDA classification and pathway, regulatory submissions, and the scope and funding of the Cleveland Clinic collaboration.
- Capital needs and dilution: subsequent equity or debt financing, equity awards, warrants, and any acquisition activity.
- Nasdaq listing status and outcome of the stockholder litigation settlement.