Astrotech Corporation (ASTC) — Form 10-Q Summary
Reporting-period note: The supplied filing is for the quarter ended September 30, 2020 (fiscal 2021 Q1), not 2019 Q1. Financial figures below are in thousands of dollars unless stated otherwise.
Business context
Astrotech develops and commercializes mass-spectrometry technology through subsidiaries focused on airport security (1st Detect), agriculture (AgLAB), and breath analysis (BreathTech). 1st Detect’s TRACER 1000 has European ECAC certification; AgLAB and BreathTech products remain under development.
Financial results and liquidity
| Metric | Quarter ended Sep. 30, 2020 | Quarter ended Sep. 30, 2019 |
|---|---|---|
| Revenue | $140 | $1 |
| Cost of revenue | $113 | $0 |
| Gross profit / margin | $27 / 19% | $1 / 100% |
| Operating expenses | $2,079 | $2,057 |
| Operating loss | $(2,052) | $(2,056) |
| Net loss | $(2,111) | $(2,068) |
| Net loss per share | $(0.27) | $(0.37) |
| Operating cash used | $(1,480) | $(1,830) |
Revenue rose by $139,000, substantially from TRACER 1000 sales; the prior-year quarter’s revenue came from components for earlier technology iterations. SG&A decreased $276,000 and R&D decreased $246,000, while a $544,000 corporate-lease disposal charge contributed to total operating expenses increasing $22,000. Management estimates lease termination will save approximately $870,000 net over three years.
At September 30, cash was $1.853 million, down from $3.349 million at June 30, 2020; working capital was approximately negative $1.5 million versus positive $0.3 million at June 30. Total assets were $3.187 million, total liabilities $4.631 million, and stockholders’ deficit $1.444 million. Debt included a $2.5 million related-party term note, extended to September 5, 2021, and a $542,000 PPP note. The company had $364,000 of lease liabilities. It received a $429,000 refundable AMT credit during the quarter.
Material developments, outlook and risks
- After quarter-end, Astrotech completed an October public offering with gross proceeds of $18.0 million and a registered direct offering with gross proceeds of $6.2 million. Management said these financings resolved the liquidity issue and removed substantial doubt about its ability to continue as a going concern. Nasdaq subsequently confirmed compliance with its minimum-equity listing requirement.
- TRACER 1000 passed TSA air-cargo non-detection testing; detection testing was expected to resume in fall 2020. TSA passenger-checkpoint certification testing was on indefinite hold. On October 28, the company reported more than $1.0 million in purchase orders and an additional $1.0 million in future service and support commitments, naming DHL its largest flagship customer.
- BreathTech signed an October 2020 development agreement with Cleveland Clinic to explore breath-based COVID-19 screening. The product is developmental; the filing notes that clinical testing and regulatory authorization may be required and that FDA clearance or authorization is uncertain.
- COVID-19 had delayed TSA testing and affected parts of the supply chain; reduced air travel also weakened near-term checkpoint demand. The company warned that the pandemic could continue to adversely affect operations, cash flows, and financial condition.
- Revenue remained limited and concentrated: one customer materially comprised substantially all quarter revenue. The company reported an accumulated deficit of approximately $201.9 million and expects continued losses; it gave no specific revenue or earnings guidance.
- The company applied for PPP loan forgiveness and placed approximately $541,500 with the lender under a cash reserve agreement. Forgiveness remained subject to SBA approval. No material pending legal proceedings were reported.
Key facts for investors to verify
- Confirm the reporting period: the filing covers September 30, 2020, despite the request metadata indicating 2019 Q1.
- Review net proceeds, share issuance and dilution from the two post-quarter equity offerings, and the company’s cash runway following them.
- Track TRACER 1000 order conversion, customer concentration, TSA cargo detection testing and the effect of continued passenger-testing delays.
- Check status of PPP forgiveness and any remaining obligations under related-party debt and leases.
- Assess BreathTest-1000 clinical, technical and regulatory progress; the filing does not establish that the product is clinically validated or authorized for sale.