10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34426

Astrotech Corporation

(Exact name of registrant as specified in its charter)

Washington	91-1273737
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

401 Congress Avenue, Suite 1650

Austin, Texas 78701

(Address of principal executive offices and zip code)

(512) 485-9530

(Registrant’s telephone number, including area code)

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. YesþNo¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YesþNo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ Noþ

As of November 6, 2015, the number of shares of the registrant’s common stock outstanding was: 20,700,673.

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ASTROTECH CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

	Page
PART I:    FINANCIAL INFORMATION	4
ITEM 1.     CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	4
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
ITEM 4.     CONTROLS AND PROCEDURES	23
PART II: OTHER INFORMATION	24
ITEM 1.    LEGAL PROCEEDINGS	24
ITEM 1A. RISK FACTORS	24
ITEM 2.    UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4.    MINE SAFETY DISCLOSURES	24
ITEM 5.    OTHER INFORMATION	24
ITEM 6.    EXHIBITS	25

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PART I: FINANCIAL INFORMATION

ITEM 1.   Condensed Consolidated Financial Statements

ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	September 30, 2015			June 30, 2015
Assets
Current assets
Cash and cash equivalents	$	1,356		$	2,330
Short-term investments	21,193			23,161
Accounts receivable, net of allowance	221			198
Inventory	783			509
Indemnity receivable	6,100			6,100
Prepaid expenses and other current assets	580			296
Total current assets	30,233			32,594
Property and equipment, net	3,631			3,108
Long-term investments	6,257			8,516
Total assets	$	40,121		$	44,218
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	261		$	398
Accrued liabilities and other	1,501			1,801
Income tax payable	—			190
Total current liabilities	1,762			2,389
Other liabilities	146			101
Total liabilities	1,908			2,490
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred stock, no par value, convertible, 2,500,000 authorized shares; no issued and outstanding shares, at September 30, 2015 and June 30, 2015	—			—
Common stock, no par value, 75,000,000 shares authorized; 21,864,548 shares issued at September 30, 2015 and June 30, 2015; 20,700,673 and 20,743,973 shares outstanding at September 30, 2015 and June 30, 2015, respectively	189,096			189,007
Treasury stock, 1,163,875 and 1,120,575 shares at cost at September 30, 2015 and June 30, 2015, respectively	(2,789		)	(2,672		)
Additional paid-in capital	1,193			1,139
Accumulated deficit	(149,386		)	(146,022		)
Accumulated other comprehensive loss	(111		)	(23		)
Equity attributable to stockholders of Astrotech Corporation	38,003			41,429
Noncontrolling interest	210			299
Total stockholders’ equity	38,213			41,728
Total liabilities and stockholders’ equity	$	40,121		$	44,218

See accompanying notes to unaudited condensed consolidated financial statements.

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 ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share data)

(Unaudited)

	Three Months Ended   September 30,
	2015			2014
Revenue	$	—		$	320
Cost of revenue	—			277
Gross profit	—			43
Operating expenses:
Selling, general and administrative	2,286			1,960
Research and development	1,264			692
Total operating expenses	3,550			2,652
Loss from operations	(3,550		)	(2,609		)
Interest and other expense, net	99			12
Loss from continuing operations before income taxes	(3,451		)	(2,597		)
Income tax (expense) benefit	(2		)	1,325
Loss from continuing operations	(3,453		)	(1,272		)
Discontinued operations (Note 3)
Income from discontinued operations	—			1,303
Income tax expense	—			(2,378		)
Gain on sale of discontinued operations	—			25,630
Income from discontinued operations	—			24,555
Net (loss) income	(3,453		)	23,283
Less: Net loss attributable to noncontrolling interest	(89		)	—
Net (loss) income attributable to Astrotech Corporation	(3,364		)	23,283
Less: Deemed dividend to State of Texas	—			531
Net (loss) income attributable to common stockholders	$	(3,364	)	$	22,752
Amounts attributable to Astrotech Corporation:
Loss from continuing operations, net of tax	$	(3,364	)	$	(1,272	)
Income from discontinued operations, net of tax	—			24,555
Net (loss) income attributable to Astrotech Corporation	$	(3,364	)	$	23,283
Weighted average common shares outstanding:
Basic and diluted	20,705			19,548
Basic and diluted net (loss) income per common share:
Net loss attributable to Astrotech Corporation from continuing operations	$	(0.16	)	$	(0.09	)
Net income from discontinued operations	—			1.25
Net (loss) income attributable to Astrotech Corporation	$	(0.16	)	$	1.16
Other comprehensive income, net of tax:
Available-for-sale securities:
Net unrealized loss, net of tax benefit of $33	$	(61	)	$	—
Reclassification adjustment for realized losses included in net (loss) income, net of tax of $2	4			—
Total comprehensive (loss) income	$	(3,421	)	$	23,283

See accompanying notes to unaudited condensed consolidated financial statements.

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 ASTROTECH CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited) 

	Three Months Ended   September 30,
	2015			2014
Cash flows from operating activities:
Net (loss) income	$	(3,453	)	$	23,283
Less: Income from discontinued operations	—			(24,555		)
Net loss from continuing operations	(3,453		)	(1,272		)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Stock-based compensation	143			1
Amortization	20			—
Depreciation	102			85
Changes in assets and liabilities:
Accounts receivable	(23		)	(267		)
Accounts payable	(137		)	(778		)
Other assets and liabilities	(800		)	(571		)
Income taxes payable	(190		)	1,053
Net cash used in operating activities-continuing operations	(4,338		)	(1,749		)
Net cash used in operating activities-discontinued operations	—			(1,370		)
Net cash used in operating activities	(4,338		)	(3,119		)
Cash flows from investing activities:
Sale of available-for-sale investments	2,625			—
Maturities of held-to-maturity securities	1,494			—
Purchases of property and equipment	(638		)	(46		)
Net cash provided by (used in) investing activities-continuing operations	3,481			(46		)
Net cash provided by investing activities-discontinued operations	—			52,591
Net cash provided by investing activities	3,481			52,545
Cash flows from financing activities:
Repayment of State of Texas funding, including deemed dividend	—			(2,331		)
Payments for shares bought back	(117		)	—
Net cash used in financing activities-continuing operations	(117		)	(2,331		)
Net cash used in financing activities-discontinued operations	—			(5,655		)
Net cash used in financing activities	(117		)	(7,986		)
Net change in cash and cash equivalents	(974		)	41,440
Cash and cash equivalents at beginning of period	2,330			3,831
Cash and cash equivalents at end of period	$	1,356		$	45,271
Supplemental disclosures of cash flow information:
Cash paid for interest	$	—		$	63
Income taxes paid	$	198		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

6

ASTROTECH CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) General Information

Description of the Company – Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” “the Company,” “we,” “us,” or “our”), a Washington corporation organized in 1984, is an Austin, Texas based holding company that leverages management’s entrepreneurial expertise in turnarounds, start-ups, and mergers and acquisitions to commercialize emerging disruptive technologies through its closely held subsidiaries with a focus on adding value for our shareholders.

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared by Astrotech Corporation 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 three months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2015.

Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. The core principle of ASU 2014-9 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle. ASU 2014-9 requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. ASU 2014-9 was to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In 2015, the FASB issued ASU 2015-14 which delayed the required adoption date for public entities to periods beginning after December 15, 2017, although early adoption to the original effective date under ASU 2014-9 is permitted. Once implemented, the Company can use one of two retrospective application methods for prior periods. Earlier application is not permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to evaluate whether there are conditions or events that raise substantial doubt about the ability of a company to continue as a going concern for one year from the date the financial statements are issued or within one year after the date that the financial statements are available to be issued when applicable. Further, the ASU provides management guidance regarding its responsibility to disclose the ability of a company to continue as a going concern in the notes to the financial statements. This ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have an impact on our financial statements; we will adopt this ASU in fiscal year 2017.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurements of Inventory.” This ASU requires management to evaluate inventory at the lower of cost and net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Earlier application is permitted by all entities as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, on its consolidated financial statements.

Segment Information – With the sale of the Astrotech Space Operations (“ASO”) business (see Note 3), the Company now operates a single reportable business unit, Astro Scientific (formerly known as Spacetech). Since only one of the Company’s three distinct opportunities has material operations, all financial segment information required by FASB ASC 280 can be found in the consolidated financial statements.

Astro Scientific

Astro Scientific is a technology incubator designed to commercialize emerging disruptive technologies. This business unit is currently pursuing three distinct opportunities:

7

1^st Detect

1^st Detect develops, manufactures, and sells chemical analyzers that streamline processes for industrial use in the food and beverage, semiconductor, pharmaceutical, research, and environmental markets as well as for government applications used in explosive and chemical warfare detection for the Department of Homeland Security and the military. Our chemical analyzers can identify chemicals with more accuracy and precision than competing analyzers given their extreme sensitivity and specificity. By leveraging technology initiated by an engagement with the National Aeronautics and Space Administration (“NASA”) to develop a mass spectrometer for the International Space Station (“ISS”), the Company has developed a series of analyzers that enable real time analytics that we believe to be significantly smaller, lighter, faster, and less expensive than competing analyzers.

Our product portfolio currently consists of the following products: 

• MMS-1000™ - the MMS-1000™ is a small, low power desktop analyzer designed for the laboratory market.

• OEM-1000 - the OEM-1000 is an original equipment manufacturer (“OEM”) component that is designed to be integrated into customers’ specific packaging and enclosures, and is well suited to be integrated with application specific sampling or separation technology.

• iONTRAC - the iONTRAC is a process analyzer utilizing an enhanced version of our core technology, which includes the addition and integration of gas chromatography and continuous 24/7 operational features.

Astrogenetix

Astrogenetix is a biotechnology company that is applying a fast-track on-orbit discovery platform using the International Space Station to develop vaccines and other therapeutics. NASA has engaged the Center for Vaccine Development at the University of Maryland, one of the leading vaccinology institutions in the world, to aid in the filing of an Investigational New Drug (“IND”) application for Salmonella. NASA is providing much of the necessary funding for this research, meaning little investment is required of Astrogenetix as efforts are concentrated on filing the IND. We have negotiated a Space Act Agreement with NASA for a minimum of twenty-eight additional space flights following the successful filing of the IND application.

Astral Images

Astral Images (“Astral”) was created to commercialize decades of image research from the laboratories of IBM and Kodak combined with classified satellite technology from government laboratories. Astral sells film-to-digital image enhancement, defect removal and color correction software, and post processing services providing economically feasible conversion of television and feature 35mm and 16mm films to the new 4K ultra-high definition (“UHD”), high-dynamic range (“HDR”) format necessary for the new generation of digital distribution.

(2) Investments

We use specific identification when determining realized gains and losses on our available-for-sale securities. The following tables summarize unrealized gains and losses related to our investments:

Available-for-Sale	September 30, 2015
(In thousands)	Adjusted		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
Mutual Funds - Corporate & Government Debt	$	14,619	$	—	$	(111	)	$	14,508
Total	$	14,619	$	—	$	(111	)	$	14,508

For information on the unrealized holding losses on available-for-sale investments reclassified out of accumulated other comprehensive income (loss) into the consolidated statements of income, see “Note 10: Other Comprehensive Income (Loss).”

8

Held-to-Maturity	September 30, 2015
(In thousands)	Carrying		Unrealized		Unrealized			Fair
	Value		Gain		Loss			Value
Fixed Income Bonds	$	3,515	$	—	$	(26	)	$	3,489
Time Deposits	9,427		10		(7		)	9,430
Total	$	12,942	$	10	$	(33	)	$	12,919

There were no investments at September 30, 2014.

We have certain financial instruments on our condensed consolidated balance sheet related to interest bearing time deposits and fixed income bonds. These held-to-maturity time deposits are included in “Short-term investments” if the maturities at the end of the reporting period were 360 days or less or “Long-term investments” if the maturities at the end of the reporting period were over 360 days. Fixed income bonds, maturing over the next one to four years, are comprised of investments in various corporations with ratings of BBB- or better.

	Carrying Value
	Short-Term Investments				Long-Term Investments
(In thousands)	September 30, 2015		June 30, 2015		September 30, 2015		June 30, 2015
Mutual Funds - Corporate & Government Debt	$	14,508	$	17,227	$	—	$	—
Time deposits
Maturities from 1-90 days	950		1,496		—		—
Maturities from 91-360 days	5,735		4,438		—		—
Maturities over 360 days	—		—		2,742		4,990
Fixed Income Bonds
Maturities from 1-3 years	—		—		2,427		2,073
Maturities from 3-5 years	—		—		1,088		1,453
Total	$	21,193	$	23,161	$	6,257	$	8,516

(3) Discontinued Operations & Gain on the Sale of the ASO Business Unit

In August 2014, the Company completed the previously announced sale of substantially all of its assets used in the Company’s former ASO business unit (the “Asset Sale”) to Lockheed Martin Corporation (“the Buyer”) for an agreed upon sales price of $61.0 million, less a working capital adjustment. The sales price was $59.3 million, which includes a working capital adjustment of $1.7 million. As of September 30, 2015, the Company has received cash of $53.2 million and has recorded a receivable of $6.1 million for the indemnity holdback. The indemnity holdback is being held in escrow under the terms of an escrow agreement until February 2016 (the 18-month anniversary of the consummation of the transaction). The Company believes it will fully realize the indemnity holdback in February 2016. The ASO business consisted of (i) ownership, operation, and maintenance of spacecraft processing facilities in Titusville, Florida and Vandenberg Air Force Base, California (“VAFB”); (ii) supporting government and commercial customers processing complex communication, earth observation, and deep space satellite launches; (iii) designing and building spacecraft processing equipment and facilities; and (iv) providing propellant services including designing, building, and testing propellant service equipment for fueling spacecraft.

Additionally, as part of the Asset Sale, the Company used a portion of the proceeds to pay off the outstanding balance of its term loan of $5.7 million, which was secured by certain assets of the ASO business. As such, 100% of the interest expense on the debt was allocated to discontinued operations in the amount of $0 and $62 thousand for the three months ended September 30, 2015 and 2014, respectively.

The sale of our former ASO business, which was previously reported within our former ASO business unit segment, resulted in a pre-tax gain of $25.4 million ($20.6 million after-tax) for the year ended June 30, 2015. The pre-tax gain on this sale reflects the excess of the sum of the cash proceeds received over the net book value of the net assets of the Company’s former ASO business.

9

The total pre-tax gain on the sale for the year ended June 30, 2015, includes the following (in thousands):

Cash proceeds from the sale of the ASO business	$	53,189
Receivable for indemnity holdback	6,100
Liabilities assumed by the Buyer	2,478
Net book value of assets sold	(36,175		)
Other	(156		)
Gain on sale of our former ASO business	$	25,436

The Company and the Buyer entered into a transition services agreement to which the Company and the Buyer agreed to provide the other party with certain services, including, among others, services related to benefits, human resources and payroll administration, cash management, financial statements, and compliance, each of a type currently provided by or for the Company or our former ASO business unit prior to the Asset Sale. Pursuant to the transition services agreement, the Company agreed to provide services to the Buyer for a period of up to one year, and the Buyer agreed to provide services to the Company for a period of up to six months. Each party had the option to extend the term of the services provided by the other party for a period of one year. No such extension was executed by either party.

While we are a party to the transition services agreement, we have determined that the continuing cash flows generated by this agreement did not constitute significant continuing involvement in the operations of our former ASO business. As such, the operating results and cash flows related to our former ASO business have been separately reflected as discontinued operations for the three months ended September 30, 2014.

The following table provides a reconciliation of the major components of income of our former ASO business to the amounts reported in the condensed consolidated statements of operations (in thousands): 

	Three Months Ended   September 30,
	2015		2014
Major line items constituting income of discontinued operations
Revenue	$	—	$	2,807
Cost of revenue	—		(1,313		)
Selling, general and administrative	—		(128		)
Other expense, net	—		(63		)
Gain on sale of discontinued operations (1)	—		25,630
Income tax expense	—		(2,378		)
Gain on discontinued operations	$	—	$	24,555

1. An adjustment of $194 thousand was made during the last quarter of fiscal year 2015.

(4) Receivables – Indemnity Holdback Related to the Asset Sale

In August 2014, the Company completed the Asset Sale. The net purchase price was $59.3 million, which included a working capital adjustment of $1.7 million. As of September 30, 2015, the Company received cash of $53.2 million and recorded a receivable of $6.1 million for the indemnity holdback. As of the date of this quarterly report on Form 10-Q, no claims have been asserted against the indemnity holdback. The indemnity holdback amount, minus any amounts previously released in respect of indemnity claims or held back with respect to pending claims, will be released within three days after the 18^th month anniversary of the closing of the Asset Sale pursuant to the terms of an escrow agreement.

(5) Noncontrolling Interest

During the third quarter of 2015, Astral Images was created in conjunction with a noncontrolling interest, resulting in Astrotech owning 72% of Astral. The Company applies noncontrolling interest accounting, which requires us to clearly identify the noncontrolling interest in the condensed consolidated balance sheets and condensed consolidated statements of operations. We disclose three measures of net income (loss): net income (loss), net (loss) attributable to noncontrolling interest, and net income (loss) attributable to Astrotech Corporation. Our operating cash flows in our condensed consolidated statements of cash flows

10

reflect net income (loss) while our basic and diluted net income (loss) per share calculations reflect net income (loss) attributable to Astrotech Corporation.

On August 28, 2014, we repaid the State of Texas Emerging Technology Fund $2.3 million to settle their $1.8 million interest in 1^st Detect (see Note 12 for more information).

The following table breaks down the changes in Stockholders’ Equity in the first quarter of fiscal year 2016 (in thousands):

	Astrotech Corp Stockholders' Equity			Noncontrolling Interest in Subsidiary			Total Stockholders' Equity
Balance at June 30, 2015	$	41,429		$	299		$	41,728
Stock based compensation	143			—			143
Share repurchases	(117		)	—			(117		)
Net change in available-for-sale securities	(88		)	—			(88		)
Net income attributable to Astrotech Corporation	(3,364		)	—			(3,364		)
Net loss attributable to noncontrolling interest	—			(89		)	(89		)
Balance at September 30, 2015	$	38,003		$	210		$	38,213

(6) Net Income (Loss) per Share

Basic net income (loss) per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential 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 income (loss) per share (in thousands, except per share data):

	Three Months Ended   September 30,
	2015			2014
Numerator:
Amounts attributable to Astrotech Corporation, basic and diluted:
Loss from continuing operations before income taxes	$	(3,451	)	$	(2,597	)
Income tax (expense) benefit	(2		)	1,325
Loss from continuing operations, net of tax	(3,453		)	(1,272		)
Less: Net loss attributable to noncontrolling interest	(89		)	—
Income from discontinued operations, net of tax	—			24,555
Net (loss) income attributable to Astrotech Corporation	(3,364		)	23,283
Less: State of Texas deemed dividend (Note 12)	—			531
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(3,364	)	$	22,752
Denominator:
Denominator for basic and diluted net income (loss) per share attributable to Astrotech Corporation — weighted average common stock outstanding	20,705			19,548
Basic and diluted net income (loss) per common share:
Net loss attributable to Astrotech Corporation from continuing operations	$	(0.16	)	$	(0.09	)
Net income from discontinued operations	—			1.25
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(0.16	)	$	1.16

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Options to purchase 1,117,750 shares of common stock at exercise prices ranging from $0.32 to $3.20 per share outstanding for the three months ended September 30, 2015 were not included in diluted net loss per share, as the inclusion of the potential common shares would have had an anti-dilutive effect on the loss from continuing operations.

(7) Revenue Recognition

Astrotech recognizes revenue employing several generally accepted revenue recognition methodologies. The methodology used is based on contract type and the manner in which products and services are provided.

Revenue is recognized when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when pervasive evidence of an arrangement exists, delivery has occurred or services have been provided, and collectability is reasonably assured.

(8) Debt

In October 2010, our former ASO business entered into a financing facility with a commercial bank providing a $7.0 million term loan and a $3.0 million revolving credit facility. The $7.0 million term loan was to terminate in October 2015 and the $3.0 million revolving credit facility expired in October 2012. The bank financing facilities were secured by the assets of our former ASO business, including accounts receivable, and required us to comply with designated covenants. On August 22, 2014, the Company used a portion of the proceeds from the Asset Sale to pay off the outstanding balance of its term loan of $5.7 million which is reported in the statement of cash flows as discontinued operations. The Company has no outstanding debt as of September 30, 2015.

(9) Fair Value Measurement

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 1—Quoted prices in active markets for identical assets or liabilities.

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.

The following table presents the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of September 30, 2015 and June 30, 2015: 

	September 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	14,508	$	14,508	$	—	$	—	$	14,508
Held-to-Maturity Securities
Bonds: 1-3 years	2,427		—		2,410		—		2,410
Bonds: 3-5 years	1,088		—		1,079		—		1,079
Time deposits: 1-90 days	950		—		949		—		949
Time deposits: 91-360 days	5,735		—		5,740		—		5,740
Time deposits: over 360 days	2,742		—		2,741		—		2,741
Total	$	27,450	$	14,508	$	12,919	$	—	$	27,427

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	June 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	17,227	$	17,227	$	—	$	—	$	17,227
Held-to-Maturity Securities
Bonds: 1-3 years	2,073		—		2,057		—		2,057
Bonds: 3-5 years	1,453		—		1,438		—		1,438
Time deposits: 1-90 days	1,496		—		1,496		—		1,496
Time deposits: 91-360 days	4,438		—		4,440		—		4,440
Time deposits: over 360 days	4,990		—		4,993		—		4,993
Total	$	31,677	$	17,227	$	14,424	$	—	$	31,651

The value of our available-for-sale investments is based on pricing from third party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs). Our held-to-maturity investments are recorded at amortized costs, as management’s intent is to hold such investments until maturity. The fair value of our held-to-maturity investments with maturities less than 90 days is considered the amortized value; the fair value measurements used for bonds and time deposits with maturities greater than 90 days is considered Level 2 and uses pricing from third party pricing vendors who use quoted prices for identical or similar securities in both active and inactive markets. 

(10) Other Comprehensive Income (Loss)

Changes in the balances of each component included in accumulated other comprehensive income (loss) (“accumulated OCI”) for the three months ended September 30, 2015, are presented below. The amounts below are pre-tax.

(In thousands)	Accumulated Other Comprehensive Income (Loss)
Unrealized Gain in Mutual Fund Investments
Balance at June 30, 2015	$	(23	)
Current period change in other comprehensive income (loss) before reclassifications	(94		)
Reclassification to net (loss) income for realized losses	6
Balance at September 30, 2015	$	(111	)

(11) Business Risk and Credit Risk Concentration Involving Cash

All of the Company’s revenue during the previous fiscal year came from one customer.

The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (“FDIC”) of $250,000 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.

(12) State of Texas Funding

In March 2010, the Texas Emerging Technology Fund awarded 1^st Detect $1.8 million for the development and marketing of the Miniature Chemical Detector, a portable mass spectrometer designed to provide mass spectrometry analytics in real time for explosive device detection in airports and the battlefield, industrial quality and process control, environmental field applications, and laboratory research. In exchange for the award, 1^st Detect granted a common stock purchase right and a note payable to the State of Texas. The economic substance of the transaction was that the State of Texas had purchased shares of 1^st Detect in exchange for the granted award. The note, which was treated economically as purchased shares and reflected in the equity section of the condensed consolidated balance sheet, equaled the disbursements to 1^st Detect to date and accrued interest at 8% per year. On August 28, 2014, 1^st Detect settled the funding and common stock repurchase right with a payment of $2.3 million. The Company has accounted for the difference between the $2.3 million paid and the $1.8 million received as a deemed dividend in its calculation of earnings per share.

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(13) Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans

Stock Option Activity Summary

The Company’s stock option activity for three months ended September 30, 2015 was as follows:

	Shares (in thousands)		Weighted Average Exercise Price
Outstanding at June 30, 2015	1,128		$	1.53
Granted	—		—
Exercised	—		—
Canceled or expired	(10	)	0.45
Outstanding at September 30, 2015	1,118		$	1.54

The aggregate fair value of options exercisable at September 30, 2015 was $0.5 million as the fair value of the Company’s common stock is more than the exercise prices of these options. The aggregate fair value of all options outstanding at September 30, 2015 was $0.9 million.

The table below details the Company’s stock options outstanding as of September 30, 2015:

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
$0.32 – 0.71	438,750	4.91	$	0.60	438,750	$	0.60
$1.20 – 2.60	570,000	8.10	1.94		282,500	1.20
$3.20 – 3.20	109,000	9.52	3.20		—	—
$0.32 – 3.20	1,117,750	6.57	$	1.54	721,250	$	0.83

Compensation costs recognized related to stock option awards were $54 thousand and $0 for the three months ended September 30, 2015 and 2014, respectively. There were no options granted during the three months ended September 30, 2015 and 2014.

Restricted Stock

No restricted stock was granted, vested, canceled, or expired during the three months ended September 30, 2015. Stock compensation expense related to restricted stock was $89 thousand and $1 thousand for the three months ended September 30, 2015 and 2014, respectively.

Treasury Stock

On December 12, 2014, the Board of Directors amended the stock repurchase program to allow for the repurchase of up to $5 million more treasury shares until December 31, 2015. During the three months ended September 30, 2015, the Company repurchased 43 thousand shares at a cost of $117 thousand. As of September 30, 2015 we have repurchased 1.2 million shares at a cost of $2.8 million. There were no stock repurchases during the three months ended September 30, 2014.

(14) Income Taxes

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 September 30, 2015, the Company established a full valuation allowance against all of its net deferred tax assets.

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To the extent that a loss from continuing operations can be utilized to offset the income otherwise resulting from discontinued operations, it has been recognized as a tax benefit from continuing operations. To the extent that a loss or credit carryover can be utilized to offset the income from discontinued operations, it has been recognized as a tax benefit from discontinued operations.

For the three months ended September 30, 2015 and 2014, the Company incurred pre-tax losses from continuing operations in the amount of $3.5 million and $2.6 million, respectively. The total effective tax rate for continuing operations was approximately 0% and 51% for the three months ended September 30, 2015 and 2014, respectively.

For the three months ended September 30, 2015 and 2014, the Company’s effective tax rate differed from the federal statutory rate of 35%, primarily due to recording changes to the valuation allowance placed against its net deferred tax assets. 

FASB ASC 740, Income Taxes (“FASB ASC 740”) 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 has an unrecognized tax benefit of $0.1 million for the three months ended September 30, 2015 and 2014.

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 through present for federal purposes and fiscal years ended 2006 through present for state purposes.

(15) Commitments and Contingencies

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, other than as set forth below:

Astrotech was previously named as a party to a suit filed in the Circuit Court of the Eighteenth Judicial Circuit for Brevard County, Florida. This is an action for foreclosure of certain real estate and for debt. The Company was named as a party because it held an inferior lien against the property at issue and had to be named in the foreclosure action. No monetary relief was requested from Astrotech. In July 2014, the Company received a lump sum payment of $50 thousand, less legal fees, along with a release of liability in exchange for a release of its inferior mortgage. In October 2014, the underlying lawsuit was voluntarily dismissed and the case was closed.

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FORWARD-LOOKING STATEMENTS

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:

• The effect of economic conditions in the United States or other nations that could impact our ability to sell our products and services or gain customers;

• Our ability to raise sufficient capital to meet our long and short-term liquidity requirements;

• Our ability to successfully pursue our business plan and execute our strategy;

• Whether we will fully realize the economic benefits under our customer contracts;

• Technological difficulties and potential legal claims arising from any technological difficulties;

• Product demand and market acceptance risks, including our ability to develop and sell products and services to be used by governmental or commercial customers;

• Uncertainty in government funding and support for key programs, grant opportunities, or procurements;

• The impact of competition on our ability to win new contracts;

• Delays in the timing of performance under our contracts; and

• Our ability to meet technological development milestones and overcome development challenges.

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 2015 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.

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 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.

Business Overview

Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” “the Company,” “we,” “us,” or “our”), a Washington corporation organized in 1984, is an Austin, Texas based holding company that leverages management’s entrepreneurial expertise in turnarounds, start-ups, and mergers and acquisitions to commercialize emerging disruptive technologies through its closely held subsidiaries with a focus on adding value for our shareholders.

With the sale of the Company’s former Astrotech Space Operations (“ASO”) business, the Company now operates a single reportable business unit, Astro Scientific (formerly known as Spacetech), and its efforts are focused on the following:

• Working with customers and development partners to satisfy application specific chemical detection objectives using our advanced chemical analyzers;

• Extending our intellectual property portfolio by enhancing and refining our chemical analyzer technology;

• Enabling film restoration, enhancement, and digitization using an automated process that revives the original color and removes dust, scratches, and defects from film to restore it to its original condition;

• Facilitating the shift from 2K resolution to ultra-high definition (“UHD”), high-dynamic range (“HDR”) 4K resolution, the format in which the next generation of digital video content will be distributed to the home; and

• Developing next generation vaccines using the unique environment of microgravity.

 Astro Scientific

Astro Scientific is a technology incubator designed to commercialize emerging disruptive technologies. Astro Scientific is currently pursuing three distinct opportunities:

1^st Detect

1^st Detect develops, manufactures, and sells chemical analyzers that streamline processes for industrial use in the food and beverage, semiconductor, pharmaceutical, research, and environmental markets as well as for government applications used in explosive and chemical warfare detection for the Department of Homeland Security and the military. Our chemical analyzers can identify chemicals with more accuracy and precision than competing analyzers given their extreme sensitivity and specificity. By leveraging technology initiated by an engagement with the National Aeronautics and Space Administration (“NASA”) to develop a mass spectrometer for the International Space Station, the Company has developed a series of analyzers that enable real time analytics that we believe to be significantly smaller, lighter, faster, and less expensive than competing analyzers.

Our efforts have resulted in a technology that has been or will be deployed in the following areas:

• Explosive device detection in airports - we believe our analyzers have at least 100 times the specificity of the current generation of screening devices, meaning significantly fewer false alarms and a higher probability of threat detection. Our solution also has better resolution, translating into the detection of a broader range of compounds, which allows us to see not only traditional explosives, but also homemade and improvised explosives, which has proved challenging for the current technology.

• Military - our technology is extremely sensitive, so we believe we can detect chemical warfare agents in much lower concentrations than incumbent technologies. The high level of specificity of our instrumentation not only improves detection of traditional threats, but also detects next generation chemical agents not easily detectable by current instrumentation. We expect that our products will be used to verify decontamination of previously contaminated sites, to positively identify a suspect compound following an alarm on a less sophisticated instrument, and to evaluate a blast site for the type of explosive used.

• Industrial process controls - we are enabling cost effective real-time in-situ analysis for the first time. While competing technologies can alarm when there is an anomaly in a process, our technology can provide production or line managers real-time insights about those deviations to enable quicker decisions.

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• Food and beverage - we are also enabling cost effective real-time in-situ analysis for what we believe to be the first time in the food and beverage industry. Not only does our instrumentation provide a full set of information to more thoroughly analyze results when there is a deviation in quality, but we provide objectivity that is not possible with human taste testers.

• Semiconductor - our products can easily detect excursion events. Most incumbent technologies are tuned to actively look for a particular known potential contaminant. Rather than being limited to one or a small set of potential contaminants, our instrument can warn of virtually any potential contaminant, often exposing excursions that would have otherwise gone undetected, making our product a much more robust solution.

• Oil and gas - given the sensitivity and speed of our technology, we believe we can detect smaller leaks in a pipeline sooner than the competition and we can more completely characterize production and potential production.

• Laboratory research - we believe our products are significantly less expensive than the competition and have a minimal footprint, making our products a great solution for entities with limited funding and counter space.

• Petrochemical and refining - our products are able to provide real-time information upon which automated or human decisions may be made regarding product quality, efficiency of production, and feedstock performance.

Our product portfolio currently consists of the following products: 

• MMS-1000™ - the MMS-1000™ is a small, low power desktop mass spectrometer designed for the laboratory market. The unique design of this unit enables fast, quality chemical analysis, requires minimal benchtop space (about the size of a shoebox), requires less power than a typical light bulb, and unlike traditional instruments, requires no consumables or special infrastructure.

• OEM-1000 - the OEM-1000 is an original equipment manufacturer (“OEM”) component that drives the MMS-1000™. It is designed to be integrated into customers’ specific packaging and enclosures and is well suited to be integrated with application specific sampling or separation technology. A variant, the OEM-1000PI has recently been integrated into a Thermogravimetric Analyzer (“TGA”) manufactured by RIGAKU Corp. of Tokyo, Japan, one of the leading instrumentation companies in Asia. The integrated instrument named Thermo iMS2 is the world’s first integrated TGA with tandem mass spectrometry (“MS/MS”) capabilities and is expected to be well received by the international research and development markets. A further variant of the OEM-1000 has been selected by Battelle, a leading supplier of military chemical detection equipment, for integration into the Next Generation Chemical Detector (“NGCD”), a program under development by the Department of Defense’s Joint Program Executive for Chemical and Biological Defense.

• iONTRAC - the iONTRAC is a process analyzer utilizing an enhanced version of our core mass spectrometer technology, which includes the addition and integration of gas chromatography and continuous 24/7 operational features. The iONTRAC provides real-time in-situ monitoring of industrial processes and we are targeting customers in petrochemical processing, food and beverage manufacturing, critical infrastructure protection, and semiconductor clean-room environmental monitoring. The instrument is designed to autonomously monitor processes and to provide reports using industry standard factory management system (“FMS”) infrastructure.

Astrogenetix

Astrogenetix is a biotechnology company that is applying a fast-track on-orbit discovery platform using the International Space Station to develop vaccines and other therapeutics. NASA has engaged the Center for Vaccine Development at the University of Maryland, one of the leading vaccinology institutions in the world, to aid in the filing of an Investigational New Drug (“IND”) application for Salmonella. NASA is providing much of the necessary funding for this research, meaning little investment is required of Astrogenetix as efforts are concentrated on filing the IND. We have negotiated a Space Act Agreement with NASA for a minimum of twenty-eight additional space flights following the successful filing of the IND for Salmonella.

Astral Images

Astral Images, Inc. (“Astral”) was created to commercialize decades of image research from the laboratories of IBM and Kodak combined with classified satellite technology from government laboratories. Astral sells film-to-digital image enhancement, defect removal and color correction software, and post processing services providing economically feasible conversion of television and feature 35mm and 16mm films to the new 4K UHD HDR format necessary for the new generation of digital distribution. Due to a significant shift in the film scanning industry, most film assets will need to go through an upgrade to 4K to remain relevant for over-to-top distribution as television manufacturers sell more 4K televisions and consumer demand for such content accelerates.

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Astral is positioned to be a leader in digital conversion and repair of feature films, film based television series, sporting events shot on film, film libraries, film archives, and consumer media.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. 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.

Management believes there have been no significant changes during the three months ended September 30, 2015 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2015 Annual Report on Form 10-K.

Results of Operations

Selected consolidated financial data for the quarter ended September 30, 2015 and 2014 is as follows (in thousands):

	Quarter Ended September 30,
	2015			2014
Revenue	$	—		$	320
Cost of revenue	—			277
Gross profit	—			43
Gross margin	—		%	13		%
Selling, general and administrative	2,286			1,960
Research and development	1,264			692
Operating expenses	3,550			2,652
Loss from operations	(3,550		)	(2,609		)
Other income, net	99			12
Income tax (expense) benefit	(2		)	1,325
Loss from continuing operations	(3,453		)	(1,272		)
Discontinued operations
Income from discontinued operations	—			1,303
Income tax (expense)	—			(2,378		)
Gain on sale of discontinued operations	—			25,630
Income from discontinued operations	—			24,555
Net (loss) income	(3,453		)	23,283
Less: Net loss attributable to noncontrolling interest	(89		)	—
Net (loss) income attributable to Astrotech Corporation	$	(3,364	)	$	23,283

Revenue – Total revenue decreased$320 thousand, or 100%, during the first quarter of fiscal 2016, compared to the first quarter of fiscal 2015. During the first quarter of fiscal 2016, we had no revenue as research-based milestones associated with unit sales continue to be booked as an offset of R&D expense. In the prior year, we had revenue of $320 thousand associated with the first phase of a new subcontract agreement with a third party on the NGCD program.

Gross Profit – Gross profit decreased$43 thousand, or 100%, during the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 due to the decrease in revenue as described above. Also during the first quarter of fiscal 2016, cost of revenues decreased to no cost of revenues from $277 thousand in the first quarter of fiscal 2015.

Operating Expenses – Our operating expenses increased$898 thousand, or 34%, during the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015. Significant changes to operating expenses included the following:

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• Selling, general and administrative expense increased by $326 thousand, or 17%, primarily driven by additional headcount during the quarter.

• Research and development expense increased$572 thousand, or 83%, primarily driven by additional headcount during the quarter.

Income Taxes on Continuing Operations – Our income tax benefit decreased$1.3 million, or 100%, due to the allocation method of taxes between continuing and discontinued operations in the prior fiscal year.

Discontinued Operations – Discontinued operations includes the reclassification of operations of the Company’s former ASO business unit for the three months ended September 30, 2014. There was no activity in discontinued operations for the three months ended September 30, 2015.

Liquidity and Capital Resources

The following is a summary of the change in our cash and cash equivalents (in thousands):

	Three Months Ended   September 30,
	2015			2014			change
Cash flows from continuing operations:
Net cash used in operating activities	$	(4,338	)	$	(1,749	)	$	(2,589	)
Net cash provided by (used in) investing activities	3,481			(46		)	3,527
Net cash used in financing activities	(117		)	(2,331		)	2,214
Net cash used in continuing operations	(974		)	(4,126		)	3,152
Cash flows from discontinued operations:
Net cash used in operating activities	—			(1,370		)	1,370
Net cash provided by investing activities	—			52,591			(52,591		)
Net cash used in financing activities	—			(5,655		)	5,655
Net cash provided by discontinued operations	—			45,566			(45,566		)
Net change in cash and cash equivalents	$	(974	)	$	41,440		$	(42,414	)

Cash and Cash Equivalents and Short-Term Investments

As of September 30, 2015, we held cash and cash equivalents and short-term investments of $22.5 million, and our working capital was approximately $28.5 million. As of June 30, 2015, we had cash and cash equivalents and short-term investments of $25.5 million and our working capital was approximately $30.2 million. Cash and cash equivalents and short-term investments decreased by approximately $2.9 million as of September 30, 2015, as compared to June 30, 2015, due to normal operating activity.

Operating Activities

Net cash used in operating activities from continuing operations increased to $4.3 million for the three months ended September 30, 2015, compared to $1.7 million for the three months ended September 30, 2014, which was primarily the result of increased losses from operations of $2.2 million and increase in income tax payable of $1.2 million, partially offset by $0.6 million change in accounts payable and $0.2 million change in accounts receivable.

Investing Activities

Cash provided by investing activities from continuing operations increased $3.5 million for the three months ended September 30, 2015, compared to the three months ended September 30, 2014. Cash from the sale and maturity of investments has been used to fund continuing operations.

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Financing Activities

Cash used in financing activities from continuing operations decreased $2.2 million for the three months ended September 30, 2015, compared to the three months ended September 30, 2014. The decrease was due to the payoff of equity funding from the State of Texas Emerging Technology Fund for $2.3 million during the three months ended September 30, 2014. This was partially offset by the $0.1 million used for shares that the Company repurchased during the three months ended September 30, 2015.

Discontinued Operations

There was no cash provided by or used in operating activities from discontinued operations during the three months ended September 30, 2015, compared to net cash used in operating activities from discontinued operations of $1.4 million for the three months ended September 30, 2014. The change was related to the sale of our former ASO business unit during the prior fiscal year.

There was no cash provided by or used in investing activities from discontinued operations during the three months ended September 30, 2015, compared to net cash used in investing activities from discontinued operations of $52.6 million for the three months ended September 30, 2014, which was due to the sale of our former ASO business.

There was no cash provided by or used in financing activities from discontinued operations during the three months ended September 30, 2015, compared to net cash used in financing activities from discontinued operations of $5.7 million for the three months ended September 30, 2014. This decrease was related to the payoff of our term loan that was secured by the assets of our former ASO business unit, following the sale of the ASO business.

Liquidity

As of September 30, 2015, we had cash and cash equivalents and short-term investments of $22.5 million and our working capital was approximately $28.5 million, which includes an indemnity cash holdback receivable of $6.1 million being held in escrow as part of the sale of our ASO business. The indemnity cash holdback, or portion thereof, may be received in February 2016 subject to certain conditions in the asset purchase agreement entered into in connection with the sale of the ASO business.

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 capabilities, costs associated with strategic acquisitions including integration costs and assumed liabilities, and the status of competitive products and potential cost associated with both protecting and defending our intellectual property. In addition, actions taken as a result of the ongoing internal evaluation of our business could result in expenditures not currently contemplated in our estimates for 2016. 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 believe we have sufficient liquidity to continue to fund our operating expenses, capital requirements, and other expected liquidity requirements over the next fiscal year.

Income Taxes

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 September 30, 2015, the Company has established a full valuation allowance against all of its net deferred tax assets.

To the extent that a loss from continuing operations can be utilized to offset the income otherwise resulting from discontinued operations, it has been recognized as a tax benefit from continuing operations. To the extent that a loss or credit carryover can be utilized to offset the income from discontinued operations, it has been recognized as a tax benefit from discontinued operations.

For the three months ended September 30, 2015 and 2014, the Company incurred pre-tax losses from continuing operations in the amount of $3.5 million and $2.6 million, respectively. The total effective tax rate for continuing operations was approximately 0% and 51% for the three months ended September 30, 2015 and 2014, respectively.

For the three months ended September 30, 2015 and 2014, the Company’s effective tax rate differed from the federal statutory rate of 35%, primarily due to recording changes to the valuation allowance placed against its net deferred tax assets. 

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FASB ASC 740, Income Taxes (“FASB ASC 740”) 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 has an unrecognized tax benefit of $0.1 million for the three months ended September 30, 2015 and 2014.

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 through present for federal purposes and fiscal years ended 2006 through present for state purposes.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2015.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

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 Securities and Exchange Commission’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.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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. As of September 30, 2015, 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.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchase of Equity Securities by the Issuer and Affiliated Purchasers (amounts in thousands of dollars, except share data and per share amounts).

On December 16, 2014, we announced a share repurchase program pursuant to which our Board of Directors authorized the repurchase of up to $5 million of our outstanding common stock shares. As of September 30, 2015, we had repurchased approximately $0.5 million worth of Astrotech Corporation common stock as part of the current share buyback program. To date, we have approximately $2.8 million worth of Astrotech stock in treasury stock.

The following table identifies all repurchases during the three months ended September 30, 2015.

Fiscal Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2015 through September 30, 2015	43,300	$	2.69	43,300	$	4,508,325
Total	43,300	$	2.69	43,300

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable.

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ITEM 6.  EXHIBITS

The following exhibits are filed herewith:

Exhibit No.	Description	Incorporation by Reference
3.1	Amended and Restated Bylaws of Astrotech Corporation	Filed herewith.
4.1	Astrotech Corporation amended and restated 2008 Stock Incentive Plan	Incorporated by reference from the Company’s Form 8-K filed on August 11, 2015.
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 and Exchange Act of 1934.	Filed herewith.
101	The following financial information from the Company’s Quarterly Report on Form 10-Q, for the period ended September 30, 2015, 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.(1)	Filed herewith.

(1) Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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.

	Astrotech Corporation
Date: November 10, 2015	/s/ Eric Stober
	Eric Stober
	Chief Financial Officer

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EX-3.1

Exhibit 3.1

______________________________________________________________________________

ASTROTECH CORPORATION

Incorporated under the laws
of the State of Washington

_______________________________________

AMENDED AND RESTATED BY-LAWS

_______________________________________

Last Amended August 18, 2015

______________________________________________________________________________

Table of Contents
			Page
ARTICLE 1 Offices			1
	SECTION 1.1	Office	1
	SECTION 1.2	Other Offices	1
ARTICLE 2 Meetings of Shareholders			1
	SECTION 2.1	Annual Meetings	1
	SECTION 2.2	Special Meetings	1
	SECTION 2.3	Notice of Meetings	1
	SECTION 2.4	Quorum	2
	SECTION 2.5	Organization	2
	SECTION 2.6	Order of Business	3
	SECTION 2.7	Voting	3
	SECTION 2.8	Informal Action by Shareholders	3
	SECTION 2.9	Voting Procedures and Inspection of Elections	3
	SECTION 2.10	Advance Notification of Proposals at Shareholders’ Meetings	3
	SECTION 2.11	Advisory Shareholder Votes	4
	SECTION 2.12	List of Shareholders	4
ARTICLE 3 Board of Directors			4
	SECTION 3.1	General Powers	4
	SECTION 3.2	Number and Term of Office	5
	SECTION 3.3	Election of Directors	5
	SECTION 3.4	Resignation and Vacancies	5
	SECTION 3.5	Meetings	5
	SECTION 3.6	Directors’ Consent in Lieu of Meeting	6
	SECTION 3.7	Action by Means of Conference Telephone or Similar Communications Equipment	6
	SECTION 3.8	Committees	6
	SECTION 3.9	Compensation	7
	SECTION 3.10	Preferred Stock Directors	7
ARTICLE 4 Officers			7

i

	SECTION 4.1	Executive Officers	7
	SECTION 4.2	Authority and Duties	7
	SECTION 4.3	Other Officers	7
	SECTION 4.4	Term of Office, Resignation and Removal	7
	SECTION 4.5	Vacancies	8
	SECTION 4.6	The Chairman	8
	SECTION 4.7	The President	8
	SECTION 4.8	Senior Vice President or Vice President	8
	SECTION 4.9	The Secretary	8
	SECTION 4.10	The Treasurer	9
ARTICLE 5 Contracts, Checks, Drafts, Bank Accounts, Etc.			9
	SECTION 5.1	Execution of Documents	9
	SECTION 5.2	Deposits	9
	SECTION 5.3	Proxies in Respect of Stock or Other Securities of Other Corporations	9
ARTICLE 6 Shares and Their Transfer; Fixing Record Date			9
	SECTION 6.1	Certificates for Shares	9
	SECTION 6.2	Shares without Certificates	10
	SECTION 6.3	Transfer of Stock	10
	SECTION 6.4	Addresses of Shareholders	10
	SECTION 6.5	Replacement	10
	SECTION 6.6	Regulations	10
	SECTION 6.7	Fixing Date for Determination of Shareholders of Record	10
ARTICLE 7 Seal			11
ARTICLE 8 Fiscal Year			11
ARTICLE 9 Indemnification and Insurance			11
	SECTION 9.1	Right to Indemnification	11
	SECTION 9.2	Restrictions on Indemnification	11
	SECTION 9.3	Advancement of Expenses	12
	SECTION 9.4	Right of Indemnitee to Bring Suit	12
	SECTION 9.5	Procedures	12
	SECTION 9.6	Nonexclusivity of Rights	12
	SECTION 9.7	Insurance, Contracts and Funding	12

ii

	SECTION 9.8	Indemnification of Employees and Agents of the Corporation	12
	SECTION 9.9	Persons Serving Other Entities	13
	SECTION 9.10	Effect of Amendment or Repeal; Survival.	13
ARTICLE 10 Amendment			13

iii

BY-LAWS

of

ASTROTECH CORPORATION

PREAMBLE

These By-laws are subject to, and governed by, the Washington Business Corporation Act (the “WBCA”) of the State of Washington and the Amended and Restated Articles of Incorporation of Astrotech Corporation, a Washington corporation (the “Corporation”) then in effect (the “Articles”). In the event of a direct conflict between the provisions of these By-laws and (i) the mandatory provisions of the WBCA or the provisions of the Articles, such provisions of the WBCA or the Articles, as the case may be, will be controlling.

ARTICLE 1

Offices

SECTION 1.1Office

The registered office of the Corporation in the State of Washington shall be at the location determined from time-to-time by Corporation’s Board of Directors (the “Board”), and the registered agent in charge thereof shall be as determined by the Board.

SECTION 1.2Other Offices

The Corporation may also have an office or offices at any other place or places within or outside the State of Washington.

ARTICLE 2Meetings of Shareholders

SECTION 2.1Annual Meetings

The annual meeting of the shareholders for the election of directors, and for the transaction of such other business as may properly come before the meeting, shall be held at such place, date and hour as shall be fixed by the Board, within or without the State of Washington, and designated in the notice or waiver of notice thereof.

SECTION 2.2Special Meetings

Except as otherwise required by law, special meetings of the shareholders may be called only in accordance with the provisions of the Articles.

SECTION 2.3Notice of Meetings

Except as otherwise required by law or by the Articles or these By-laws, notice of each annual or special meeting of the shareholders shall be given to each shareholder of record entitled to vote at such meeting and, if and to the extent required by law, to each shareholder of the corporation, not less than ten (10) nor more than sixty (60) days before the day on which the meeting is to be held, except that notice of a meeting to act on an amendment to the Articles of Incorporation, a plan of merger or share exchange, a proposed sale, lease, exchange or other disposition of all or substantially all of the assets of the Corporation other than in the usual or regular course of business, or the dissolution of the Corporation shall be given no fewer than twenty (20) days nor more than sixty (60) days before the meeting date. Written notice may be transmitted by mail (postage prepaid), private carrier, or personal delivery; telegraph or teletype; cable or other telephonic transmission to the shareholder at his address as it appears in the records of the Corporation. If these forms of written notice are impracticable in the view of the Board, the Chairman of the Board, the President or the Secretary, written notice may be transmitted by an advertisement in a newspaper of general circulation in the

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area where published. If mailed, such notice shall be deemed effective when deposited in the United States mail, first class postage prepaid, properly addressed to the shareholder at his address as it appears in the Corporation’s records. Notice dispatched by telegraph, teletype, or facsimile equipment shall be deemed effective when dispatched to the shareholder’s address, telephone number or other number appearing on the records of the corporation. Any notice given by publication as herein provided shall be deemed effective five (5) days after first publication. Every such notice shall state the place, the date and hour of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise required by law, notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend such meeting in person or by proxy, or who shall, in person or by attorney thereunto authorized, waive such notice in writing to be delivered to the Corporation (for inclusion in the minutes or the corporate records), either before or after such meeting. Except as otherwise provided in these By-laws, neither the business to be transacted at, nor the purpose of, any meeting of the shareholders need be specified in any such notice or waiver of notice. Notice of any adjourned meeting of shareholders shall not be required to be given, except when expressly required by law.

SECTION 2.4Quorum

At each meeting of the shareholders, except where otherwise provided by the Articles or these By-laws, the holders of at least one-third of the issued and outstanding shares of stock of the Corporation entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business, except as otherwise required by law, these By-laws or the Articles. In the absence of a quorum a majority in interest of the shareholders present in person or represented by proxy and entitled to vote, or, in the absence of all the shareholders entitled to vote, any officer entitled to preside at, or act as secretary of, such meeting, shall have the power to adjourn the meeting to another time and/or place, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than one hundred and twenty (120) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Once a share is represented for any purpose at a meeting other than solely to object to holding the meeting or transacting business thereat, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof (unless a new record date is or must be set for the adjourned meeting) notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

SECTION 2.5Organization

At each meeting of the shareholders, one of the following shall act as chairman of the meeting and preside thereat, in the following order of precedence:

(a)the Chairman;

(b)the President;

(c)any Vice-President;

(d)any officer of the Corporation designated by the Board to act as chairman of such meeting and to preside thereat; or

(e)a shareholder of record who shall be chosen chairman of such meeting by a majority in voting interest of the shareholders present in person or by proxy and entitled to vote thereat.

The Secretary or, if he shall be presiding over such meeting in accordance with the provisions of this Section 5 or if he shall be absent from such meeting, the person (who shall be an Assistant Secretary, if an Assistant Secretary has been appointed and is present) whom the chairman of such meeting shall appoint, shall act as secretary of such meeting and keep the minutes thereof.

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SECTION 2.6Order of Business

The order of business at each meeting of the shareholders shall be determined by the chairman of such meeting, but such order of business may be changed by a majority in voting interest of those present in person or by proxy at such meeting and entitled to vote thereat.

SECTION 2.7Voting

Except as may otherwise be required by law or these By-laws, shareholders shall have the voting rights specified in the Articles.

SECTION 2.8Informal Action by Shareholders

Any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of such shareholders and may not be effected by a consent in writing by any such shareholders.

SECTION 2.9Voting Procedures and Inspection of Elections

(a)The Corporation shall, in advance of any meeting of shareholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of shareholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability.

(b)The inspectors shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at a meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.

(c)The date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless a state court in Washington, upon application by a shareholder, shall determine otherwise.

(d)In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the shareholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted in this Section 9, the inspectors at the time they make their certification pursuant to subsection (b)(v) of this Section 9 shall specify the precise information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

SECTION 2.10Advance Notification of Proposals at Shareholders’ Meetings

If a shareholder desires to submit a proposal for consideration at an annual or special shareholders' meeting, or to nominate persons for election as directors at any shareholders' meeting duly called for the election of directors, written notice of such shareholders' intent to make such a proposal or nomination must be given and received by the Secretary of the Corporation at the principal executive offices of the Corporation either by personal delivery or by

3

United States mail (i) with respect to an annual meeting of shareholders, no earlier than 120 days and no later than 90 days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to a special meeting of shareholders, the close of business on the tenth day following the date on which notice of such meeting is first sent or given to shareholders; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date (or in the event that no annual meeting was held in the previous year), then to be timely such notice must be delivered to and received by the Secretary no earlier than 90 days prior to the date of the meeting and no later than the later of (x) 60 days prior to the date of the meeting or (y) 10 days following the day on which the Corporation first publicly announces the date of such meeting in a press release disseminated by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. Each notice shall describe the proposal or nomination in sufficient detail for the proposal or nomination to be summarized on the agenda for the meeting and shall set forth: (i) the name and address, as it appears on the books of the Corporation, of the shareholder who intends to make the proposal or nomination; (ii) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present such proposal or nomination; and (iii) the class and number of shares of the Corporation which are beneficially owned by the shareholder. In addition, in the case of a shareholder proposal, the notice shall set forth the reasons for conducting such proposed business at the meeting and any material interest of the shareholder in such business. In the case of a nomination of any person for election as a director, the notice shall set forth: (i) the name and address of any person to be nominated; (ii) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (iii) such other information regarding such nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and (iv) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer of the annual or special meeting shall, if the facts warrant, refuse to acknowledge a proposal or nomination not made in compliance with the foregoing procedure, and any such proposal or nomination not properly brought before the meeting shall not be considered.

SECTION 2.11Advisory Shareholder Votes

In order for the shareholders to adopt or approve any precatory proposal submitted to them for the purpose of requesting the Board to take certain actions, a majority of the outstanding stock of the Corporation entitled to vote thereon must be voted in favor of the proposal in accordance with Section 7 of this Article II.

SECTION 2.12List of Shareholders

It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of its stock ledger to prepare and make, at least 10 days before every meeting of the shareholders, a complete list of the shareholders entitled to vote thereat, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, shareholder’s agent, or shareholder’s attorney, for any purpose germane to any such meeting, during ordinary business hours, for a period of at least 10 days prior to such meeting, either at the Corporation’s principal office, at a place within the city where such meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. Such list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder, shareholder’s agent or shareholder’s attorney during the meeting or adjournment.

ARTICLE 3

Board of Directors

SECTION 3.1General Powers

The business, property and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles directed or required to be exercised or done by the shareholders.

4

SECTION 3.2Number and Term of Office

The number of directors shall be fixed in accordance with the Articles. Directors need not be shareholders. Each director shall hold office until his successor is elected and qualified, or until his earlier death, resignation, retirement, disqualification or removal in the manner hereinafter provided. No decrease in the number of directors shall have the effect of shortening the term of any incumbent director.

SECTION 3.3Election of Directors

At each meeting of the shareholders for the election of directors at which a quorum is present, the persons receiving the greatest number of votes, up to the number of directors to be elected, of the shareholders present in person or by proxy and entitled to vote thereon, shall be the directors; provided that for purposes of such vote no shareholder shall be allowed to cumulate his votes.

SECTION 3.4Resignation and Vacancies

Any director may resign at any time by giving written notice to the Board, the Chairman, the President or the Secretary. Such resignation shall take effect at the time specified therein (which may be upon the happening of an event or events specified therein) or, if the time be not specified, upon delivery thereof; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Except as otherwise required by law, vacancies on the Board and newly created directorships will be filled in accordance with the Articles.

SECTION 3.5Meetings

(a)Regular Meetings. As soon as practicable after each annual election of directors, the Board shall meet for the purpose of organization and the transaction of other business, unless it shall have transacted all such business by written consent pursuant to Section 6 of this Article III.

(b)Special Meetings. Other meetings of the Board shall be held at such times and places as the Board, the Chairman, the President or any two directors shall from time to time determine.

(c)Notice of Meetings. Notice shall be given to each director for each regular and special meeting, including the time, place and purpose of such meeting. Notice of each such meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least two days before the date on which such meeting is to be held, or shall be sent to him at such place by telegraph, cable, wireless or other form of recorded communication, or be delivered personally or by telephone not later than the day before the day on which such meeting is to be held, but notice need not be given to any director who shall attend such meeting. A written waiver of notice, signed by the person entitled thereto and delivered to the Corporation, whether before or after the time of the meeting stated therein, shall be deemed equivalent to notice.

(d)Place of Meetings. The Board may hold its meetings at such place or places within or outside the State of Washington as the Board may from time to time determine, or as shall be designated in the respective notices or waivers of notice thereof.

(e)Quorum and Manner of Acting. A majority of the total number of directors then in office shall be present in person at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and the vote of a majority of those directors present at any such meeting at which a quorum is present shall be necessary for the passage of any resolution or act of the Board, except as otherwise expressly required by law, the Articles or these By-laws. In the absence of a quorum for any such meeting, a majority of the directors present thereat may adjourn such meeting from time to time until a quorum shall be present and no further notice thereof need be given. A director who is in attendance at a meeting of the Board but who abstains from the vote on any matter by announcing his abstention to the person acting as secretary of the meeting for inclusion in the minutes and not voting

5

on such matter shall not be deemed present at such meeting for purposes of the preceding sentence with respect to such vote, but shall be deemed present at such meeting for all other purposes.

(f)Organization. At each meeting of the Board, one of the following shall act as chairman of the meeting and preside thereat, in the following order of precedence:

(1)the Chairman;

(2)the President (if a director); or

(3)a person designated by the Board.

The Secretary or, in the case of his absence, any person (who shall be an Assistant Secretary, if an Assistant Secretary has been appointed and is present) whom the chairman of the meeting shall appoint shall act as secretary of such meeting and keep the minutes thereof.

SECTION 3.6Directors’ Consent in Lieu of Meeting

Unless otherwise restricted by the Articles or these By-laws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, without prior notice and without a vote, if one or more written consents, setting forth the action so taken, are given by all the members of the Board or committee, either before or after the action taken, and such consent is filed with the minutes of proceedings of the Board or committee. Action taken by written consent of Directors without a meeting is effective when the last Director gives the consent, unless the consent specifies a later effective date.

SECTION 3.7Action by Means of Conference Telephone or Similar Communications Equipment

Any one or more members of the Board or any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.

SECTION 3.8Committees

The Board, by resolution adopted by the greater of a majority of the Directors then in office when the action is taken or the number of directors required to take action in accordance with WBCA and these By-laws, may designate one or more committees, each such committee to consist of two or more directors. The Board, by resolution adopted by the same vote required herein, at any time may change the membership of any committee or amend or rescind the resolution designating the committee. Each committee shall keep a record of proceedings and report the same to the Board to such extent and in such form as the Board may require. Unless otherwise provided in the resolution designating a committee, a majority of all of the members of any such committee may select its Chairman, fix its rules or procedure, fix the time and place of its meetings and specify what notice of meetings, if any, shall be given. Each committee shall have and may exercise all of the authority of the Board to the extent provided in the resolution of the Board creating the committee and any subsequent resolutions pertaining thereto and adopted in like manner, except that no such committee shall have the authority to: (1) authorize or approve a distribution except according to a general formula or method prescribed by the Board, (2) approve or propose to shareholders actions or proposals required by the WBCA to be approved by shareholders, (3) fill vacancies on the Board or any committee thereof, (4) adopt, amend or repeal By-laws, (5) amend the Articles of Incorporation pursuant to RCW 23B.l0.020, (6) approve a plan of merger, (7) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board may authorize a committee or a senior executive officer of the Corporation to do so within limits specifically prescribed by the Board, or (8) engage in any act or activity otherwise prohibited by Section 23B.08.250 of the WBCA.

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SECTION 3.9Compensation

The Board of Directors shall have the authority to fix the compensation of directors, which may include their expenses, if any, of attendance at each meeting of the Board of Directors or of a committee.

SECTION 3.10Preferred Stock Directors

Notwithstanding the foregoing, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series; to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH of the Articles applicable thereto, and each director so elected shall not be subject to the provisions of this ARTICLE III unless otherwise provided therein.

ARTICLE 4

Officers

SECTION 4.1Executive Officers

The executive officers of the Corporation shall be determined by the Board and may include a Chairman, a Chief Executive Officer, a President, Senior Vice-Presidents, Vice-Presidents, a Secretary and a Treasurer, and also may include such other officers as the Board may appoint pursuant to Section 3 of this Article IV. Any two or more offices may be held by the same person.

SECTION 4.2Authority and Duties

All officers, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-laws or, to the extent so provided, by the Board.

SECTION 4.3Other Officers

The Corporation may have such other officers, agents and employees as the Board may deem necessary, including one or more Assistant Secretaries, one or more Assistant Treasurers and one or more Vice-presidents, each of whom shall hold office for such period, have such authority, and perform such duties as the Board, the Chairman, or the President may from time to time determine. The Board may delegate to any principal officer the power to appoint and define the authority and duties of, or remove, any such officers, agents or employees.

SECTION 4.4Term of Office, Resignation and Removal

All executive officers shall be elected or appointed by the Board and shall hold office for such term as may be prescribed by the Board. Each executive officer shall hold office until his successor has been elected or appointed and qualified or until his earlier death or resignation or removal in the manner hereinafter provided. The Board may require any executive officer to give security for the faithful performance of his duties.

Any officer may resign at any time by delivering written notice to the Board, the Chairman, the President or the Secretary. Such resignation shall take effect at the time specified therein or, if the time be not specified, at the time notice is given. Except as aforesaid, the acceptance of such resignation shall not be necessary to make it effective.

All officers and agents elected or appointed by the Board shall be subject to removal at any time by the Board with or without cause, subject to any agreements to the contrary.

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SECTION 4.5Vacancies

If the office of Chairman, President, Secretary or Treasurer becomes vacant for any reason, the Board shall fill such vacancy, and if any other office becomes vacant, the Board may fill such vacancy. Except as otherwise provided in these By-laws, any officer so appointed or elected by the Board shall serve only until such time as the unexpired term of his predecessor shall have expired and until his successor shall have been duly elected and qualified, unless reelected or reappointed by the Board.

SECTION 4.6The Chairman

The Chairman of the Board shall perform such duties as shall be assigned to him by the Board from time to time and shall preside over meetings of the Board and shareholders unless another officer is appointed or designated by the Board as Chairman of such meeting.

SECTION 4.7The President

The President, if any, shall be the chief executive officer and, in the event that the office of Chairman is or becomes vacant, the chief executive officer of the Corporation shall act as Chairman. The President shall have general charge and supervision of the operation of the business and affairs of the Corporation. The President may sign certificates for shares of the corporation, deeds, mortgages, bonds, contracts, or other instruments, except when the signing and execution thereof have been expressly delegated by the Board or by these By-laws to some other officer or agent of the corporation or are required by law to be otherwise signed or executed by some other officer or in some other manner. He shall from time to time make such reports of the affairs of the Corporation as the Board may require and shall perform such other duties as may from time to time be assigned to him by the Board or the Chairman. In the absence of a President, the Chief Executive Officer will have the responsibilities of the President.

SECTION 4.8Senior Vice President or Vice President

In the event of the death of the President or his or her inability to act, the Senior Vice President or Vice President, if any (or if there is more than one Senior Vice President or Vice President, the Senior Vice President or Vice President who was designated by the Board as the successor to the President, or if no Senior Vice President or Vice President is so designated, the Senior Vice President first elected to such office or if there is no Senior Vice President, the Vice President first elected to such office) shall perform the duties of the President, except as may be limited by resolution of the Board, with all the powers of and subject to all the restrictions upon the President. Any Senior Vice President or Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation. Senior Vice President or Vice Presidents shall have, to the extent authorized by the President or the Board, the same powers as the President to sign deeds, mortgages, bonds, contracts, or other instruments. Senior Vice President or Vice Presidents shall perform such other duties as from time to time may be assigned to them by the President or by the Board. The Board may name any Senior Vice President or Vice President as the Chief Operating Officer, Chief Financial Officer or similar title.

SECTION 4.9The Secretary

The Secretary shall, to the extent practicable, attend all meetings of the Board and all meetings of the shareholders and shall record the minutes of all proceedings in a book to be kept for that purpose. He may give, or cause to be given, notice of all meetings of the shareholders and of the Board, and shall perform such other duties as may be prescribed by the Board, the Chairman or the President, under whose supervision he shall act. He shall keep in safe custody the seal of the Corporation and affix the same to any duly authorized instrument requiring it and, when so affixed, it may be attested by his signature or by the signature of the Treasurer or, if appointed, an Assistant Secretary or an Assistant Treasurer. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest such affixing of the seal. He shall keep in safe custody the certificate books and shareholder records, including registers of the post office address of each shareholder and director, and such other books and records as the

8

Board may direct, and shall perform all other duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman or the President.

SECTION 4.10The Treasurer

The Treasurer shall have the care and custody of the corporate funds and other valuable effects, including securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Chairman, President and directors, at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation, and shall perform all other duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board, the Chairman or the President.

ARTICLE 5

Contracts, Checks, Drafts, Bank Accounts, Etc.

SECTION 5.1Execution of Documents

The Board shall designate, by either specific or general resolution, the officers, employees and agents of the Corporation who shall have the power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation, and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the Corporation; and, unless so designated or expressly authorized by these By-laws, no officer, employee or agent shall have any power or authority to bind the Corporation by any contract or engagement, to pledge its credit or to render it liable pecuniarily for any purpose or to any amount.

SECTION 5.2Deposits

All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation or otherwise as the Board or Treasurer, or any other officer of the Corporation to whom power in this respect shall have been given by the Board, shall select.

SECTION 5.3Proxies in Respect of Stock or Other Securities of Other Corporations

The Board shall designate the officers of the Corporation who shall have authority from time to time to appoint an agent or agents of the Corporation to exercise in the name and on behalf of the Corporation the powers and rights which the Corporation may have as the holder of stock or other securities in any other corporation, and to vote or consent in respect of such stock or securities. Such designated officers may instruct the person or persons so appointed as to the manner of exercising such powers and rights, and such designated officers may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, such written proxies, powers of attorney or other instruments as they may deem necessary or proper in order that the Corporation may exercise its said powers and rights.

ARTICLE 6

Shares and Their Transfer; Fixing Record Date

SECTION 6.1Certificates for Shares

Every owner of stock of the Corporation shall be entitled to have a certificate certifying the number and class of shares owned by him in the Corporation, which shall be in such form as shall be prescribed by the Board. The Board may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Each certificate for shares shall be numbered and issued in consecutive order. Certificates of stock in the Corporation, if any, shall be signed, either manually or in facsimile by two of the following officers in

9

the name of the Corporation: the Chairman, or the President, or any Vice President and by the Treasurer (or an Assistant Treasurer, if appointed) or the Secretary (or an Assistant Secretary, if appointed). Where a certificate is countersigned by a transfer agent, other than the Corporation or an employee of the Corporation, or by a registrar, the signatures of the Chairman or the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were such officer, transfer agent or registrar at the date of its issue. All certificates shall include written notice of any restrictions which may be imposed on the transferability of shares.

SECTION 6.2Shares without Certificates

The Board may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. Within a reasonable time after the issue or transfer of shares without certificates, the Corporation shall send the shareholder a written statement of the information required by law on the certificates. The written statement shall include written notice of any restrictions which may be imposed on the transferability of such shares.

SECTION 6.3Transfer of Stock

Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate of stock or uncertificated shares in place of any certificate therefor issued by the Corporation to the person entitled thereto, cancel the old certificate and record the transaction in its stock transfer books.

SECTION 6.4Addresses of Shareholders

Each shareholder shall designate to the Secretary an address at which notices of meetings and all other corporate notices may be served or mailed to him, and, if any shareholder shall fail to designate such address, corporate notices may be served upon him by mail directed to him at his post office address, if any, as the same appears on the share record books of the Corporation or at his last known post office address.

SECTION 6.5Replacement

In case of the loss, destruction, mutilation or theft of a certificate for any stock of the Corporation, a new certificate of stock or uncertificated shares in place of any certificate therefor issued by the Corporation may be issued upon satisfactory proof of such loss, destruction, mutilation or theft and upon such terms as the Corporation may prescribe. The Corporation may in its discretion require the owner of the lost, destroyed, mutilated or stolen certificate, or his legal representative, to give the Corporation a bond, in such sum and in such form and with such surety or sureties as it may direct, to indemnify the Corporation against any claim that may be made against it with respect to the certificate alleged to have been lost, destroyed, mutilated or stolen.

SECTION 6.6Regulations

The Board may make such rules and regulations as it may deem expedient, not inconsistent with these By-laws, concerning the issue, transfer and registration of certificates for stock of the Corporation.

SECTION 6.7Fixing Date for Determination of Shareholders of Record

The Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, in order that the Corporation may determine which shareholders are entitled to (i) notice of or to vote at any meeting of shareholders or any adjournment thereof, (ii) receive payment of any dividend, or (iii) notice for any other purpose. Such record dare shall be not more than seventy (70) days, and in the case of a meeting of shareholders not less than ten (10) days prior to the date on which the particular action requiring such

10

determination is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting, the record date shall be the day immediately preceding the date on which notice of the meeting is first given to shareholders. Such a determination shall apply to any adjournment of the meeting unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is set for the determination of shareholders entitled to receive payment of any stock dividend or distribution (other than one involving a purchase, redemption, or other acquisition of the corporation’s shares) the record date shall be the date the Board authorizes the stock dividend or distribution.

ARTICLE 7

Seal

The corporate seal shall be in such form as may be approved from time to time by the Board. The seal may be used by causing it or a facsimile thereof, to be impressed or affixed or in any other manner reproduced.

ARTICLE 8

Fiscal Year

The fiscal year of the Corporation shall be fixed by resolution of the Board.

ARTICLE 9

Indemnification and Insurance

SECTION 9.1Right to Indemnification

Each person who was, is or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any threatened, pending or completed action, suit, claim or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal (a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, that being or having been a director or officer of the Corporation, he or she is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an “indemnitee”), whether the basis of a proceeding is alleged action in an official capacity or in any other capacity while serving as a director, officer, partner, trustee, employee or agent, shall be indemnified and held harmless by the Corporation against all losses, claims, damages (compensatory, exemplary, punitive or otherwise), liabilities and expenses (including attorneys’ fees, costs, judgments, fines, ERISA excise taxes or penalties, amounts to be paid in settlement and any other expenses) actually and reasonably incurred or suffered by the indemnitee in connection with the proceeding, and the indemnification shall continue as to an indemnitee who has ceased to be a director or officer of the Corporation or a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Except as provided in Section 4 of this Article IX with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify the indemnitee in connection with a proceeding (or part of a proceeding) initiated by the indemnitee only if a proceeding (or part of a proceeding) was authorized or ratified by the Board. The right to indemnification conferred in this Article IX shall be a contract right. The intent of this Article IX is to grant each indemnitee the maximum indemnification and advancement of expenses as allowed by law.

SECTION 9.2Restrictions on Indemnification

No indemnification shall be provided to any indemnitee for acts or omissions of the indemnitee finally adjudged to be intentional misconduct or a knowing violation of law, for conduct of the indemnitee finally adjudged to be in violation of RCW 23B.08.310, for any transaction with respect to which it was finally adjudged that the indemnitee personally received a benefit in money, property or services to which the indemnitee was not legally entitled or if the Corporation is otherwise prohibited by applicable law from paying indemnification. Notwithstanding the foregoing, if RCW 23B.08.560 is amended, the restrictions on indemnification set forth in this Section 2 of this Article IX shall be as set forth in the amended statutory provision.

11

SECTION 9.3Advancement of Expenses

The right to indemnification conferred in this Article IX shall include the right to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition (an “advancement of expenses”). An advancement of expenses shall be made upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that the indemnitee is not entitled to be indemnified.

SECTION 9.4Right of Indemnitee to Bring Suit

If a claim under Sections 1 and 3 of this Article IX is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part, in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of litigating the suit. The indemnitee shall be presumed to be entitled to indemnification under this Section 4 of this Article IX upon submission of a written claim (and, in an action brought to enforce a claim for an advancement of expenses, when the required undertaking has been tendered to the Corporation), and thereafter the Corporation shall have the burden of proof to overcome the presumption that the indemnitee is so entitled.

SECTION 9.5Procedures

The procedures for indemnification and the advancement of expenses required by RCW 23B.08.510 to RCW 23B.08.550 or any successor provision will apply to indemnification and advancement of expenses under this Article IX, unless these Bylaws are approved by the shareholders of the Corporation, in which case the procedures set forth in this Article IX will be the exclusive procedures for indemnification and the advancement of expenses.

SECTION 9.6Nonexclusivity of Rights

Except as set forth in Section 5 of this Article IX, the right to indemnification and the advancement of expenses conferred in this Article IX shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, provision of, the Articles of Incorporation or Bylaws of the Corporation, general or specific action of the Board or shareholders, contract or otherwise. Notwithstanding any amendment or repeal of this Article IX, or of any amendment or repeal of any of the procedures that may be established by the Board pursuant to this Article IX, any indemnitee shall be entitled to indemnification in accordance with the provisions of these Bylaws and those procedures with respect to any acts or omissions of the indemnitee occurring prior to the amendment or repeal.

SECTION 9.7Insurance, Contracts and Funding

The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, partner, trustee, employee or agent of the Corporation or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Corporation would have the authority or right to indemnify the person against the expense, liability or loss under the Washington Business Corporation Act or other law. The Corporation may enter into contracts with any director, officer, partner, trustee, employee or agent of the Corporation in furtherance of the provisions of this Article IX and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of the amounts as may be necessary to effect indemnification as provided in this Article IX.

SECTION 9.8Indemnification of Employees and Agents of the Corporation

In addition to the rights of indemnification set forth in Section 1 of this Article IX, the Corporation may, by action of the Board, grant rights to indemnification and advancement of expenses to employees and agents or any class or group of employees and agents of the Corporation (a) with the same scope and effect as the provisions of this Article

12

IX with respect to indemnification and the advancement of expenses of directors and officers of the Corporation, (b) pursuant to rights granted or provided by the Washington Business Corporation Act, or (c) as are otherwise consistent with law.

SECTION 9.9Persons Serving Other Entities

Any person who, while a director or officer of the Corporation, is or was serving (a) as a director, officer, employee or agent of another corporation of which a majority of the shares entitled to vote in the election of its directors is held by the Corporation or (b) as a partner, trustee or otherwise in an executive or management capacity in a partnership, joint venture, trust, employee benefit plan or other enterprise of which the Corporation or a majority owned subsidiary of the Corporation is a general partner or has a majority ownership, shall conclusively be deemed to be so serving at the request of the Corporation and entitled to indemnification and the advancement of expenses under Section 1 or 3 of this Article IX, respectively.

SECTION 9.10Effect of Amendment or Repeal; Survival.

No repeal or modification of this Article IX shall adversely affect any right or protection afforded hereunder to any person in respect of an act or omission occurring prior to the time of such repeal or modification. The right to indemnification and advancement of expenses under this Article IX shall be construed as a contractual right of the indemnitees, shall continue as a vested contractual right, even if a person ceases to be a director or officer of the corporation, and shall inure to the benefit of an indemnitee’s heirs, executors and administrators.

ARTICLE 10

Amendment

These By-laws may be altered, amended or repealed or new By-laws may be adopted by the Board, subject to the provisions of these By-laws and the Articles. The fact that the power to amend, alter, repeal or adopt the By-laws has been conferred upon the Board shall not divest the shareholders of the same powers.

13

EX-31.1

Exhibit 31.1 

Certification of Chief Executive Officer

Section 302 Certification

I, Thomas B. Pickens III, certify that: 

1. I have reviewed this quarterly report on Form 10-Q of Astrotech Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal three months (the registrant’s fourth fiscal three months in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2015	/s/ Thomas B. Pickens III
	Thomas B. Pickens III
	Chief Executive Officer

EX-31.2

Exhibit 31.2 

Certification of Chief Financial Officer

Section 302 Certification

I, Eric Stober, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Astrotech Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal three months (the registrant’s fourth fiscal three months in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2015	/s/ Eric Stober
	Eric Stober
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Thomas B. Pickens III, the Chief Executive Officer, and Eric Stober, the Chief Financial Officer, of Astrotech Corporation (the “Company”), hereby certify, that, to their knowledge:

1. The Quarterly Report on Form 10-Q for the period ended September 30, 2015 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15 (d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

Date: November 10, 2015
	/s/ Thomas B. Pickens III
	Thomas B. Pickens III
	Chief Executive Officer
	/s/ Eric Stober
	Eric Stober
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Astrotech and will be retained by Astrotech and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Net Income (Loss) per Share (Detail Textuals)	3 Months Ended
	Sep. 30, 2015 $ / shares shares
Earnings Per Share [Abstract]
Options to purchase shares (in shares) | shares	1,117,750
Exercise price lower range (in dollars per share)	$ 0.32
Exercise price upper range (in dollars per share)	$ 3.20

XML

Income Taxes (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Net loss from continuing operations	$ (3,453)	$ (1,272)
Loss from continuing operations before income taxes	(3,451)	(2,597)
Net (loss) income attributable to Astrotech Corporation	$ (3,364)	$ 23,283
Effective tax rate for continuing operations	0.00%	51.00%
Federal statutory effective tax rate	35.00%	35.00%
Unrecognized tax benefits	$ 100	$ 100

XML

Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans - Stock Options by Exercise Price (Details)	3 Months Ended
	Sep. 30, 2015 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price lower range (in dollars per share)	$ 0.32
Exercise price upper range (in dollars per share)	3.20
$0.32 - 0.71
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price lower range (in dollars per share)	0.32
Exercise price upper range (in dollars per share)	$ 0.71
Number outstanding (in shares) | shares	438,750
Options Outstanding Weighted- Average Remaining Contractual Life (years)	4 years 10 months 28 days
Weighted average exercise price (in dollars per share)	$ 0.60
Number exercisable (in shares) | shares	438,750
Options exercisable weighted average exercise price (in dollars per share)	$ 0.60
$1.20 - 2.60
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price lower range (in dollars per share)	1.20
Exercise price upper range (in dollars per share)	$ 2.60
Number outstanding (in shares) | shares	570,000
Options Outstanding Weighted- Average Remaining Contractual Life (years)	8 years 1 month 6 days
Weighted average exercise price (in dollars per share)	$ 1.94
Number exercisable (in shares) | shares	282,500
Options exercisable weighted average exercise price (in dollars per share)	$ 1.20
$3.20 - 3.20
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price lower range (in dollars per share)	3.20
Exercise price upper range (in dollars per share)	$ 3.20
Number outstanding (in shares) | shares	109,000
Options Outstanding Weighted- Average Remaining Contractual Life (years)	9 years 6 months 7 days
Weighted average exercise price (in dollars per share)	$ 3.20
Number exercisable (in shares) | shares	0
Options exercisable weighted average exercise price (in dollars per share)	$ 0.00
$0.32 - 3.20
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price lower range (in dollars per share)	0.32
Exercise price upper range (in dollars per share)	$ 3.20
Number outstanding (in shares) | shares	1,117,750
Options Outstanding Weighted- Average Remaining Contractual Life (years)	6 years 6 months 27 days
Weighted average exercise price (in dollars per share)	$ 1.54
Number exercisable (in shares) | shares	721,250
Options exercisable weighted average exercise price (in dollars per share)	$ 0.83

XML

Discontinued Operations & Gain on the Sale of the ASO Business Unit (Details 1) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income tax expense	$ 0		$ (2,378)
Income from discontinued operations, net of tax	0		24,555
Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue	0		2,807
Cost of revenue	0		(1,313)
Selling, general and administrative	0		(128)
Other expense, net	0		(63)
Gain on sale of discontinued operations (1)	0		25,630	$ 25,436
Income tax expense	0		(2,378)
Income from discontinued operations, net of tax	$ 0		$ 24,555
Adjustment | Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax		$ 194

XML

Net Income (Loss) per Share (Tables)

3 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of earnings per share basic and diluted

The following table reconciles the numerators and denominators used in the computations of both basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended   September 30,
	2015			2014
Numerator:
Amounts attributable to Astrotech Corporation, basic and diluted:
Loss from continuing operations before income taxes	$	(3,451	)	$	(2,597	)
Income tax (expense) benefit	(2		)	1,325
Loss from continuing operations, net of tax	(3,453		)	(1,272		)
Less: Net loss attributable to noncontrolling interest	(89		)	—
Income from discontinued operations, net of tax	—			24,555
Net (loss) income attributable to Astrotech Corporation	(3,364		)	23,283
Less: State of Texas deemed dividend (Note 12)	—			531
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(3,364	)	$	22,752
Denominator:
Denominator for basic and diluted net income (loss) per share attributable to Astrotech Corporation — weighted average common stock outstanding	20,705			19,548
Basic and diluted net income (loss) per common share:
Net loss attributable to Astrotech Corporation from continuing operations	$	(0.16	)	$	(0.09	)
Net income from discontinued operations	—			1.25
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(0.16	)	$	1.16

XML

Other Comprehensive Income (Loss) (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2015 USD ($)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at June 30, 2015	$ (23)
Current period change in other comprehensive income (loss) before reclassifications	(94)
Reclassification to net (loss) income for realized losses	6
Balance at September 30, 2015	$ (111)

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Noncontrolling Interest - Changes in Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at June 30, 2015	$ 41,728
Stock based compensation	143
Share repurchases	(117)
Net change in available-for-sale securities	(88)
Net (loss) income attributable to Astrotech Corporation	(3,364)	$ 23,283
Net loss attributable to noncontrolling interest	(89)	$ 0
Balance at September 30, 2015	38,213
Astrotech Corp Stockholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at June 30, 2015	41,429
Stock based compensation	143
Share repurchases	(117)
Net change in available-for-sale securities	(88)
Net (loss) income attributable to Astrotech Corporation	(3,364)
Balance at September 30, 2015	38,003
Noncontrolling Interest in Subsidiary
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at June 30, 2015	299
Net loss attributable to noncontrolling interest	(89)
Balance at September 30, 2015	$ 210

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Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans - Narrative (Details) - USD ($)	3 Months Ended		10 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Dec. 12, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options exercisable	$ 500,000		$ 500,000
Aggregate intrinsic value of options	$ 900,000		$ 900,000
Granted (in shares)	0
Common stock repurchased - value	$ 117,000
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation costs recognized related to stock options	$ 54,000	$ 0
Granted (in shares)	0	0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation costs recognized related to stock options	$ 89,000	$ 1,000
Shares granted (in shares)	0
Shares vested (in shares)	0
Shares canceled or expired	0
Securities Repurchase Program
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock repurchase - authorized amount				$ 5,000,000
Share repurchases (in shares)	43,000	0	1,200,000
Common stock repurchased - value	$ 117,000		$ 2,800,000

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Discontinued Operations & Gain on the Sale of the ASO Business Unit

3 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations & Gain on the Sale of the ASO Business Unit

Discontinued Operations & Gain on the Sale of the ASO Business Unit

In August 2014, the Company completed the previously announced sale of substantially all of its assets used in the Company’s former ASO business unit (the “Asset Sale”) to Lockheed Martin Corporation (“the Buyer”) for an agreed upon sales price of $61.0 million, less a working capital adjustment. The sales price was $59.3 million, which includes a working capital adjustment of $1.7 million. As of September 30, 2015, the Company has received cash of $53.2 million and has recorded a receivable of $6.1 million for the indemnity holdback. The indemnity holdback is being held in escrow under the terms of an escrow agreement until February 2016 (the 18-month anniversary of the consummation of the transaction). The Company believes it will fully realize the indemnity holdback in February 2016. The ASO business consisted of (i) ownership, operation, and maintenance of spacecraft processing facilities in Titusville, Florida and Vandenberg Air Force Base, California (“VAFB”); (ii) supporting government and commercial customers processing complex communication, earth observation, and deep space satellite launches; (iii) designing and building spacecraft processing equipment and facilities; and (iv) providing propellant services including designing, building, and testing propellant service equipment for fueling spacecraft.

Additionally, as part of the Asset Sale, the Company used a portion of the proceeds to pay off the outstanding balance of its term loan of $5.7 million, which was secured by certain assets of the ASO business. As such, 100% of the interest expense on the debt was allocated to discontinued operations in the amount of $0 and $62 thousand for the three months ended September 30, 2015 and 2014, respectively.

The sale of our former ASO business, which was previously reported within our former ASO business unit segment, resulted in a pre-tax gain of $25.4 million ($20.6 million after-tax) for the year ended June 30, 2015. The pre-tax gain on this sale reflects the excess of the sum of the cash proceeds received over the net book value of the net assets of the Company’s former ASO business.

The total pre-tax gain on the sale for the year ended June 30, 2015, includes the following (in thousands):

Cash proceeds from the sale of the ASO business	$	53,189
Receivable for indemnity holdback	6,100
Liabilities assumed by the Buyer	2,478
Net book value of assets sold	(36,175		)
Other	(156		)
Gain on sale of our former ASO business	$	25,436

The Company and the Buyer entered into a transition services agreement to which the Company and the Buyer agreed to provide the other party with certain services, including, among others, services related to benefits, human resources and payroll administration, cash management, financial statements, and compliance, each of a type currently provided by or for the Company or our former ASO business unit prior to the Asset Sale. Pursuant to the transition services agreement, the Company agreed to provide services to the Buyer for a period of up to one year, and the Buyer agreed to provide services to the Company for a period of up to six months. Each party had the option to extend the term of the services provided by the other party for a period of one year. No such extension was executed by either party.

While we are a party to the transition services agreement, we have determined that the continuing cash flows generated by this agreement did not constitute significant continuing involvement in the operations of our former ASO business. As such, the operating results and cash flows related to our former ASO business have been separately reflected as discontinued operations for the three months ended September 30, 2014.

The following table provides a reconciliation of the major components of income of our former ASO business to the amounts reported in the condensed consolidated statements of operations (in thousands): 

	Three Months Ended   September 30,
	2015		2014
Major line items constituting income of discontinued operations
Revenue	$	—	$	2,807
Cost of revenue	—		(1,313		)
Selling, general and administrative	—		(128		)
Other expense, net	—		(63		)
Gain on sale of discontinued operations (1)	—		25,630
Income tax expense	—		(2,378		)
Gain on discontinued operations	$	—	$	24,555

1. An adjustment of $194 thousand was made during the last quarter of fiscal year 2015.

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Business Risk and Credit Risk Concentration Involving Cash (Detail Textuals)	3 Months Ended
	Sep. 30, 2015 USD ($) customer
Cash and Cash Equivalents [Abstract]
Number of customers | customer	1
FDIC insurance amount per depositor	$ 250,000

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General Information (Detail Textuals)	3 Months Ended
	Sep. 30, 2015 Shuttle_Mission
Astrogenetix
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Minimum number of space flights negotiated	28

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Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans (Tables)

3 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of stock option activity

The Company’s stock option activity for three months ended September 30, 2015 was as follows:

	Shares (in thousands)		Weighted Average Exercise Price
Outstanding at June 30, 2015	1,128		$	1.53
Granted	—		—
Exercised	—		—
Canceled or expired	(10	)	0.45
Outstanding at September 30, 2015	1,118		$	1.54

Schedule of stock options by exercise price

The table below details the Company’s stock options outstanding as of September 30, 2015:

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
$0.32 – 0.71	438,750	4.91	$	0.60	438,750	$	0.60
$1.20 – 2.60	570,000	8.10	1.94		282,500	1.20
$3.20 – 3.20	109,000	9.52	3.20		—	—
$0.32 – 3.20	1,117,750	6.57	$	1.54	721,250	$	0.83

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State of Texas Funding (Detail Textuals) - USD ($) $ in Millions				3 Months Ended
	Aug. 28, 2014	Aug. 22, 2014	Mar. 10, 2010	Sep. 30, 2015
State Of Texas Funding [Line Items]
Payment Of Common Stock Repurchase Right				$ 2.3
Texas emerging technology fund | 1st Detect
State Of Texas Funding [Line Items]
Funds awarded for development and marketing			$ 1.8
Note payable interest rate				8.00%
Payment Of Common Stock Repurchase Right	$ 2.3	$ 2.3

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Investments - Available for Sale and Held to Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014
Available-for-sale Securities [Abstract]
Adjusted Cost	$ 14,619
Unrealized Gain	0
Unrealized Loss	(111)
Fair Value	14,508
Held-to-maturity Securities [Abstract]
Carrying Value	12,942		$ 0
Unrealized Gain	10
Unrealized Loss	(33)
Fair Value	12,919
Mutual Funds - Corporate & Government Debt
Available-for-sale Securities [Abstract]
Adjusted Cost	14,619
Unrealized Gain	0
Unrealized Loss	(111)
Fair Value	14,508	$ 17,227
Fixed Income Bonds
Held-to-maturity Securities [Abstract]
Carrying Value	3,515
Unrealized Gain	0
Unrealized Loss	(26)
Fair Value	3,489
Time Deposits
Held-to-maturity Securities [Abstract]
Carrying Value	9,427
Unrealized Gain	10
Unrealized Loss	(7)
Fair Value	$ 9,430

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Investments - Carrying Value (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014
Schedule of Held-to-maturity Securities [Line Items]
Available-for-sale securities, current	$ 14,508
Held-to-maturity securities, maturities from 1-90 days	950	$ 1,496
Held-to-maturity securities, maturities from 91-360 days	5,735	4,438
Held-to-maturity securities, maturities over 360 days	2,742	4,990
Held-to-maturity securities, remaining maturities from 1-3 years	2,427	2,073
Held-to-maturity securities, remaining maturities from 3-5 years	1,088	1,453
Held-to-maturity securities	12,942		$ 0
Short-Term Investments
Schedule of Held-to-maturity Securities [Line Items]
Total available-for-sale and held-to-maturity securities	21,193	23,161
Long-Term Investments
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities	6,257	8,516
Mutual Funds - Corporate & Government Debt
Schedule of Held-to-maturity Securities [Line Items]
Available-for-sale securities, current	14,508	17,227
Time Deposits
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities	9,427
Time Deposits | Short-Term Investments
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, maturities from 1-90 days		1,496
Held-to-maturity securities, maturities from 91-360 days		4,438
Time Deposits | Long-Term Investments
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, maturities over 360 days		4,990
Fixed Income Bonds
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities	$ 3,515
Fixed Income Bonds | Long-Term Investments
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, remaining maturities from 1-3 years		2,073
Held-to-maturity securities, remaining maturities from 3-5 years		$ 1,453

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Investments

3 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

We use specific identification when determining realized gains and losses on our available-for-sale securities. The following tables summarize unrealized gains and losses related to our investments:

Available-for-Sale	September 30, 2015
(In thousands)	Adjusted		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
Mutual Funds - Corporate & Government Debt	$	14,619	$	—	$	(111	)	$	14,508
Total	$	14,619	$	—	$	(111	)	$	14,508

For information on the unrealized holding losses on available-for-sale investments reclassified out of accumulated other comprehensive income (loss) into the consolidated statements of income, see “Note 10: Other Comprehensive Income (Loss).”

Held-to-Maturity	September 30, 2015
(In thousands)	Carrying		Unrealized		Unrealized			Fair
	Value		Gain		Loss			Value
Fixed Income Bonds	$	3,515	$	—	$	(26	)	$	3,489
Time Deposits	9,427		10		(7		)	9,430
Total	$	12,942	$	10	$	(33	)	$	12,919

There were no investments at September 30, 2014.

We have certain financial instruments on our condensed consolidated balance sheet related to interest bearing time deposits and fixed income bonds. These held-to-maturity time deposits are included in “Short-term investments” if the maturities at the end of the reporting period were 360 days or less or “Long-term investments” if the maturities at the end of the reporting period were over 360 days. Fixed income bonds, maturing over the next one to four years, are comprised of investments in various corporations with ratings of BBB- or better.

	Carrying Value
	Short-Term Investments				Long-Term Investments
(In thousands)	September 30, 2015		June 30, 2015		September 30, 2015		June 30, 2015
Mutual Funds - Corporate & Government Debt	$	14,508	$	17,227	$	—	$	—
Time deposits
Maturities from 1-90 days	950		1,496		—		—
Maturities from 91-360 days	5,735		4,438		—		—
Maturities over 360 days	—		—		2,742		4,990
Fixed Income Bonds
Maturities from 1-3 years	—		—		2,427		2,073
Maturities from 3-5 years	—		—		1,088		1,453
Total	$	21,193	$	23,161	$	6,257	$	8,516

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Discontinued Operations & Gain on the Sale of the ASO Business Unit (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Receivable for indemnity holdback	$ 6,100		$ 6,100
Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds from the sale of the ASO business	53,200		53,189
Receivable for indemnity holdback	6,100		6,100
Liabilities assumed by the Buyer			2,478
Net book value of assets sold			(36,175)
Other			(156)
Gain on sale of our former ASO business	$ 0	$ 25,630	$ 25,436

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Debt (Detail Textuals) - USD ($)		1 Months Ended	3 Months Ended
	Aug. 22, 2014	Aug. 31, 2014	Sep. 30, 2015	Oct. 31, 2010
Credit Facility [Line Items]
Outstanding debt			$ 0
Term Loan
Credit Facility [Line Items]
Credit facility, maximum borrowing capacity				$ 7,000,000.0
Credit facility expiration date			Oct. 31, 2015
Term Loan | Astrotech Space Operations
Credit Facility [Line Items]
Payment of outstanding balance of term loan	$ 5,700,000	$ 5,700,000
Revolving Credit Facility
Credit Facility [Line Items]
Credit facility, maximum borrowing capacity				$ 3,000,000.0
Credit facility expiration date			Oct. 31, 2012

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Current assets
Cash and cash equivalents	$ 1,356	$ 2,330
Short-term investments	21,193	23,161
Accounts receivable, net of allowance	221	198
Inventory	783	509
Indemnity receivable	6,100	6,100
Prepaid expenses and other current assets	580	296
Total current assets	30,233	32,594
Property and equipment, net	3,631	3,108
Long-term investments	6,257	8,516
Total assets	40,121	44,218
Current liabilities
Accounts payable	261	398
Accrued liabilities and other	1,501	1,801
Income tax payable	0	190
Total current liabilities	1,762	2,389
Other liabilities	146	101
Total liabilities	$ 1,908	$ 2,490
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred stock, no par value, convertible, 2,500,000 authorized shares; no issued and outstanding shares, at September 30, 2015 and June 30, 2015	$ 0	$ 0
Common stock, no par value, 75,000,000 shares authorized; 21,864,548 shares issued at September 30, 2015 and June 30, 2015; 20,700,673 and 20,743,973 shares outstanding at September 30, 2015 and June 30, 2015, respectively	189,096	189,007
Treasury stock, 1,163,875 and 1,120,575 shares at cost at September 30, 2015 and June 30, 2015, respectively	(2,789)	(2,672)
Additional paid-in capital	1,193	1,139
Accumulated deficit	(149,386)	(146,022)
Accumulated other comprehensive loss	(111)	(23)
Equity attributable to stockholders of Astrotech Corporation	38,003	41,429
Noncontrolling interest	210	299
Total stockholders’ equity	38,213	41,728
Total liabilities and stockholders’ equity	$ 40,121	$ 44,218

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Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans - Stock Option Activity (Details) shares in Thousands	3 Months Ended
	Sep. 30, 2015 $ / shares shares
Share activity:
Outstanding, beginning of period (in shares)	1,128
Granted (in shares)	0
Exercised (in shares)	0
Canceled or expired (in shares)	(10)
Outstanding, end of period (in shares)	1,118
Weighted Average Exercise Price:
Outstanding weighted average exercise price, beginning of period (in dollars per share) | $ / shares	$ 1.53
Granted weighted average exercise price (in dollars per share) | $ / shares	0.00
Exercised weighted average exercise price (in dollars per share) | $ / shares	0.00
Canceled or expired weighted average exercise price (in dollars per share) | $ / shares	0.45
Outstanding weighted average exercise price, end of period (in dollars per share) | $ / shares	$ 1.54

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net (loss) income	$ (3,453)	$ 23,283
Less: Income from discontinued operations	0	(24,555)
Net loss from continuing operations	(3,453)	(1,272)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Stock-based compensation	143	1
Amortization	20	0
Depreciation	102	85
Changes in assets and liabilities:
Accounts receivable	(23)	(267)
Accounts payable	(137)	(778)
Other assets and liabilities	(800)	(571)
Income taxes payable	(190)	1,053
Net cash used in operating activities-continuing operations	(4,338)	(1,749)
Net cash used in operating activities-discontinued operations	0	(1,370)
Net cash used in operating activities	(4,338)	(3,119)
Cash flows from investing activities:
Sale of available-for-sale investments	2,625	0
Maturities of held-to-maturity securities	1,494	0
Purchases of property and equipment	(638)	(46)
Net cash provided by (used in) investing activities-continuing operations	3,481	(46)
Net cash provided by investing activities-discontinued operations	0	52,591
Net cash provided by investing activities	3,481	52,545
Cash flows from financing activities:
Repayment of State of Texas funding, including deemed dividend	0	(2,331)
Payments for shares bought back	(117)	0
Net cash used in financing activities-continuing operations	(117)	(2,331)
Net cash used in financing activities-discontinued operations	0	(5,655)
Net cash used in financing activities	(117)	(7,986)
Net change in cash and cash equivalents	(974)	41,440
Cash and cash equivalents at beginning of period	2,330	3,831
Cash and cash equivalents at end of period	1,356	45,271
Supplemental disclosures of cash flow information:
Cash paid for interest	0	63
Income taxes paid	$ 198	$ 0

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Receivables - Indemnity Holdback Related to the Asset Sale (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Aug. 31, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Indemnity holdback	$ 6,100	$ 6,100
Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Estimated purchase price			$ 59,300
Working capital	1,700		$ 1,700
Received cash for working capital holdback	53,200	53,189
Indemnity holdback	$ 6,100	$ 6,100

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Investments (Tables)

3 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of available-for-sale securities

The following tables summarize unrealized gains and losses related to our investments:

Available-for-Sale	September 30, 2015
(In thousands)	Adjusted		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
Mutual Funds - Corporate & Government Debt	$	14,619	$	—	$	(111	)	$	14,508
Total	$	14,619	$	—	$	(111	)	$	14,508

Schedule of held-to-maturity securities

Held-to-Maturity	September 30, 2015
(In thousands)	Carrying		Unrealized		Unrealized			Fair
	Value		Gain		Loss			Value
Fixed Income Bonds	$	3,515	$	—	$	(26	)	$	3,489
Time Deposits	9,427		10		(7		)	9,430
Total	$	12,942	$	10	$	(33	)	$	12,919

	Carrying Value
	Short-Term Investments				Long-Term Investments
(In thousands)	September 30, 2015		June 30, 2015		September 30, 2015		June 30, 2015
Mutual Funds - Corporate & Government Debt	$	14,508	$	17,227	$	—	$	—
Time deposits
Maturities from 1-90 days	950		1,496		—		—
Maturities from 91-360 days	5,735		4,438		—		—
Maturities over 360 days	—		—		2,742		4,990
Fixed Income Bonds
Maturities from 1-3 years	—		—		2,427		2,073
Maturities from 3-5 years	—		—		1,088		1,453
Total	$	21,193	$	23,161	$	6,257	$	8,516

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Noncontrolling Interest (Detail Textuals) - USD ($) $ in Thousands			3 Months Ended
	Aug. 28, 2014	Aug. 22, 2014	Sep. 30, 2015	Jun. 30, 2015
Noncontrolling Interest [Line Items]
Noncontrolling interest			$ 210	$ 299
Payment of common stock repurchase right			$ 2,300
Texas emerging technology fund
Noncontrolling Interest [Line Items]
Noncontrolling interest				$ 1,800
1st Detect | Texas emerging technology fund
Noncontrolling Interest [Line Items]
Payment of common stock repurchase right	$ 2,300	$ 2,300
Astral Images, Inc
Noncontrolling Interest [Line Items]
Ownership percentage			72.00%

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Noncontrolling Interest (Tables)

3 Months Ended

Sep. 30, 2015

Noncontrolling Interest [Abstract]

Schedule of changes in stockholders equity

The following table breaks down the changes in Stockholders’ Equity in the first quarter of fiscal year 2016 (in thousands):

	Astrotech Corp Stockholders' Equity			Noncontrolling Interest in Subsidiary			Total Stockholders' Equity
Balance at June 30, 2015	$	41,429		$	299		$	41,728
Stock based compensation	143			—			143
Share repurchases	(117		)	—			(117		)
Net change in available-for-sale securities	(88		)	—			(88		)
Net income attributable to Astrotech Corporation	(3,364		)	—			(3,364		)
Net loss attributable to noncontrolling interest	—			(89		)	(89		)
Balance at September 30, 2015	$	38,003		$	210		$	38,213

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General Information

3 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General Information

General Information

Description of the Company – Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” “the Company,” “we,” “us,” or “our”), a Washington corporation organized in 1984, is an Austin, Texas based holding company that leverages management’s entrepreneurial expertise in turnarounds, start-ups, and mergers and acquisitions to commercialize emerging disruptive technologies through its closely held subsidiaries with a focus on adding value for our shareholders.

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared by Astrotech Corporation 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 three months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2015.

Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. The core principle of ASU 2014-9 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle. ASU 2014-9 requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. ASU 2014-9 was to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In 2015, the FASB issued ASU 2015-14 which delayed the required adoption date for public entities to periods beginning after December 15, 2017, although early adoption to the original effective date under ASU 2014-9 is permitted. Once implemented, the Company can use one of two retrospective application methods for prior periods. Earlier application is not permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to evaluate whether there are conditions or events that raise substantial doubt about the ability of a company to continue as a going concern for one year from the date the financial statements are issued or within one year after the date that the financial statements are available to be issued when applicable. Further, the ASU provides management guidance regarding its responsibility to disclose the ability of a company to continue as a going concern in the notes to the financial statements. This ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have an impact on our financial statements; we will adopt this ASU in fiscal year 2017.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurements of Inventory.” This ASU requires management to evaluate inventory at the lower of cost and net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Earlier application is permitted by all entities as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, on its consolidated financial statements.

Segment Information – With the sale of the Astrotech Space Operations (“ASO”) business (see Note 3), the Company now operates a single reportable business unit, Astro Scientific (formerly known as Spacetech). Since only one of the Company’s three distinct opportunities has material operations, all financial segment information required by FASB ASC 280 can be found in the consolidated financial statements.

Astro Scientific

Astro Scientific is a technology incubator designed to commercialize emerging disruptive technologies. This business unit is currently pursuing three distinct opportunities:

1^st Detect

1^st Detect develops, manufactures, and sells chemical analyzers that streamline processes for industrial use in the food and beverage, semiconductor, pharmaceutical, research, and environmental markets as well as for government applications used in explosive and chemical warfare detection for the Department of Homeland Security and the military. Our chemical analyzers can identify chemicals with more accuracy and precision than competing analyzers given their extreme sensitivity and specificity. By leveraging technology initiated by an engagement with the National Aeronautics and Space Administration (“NASA”) to develop a mass spectrometer for the International Space Station (“ISS”), the Company has developed a series of analyzers that enable real time analytics that we believe to be significantly smaller, lighter, faster, and less expensive than competing analyzers.

Our product portfolio currently consists of the following products: 

• MMS-1000™ - the MMS-1000™ is a small, low power desktop analyzer designed for the laboratory market.

• OEM-1000 - the OEM-1000 is an original equipment manufacturer (“OEM”) component that is designed to be integrated into customers’ specific packaging and enclosures, and is well suited to be integrated with application specific sampling or separation technology.

• iONTRAC - the iONTRAC is a process analyzer utilizing an enhanced version of our core technology, which includes the addition and integration of gas chromatography and continuous 24/7 operational features.

Astrogenetix

Astrogenetix is a biotechnology company that is applying a fast-track on-orbit discovery platform using the International Space Station to develop vaccines and other therapeutics. NASA has engaged the Center for Vaccine Development at the University of Maryland, one of the leading vaccinology institutions in the world, to aid in the filing of an Investigational New Drug (“IND”) application for Salmonella. NASA is providing much of the necessary funding for this research, meaning little investment is required of Astrogenetix as efforts are concentrated on filing the IND. We have negotiated a Space Act Agreement with NASA for a minimum of twenty-eight additional space flights following the successful filing of the IND application.

Astral Images

Astral Images (“Astral”) was created to commercialize decades of image research from the laboratories of IBM and Kodak combined with classified satellite technology from government laboratories. Astral sells film-to-digital image enhancement, defect removal and color correction software, and post processing services providing economically feasible conversion of television and feature 35mm and 16mm films to the new 4K ultra-high definition (“UHD”), high-dynamic range (“HDR”) format necessary for the new generation of digital distribution.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2015	Jun. 30, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	2,500,000	2,500,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares outstanding (in shares)	20,700,673	20,743,973
Common stock, shares issued (in shares)	21,864,548	21,864,548
Treasury stock, shares at cost (in shares)	1,163,875	1,120,575

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Business Risk and Credit Risk Concentration Involving Cash

3 Months Ended

Sep. 30, 2015

Cash and Cash Equivalents [Abstract]

Business Risk and Credit Risk Concentration Involving Cash

Business Risk and Credit Risk Concentration Involving Cash

All of the Company’s revenue during the previous fiscal year came from one customer.

The Company maintains funds in bank accounts that may exceed the limit insured by the Federal Deposit Insurance Corporation (“FDIC”) of $250,000 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.

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Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2015	Nov. 06, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	ASTROTECH Corp
Entity Central Index Key	0001001907
Trading Symbol	astc
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		20,700,673
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2016

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State of Texas Funding

3 Months Ended

Sep. 30, 2015

State Of Texas Funding [Abstract]

State of Texas Funding

State of Texas Funding

In March 2010, the Texas Emerging Technology Fund awarded 1^st Detect $1.8 million for the development and marketing of the Miniature Chemical Detector, a portable mass spectrometer designed to provide mass spectrometry analytics in real time for explosive device detection in airports and the battlefield, industrial quality and process control, environmental field applications, and laboratory research. In exchange for the award, 1^st Detect granted a common stock purchase right and a note payable to the State of Texas. The economic substance of the transaction was that the State of Texas had purchased shares of 1^st Detect in exchange for the granted award. The note, which was treated economically as purchased shares and reflected in the equity section of the condensed consolidated balance sheet, equaled the disbursements to 1^st Detect to date and accrued interest at 8% per year. On August 28, 2014, 1^st Detect settled the funding and common stock repurchase right with a payment of $2.3 million. The Company has accounted for the difference between the $2.3 million paid and the $1.8 million received as a deemed dividend in its calculation of earnings per share.

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Revenue	$ 0	$ 320
Cost of revenue	0	277
Gross profit	0	43
Operating expenses:
Selling, general and administrative	2,286	1,960
Research and development	1,264	692
Total operating expenses	3,550	2,652
Loss from operations	(3,550)	(2,609)
Interest and other expense, net	99	12
Loss from continuing operations before income taxes	(3,451)	(2,597)
Income tax (expense) benefit	(2)	1,325
Loss from continuing operations	(3,453)	(1,272)
Discontinued operations (Note 3)
Income from discontinued operations	0	1,303
Income tax expense	0	(2,378)
Gain on sale of discontinued operations	0	25,630
Income from discontinued operations, net of tax	0	24,555
Net (loss) income	(3,453)	23,283
Less: Net loss attributable to noncontrolling interest	(89)	0
Net (loss) income attributable to Astrotech Corporation	(3,364)	23,283
Less: Deemed dividend to State of Texas	0	(531)
Net (loss) income attributable to common stockholders	(3,364)	22,752
Amounts attributable to Astrotech Corporation:
Loss from continuing operations, net of tax	(3,364)	(1,272)
Net (loss) income attributable to Astrotech Corporation	$ (3,364)	$ 23,283
Weighted average common shares outstanding:
Basic and diluted (in shares)	20,705	19,548
Basic and diluted net income (loss) per common share:
Net loss attributable to Astrotech Corporation from continuing operations (in dollars per share)	$ (0.16)	$ (0.09)
Net income from discontinued operations (in dollars per share)	0.00	1.25
Net (loss) income attributable to Astrotech Corporation (in dollars per share)	$ (0.16)	$ 1.16
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Net unrealized loss, net of tax benefit of $33	$ (61)	$ 0
Reclassification adjustment for realized losses included in net (loss) income, net of tax of $2	4	0
Total comprehensive (loss) income	$ (3,421)	$ 23,283

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Net Income (Loss) per Share

3 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Income (Loss) per Share

Net Income (Loss) per Share

Basic net income (loss) per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential 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 income (loss) per share (in thousands, except per share data):

	Three Months Ended   September 30,
	2015			2014
Numerator:
Amounts attributable to Astrotech Corporation, basic and diluted:
Loss from continuing operations before income taxes	$	(3,451	)	$	(2,597	)
Income tax (expense) benefit	(2		)	1,325
Loss from continuing operations, net of tax	(3,453		)	(1,272		)
Less: Net loss attributable to noncontrolling interest	(89		)	—
Income from discontinued operations, net of tax	—			24,555
Net (loss) income attributable to Astrotech Corporation	(3,364		)	23,283
Less: State of Texas deemed dividend (Note 12)	—			531
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(3,364	)	$	22,752
Denominator:
Denominator for basic and diluted net income (loss) per share attributable to Astrotech Corporation — weighted average common stock outstanding	20,705			19,548
Basic and diluted net income (loss) per common share:
Net loss attributable to Astrotech Corporation from continuing operations	$	(0.16	)	$	(0.09	)
Net income from discontinued operations	—			1.25
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$	(0.16	)	$	1.16

Options to purchase 1,117,750 shares of common stock at exercise prices ranging from $0.32 to $3.20 per share outstanding for the three months ended September 30, 2015 were not included in diluted net loss per share, as the inclusion of the potential common shares would have had an anti-dilutive effect on the loss from continuing operations.

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Noncontrolling Interest

3 Months Ended

Sep. 30, 2015

Noncontrolling Interest [Abstract]

Noncontrolling Interest

Noncontrolling Interest

During the third quarter of 2015, Astral Images was created in conjunction with a noncontrolling interest, resulting in Astrotech owning 72% of Astral. The Company applies noncontrolling interest accounting, which requires us to clearly identify the noncontrolling interest in the condensed consolidated balance sheets and condensed consolidated statements of operations. We disclose three measures of net income (loss): net income (loss), net (loss) attributable to noncontrolling interest, and net income (loss) attributable to Astrotech Corporation. Our operating cash flows in our condensed consolidated statements of cash flows reflect net income (loss) while our basic and diluted net income (loss) per share calculations reflect net income (loss) attributable to Astrotech Corporation.

On August 28, 2014, we repaid the State of Texas Emerging Technology Fund $2.3 million to settle their $1.8 million interest in 1^st Detect (see Note 12 for more information).

The following table breaks down the changes in Stockholders’ Equity in the first quarter of fiscal year 2016 (in thousands):

	Astrotech Corp Stockholders' Equity			Noncontrolling Interest in Subsidiary			Total Stockholders' Equity
Balance at June 30, 2015	$	41,429		$	299		$	41,728
Stock based compensation	143			—			143
Share repurchases	(117		)	—			(117		)
Net change in available-for-sale securities	(88		)	—			(88		)
Net income attributable to Astrotech Corporation	(3,364		)	—			(3,364		)
Net loss attributable to noncontrolling interest	—			(89		)	(89		)
Balance at September 30, 2015	$	38,003		$	210		$	38,213

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Discontinued Operations & Gain on the Sale of the ASO Business Unit (Tables)

3 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Schedule of disposed of major amounts reported in consolidated statements of operation

The following table provides a reconciliation of the major components of income of our former ASO business to the amounts reported in the condensed consolidated statements of operations (in thousands): 

	Three Months Ended   September 30,
	2015		2014
Major line items constituting income of discontinued operations
Revenue	$	—	$	2,807
Cost of revenue	—		(1,313		)
Selling, general and administrative	—		(128		)
Other expense, net	—		(63		)
Gain on sale of discontinued operations (1)	—		25,630
Income tax expense	—		(2,378		)
Gain on discontinued operations	$	—	$	24,555

1. An adjustment of $194 thousand was made during the last quarter of fiscal year 2015.

The total pre-tax gain on the sale for the year ended June 30, 2015, includes the following (in thousands):

Cash proceeds from the sale of the ASO business	$	53,189
Receivable for indemnity holdback	6,100
Liabilities assumed by the Buyer	2,478
Net book value of assets sold	(36,175		)
Other	(156		)
Gain on sale of our former ASO business	$	25,436

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Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans

3 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans

Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans

Stock Option Activity Summary

The Company’s stock option activity for three months ended September 30, 2015 was as follows:

	Shares (in thousands)		Weighted Average Exercise Price
Outstanding at June 30, 2015	1,128		$	1.53
Granted	—		—
Exercised	—		—
Canceled or expired	(10	)	0.45
Outstanding at September 30, 2015	1,118		$	1.54

The aggregate fair value of options exercisable at September 30, 2015 was $0.5 million as the fair value of the Company’s common stock is more than the exercise prices of these options. The aggregate fair value of all options outstanding at September 30, 2015 was $0.9 million.

The table below details the Company’s stock options outstanding as of September 30, 2015:

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
$0.32 – 0.71	438,750	4.91	$	0.60	438,750	$	0.60
$1.20 – 2.60	570,000	8.10	1.94		282,500	1.20
$3.20 – 3.20	109,000	9.52	3.20		—	—
$0.32 – 3.20	1,117,750	6.57	$	1.54	721,250	$	0.83

Compensation costs recognized related to stock option awards were $54 thousand and $0 for the three months ended September 30, 2015 and 2014, respectively. There were no options granted during the three months ended September 30, 2015 and 2014.

Restricted Stock

No restricted stock was granted, vested, canceled, or expired during the three months ended September 30, 2015. Stock compensation expense related to restricted stock was $89 thousand and $1 thousand for the three months ended September 30, 2015 and 2014, respectively.

Treasury Stock

On December 12, 2014, the Board of Directors amended the stock repurchase program to allow for the repurchase of up to $5 million more treasury shares until December 31, 2015. During the three months ended September 30, 2015, the Company repurchased 43 thousand shares at a cost of $117 thousand. As of September 30, 2015 we have repurchased 1.2 million shares at a cost of $2.8 million. There were no stock repurchases during the three months ended September 30, 2014.

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Fair Value Measurement

3 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurement

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 1—Quoted prices in active markets for identical assets or liabilities.

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.

The following table presents the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of September 30, 2015 and June 30, 2015: 

	September 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	14,508	$	14,508	$	—	$	—	$	14,508
Held-to-Maturity Securities
Bonds: 1-3 years	2,427		—		2,410		—		2,410
Bonds: 3-5 years	1,088		—		1,079		—		1,079
Time deposits: 1-90 days	950		—		949		—		949
Time deposits: 91-360 days	5,735		—		5,740		—		5,740
Time deposits: over 360 days	2,742		—		2,741		—		2,741
Total	$	27,450	$	14,508	$	12,919	$	—	$	27,427

	June 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	17,227	$	17,227	$	—	$	—	$	17,227
Held-to-Maturity Securities
Bonds: 1-3 years	2,073		—		2,057		—		2,057
Bonds: 3-5 years	1,453		—		1,438		—		1,438
Time deposits: 1-90 days	1,496		—		1,496		—		1,496
Time deposits: 91-360 days	4,438		—		4,440		—		4,440
Time deposits: over 360 days	4,990		—		4,993		—		4,993
Total	$	31,677	$	17,227	$	14,424	$	—	$	31,651

The value of our available-for-sale investments is based on pricing from third party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs). Our held-to-maturity investments are recorded at amortized costs, as management’s intent is to hold such investments until maturity. The fair value of our held-to-maturity investments with maturities less than 90 days is considered the amortized value; the fair value measurements used for bonds and time deposits with maturities greater than 90 days is considered Level 2 and uses pricing from third party pricing vendors who use quoted prices for identical or similar securities in both active and inactive markets.

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Revenue Recognition

3 Months Ended

Sep. 30, 2015

Revenue Recognition [Abstract]

Revenue Recognition

Revenue Recognition

Astrotech recognizes revenue employing several generally accepted revenue recognition methodologies. The methodology used is based on contract type and the manner in which products and services are provided.

Revenue is recognized when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when pervasive evidence of an arrangement exists, delivery has occurred or services have been provided, and collectability is reasonably assured.

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Debt

3 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Debt

Debt

In October 2010, our former ASO business entered into a financing facility with a commercial bank providing a $7.0 million term loan and a $3.0 million revolving credit facility. The $7.0 million term loan was to terminate in October 2015 and the $3.0 million revolving credit facility expired in October 2012. The bank financing facilities were secured by the assets of our former ASO business, including accounts receivable, and required us to comply with designated covenants. On August 22, 2014, the Company used a portion of the proceeds from the Asset Sale to pay off the outstanding balance of its term loan of $5.7 million which is reported in the statement of cash flows as discontinued operations. The Company has no outstanding debt as of September 30, 2015.

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Other Comprehensive Income (Loss)

3 Months Ended

Sep. 30, 2015

Equity [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

Changes in the balances of each component included in accumulated other comprehensive income (loss) (“accumulated OCI”) for the three months ended September 30, 2015, are presented below. The amounts below are pre-tax.

(In thousands)	Accumulated Other Comprehensive Income (Loss)
Unrealized Gain in Mutual Fund Investments
Balance at June 30, 2015	$	(23	)
Current period change in other comprehensive income (loss) before reclassifications	(94		)
Reclassification to net (loss) income for realized losses	6
Balance at September 30, 2015	$	(111	)

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Discontinued Operations & Gain on the Sale of the ASO Business Unit (Detail Textuals) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended			12 Months Ended
	Aug. 22, 2014	Aug. 31, 2014	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax			$ 0		$ 24,555
Indemnity holdback			6,100	$ 6,100		$ 6,100
Interest expense, debt			0		62
Gain on sale of discontinued operations, net of tax			0		25,630
Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax			0		24,555
Sale of business unit		$ 61,000	59,300
Working capital		$ 1,700	1,700
Received cash for working capital holdback			53,200			53,189
Indemnity holdback			6,100	6,100		6,100
Gain on sale of discontinued operations (1)			$ 0		$ 25,630	25,436
Gain on sale of discontinued operations, net of tax						$ 20,600
Service agreement, term		1 year
Service agreement, extension term		1 year
Astrotech Space Operations | Lockheed Martin Corporation
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Service agreement, term		6 months
Astrotech Space Operations | Term Loan
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Payment of outstanding balance of term loan	$ 5,700	$ 5,700
Adjustment | Astrotech Space Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax				$ 194

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Commitments and Contingencies

3 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

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, other than as set forth below:

Astrotech was previously named as a party to a suit filed in the Circuit Court of the Eighteenth Judicial Circuit for Brevard County, Florida. This is an action for foreclosure of certain real estate and for debt. The Company was named as a party because it held an inferior lien against the property at issue and had to be named in the foreclosure action. No monetary relief was requested from Astrotech. In July 2014, the Company received a lump sum payment of $50 thousand, less legal fees, along with a release of liability in exchange for a release of its inferior mortgage. In October 2014, the underlying lawsuit was voluntarily dismissed and the case was closed.

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Fair Value Measurement (Tables)

3 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of fair value of financial instruments

The following table presents the carrying amounts, estimated fair values, and valuation input levels of certain financial instruments as of September 30, 2015 and June 30, 2015: 

	September 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	14,508	$	14,508	$	—	$	—	$	14,508
Held-to-Maturity Securities
Bonds: 1-3 years	2,427		—		2,410		—		2,410
Bonds: 3-5 years	1,088		—		1,079		—		1,079
Time deposits: 1-90 days	950		—		949		—		949
Time deposits: 91-360 days	5,735		—		5,740		—		5,740
Time deposits: over 360 days	2,742		—		2,741		—		2,741
Total	$	27,450	$	14,508	$	12,919	$	—	$	27,427

	June 30, 2015
	Carrying		Fair Value Measured Using						Fair
(in thousands)	Amount		Level 1		Level 2		Level 3		Value
Available-for-Sale Securities
Mutual Funds - Corporate & Government Debt	$	17,227	$	17,227	$	—	$	—	$	17,227
Held-to-Maturity Securities
Bonds: 1-3 years	2,073		—		2,057		—		2,057
Bonds: 3-5 years	1,453		—		1,438		—		1,438
Time deposits: 1-90 days	1,496		—		1,496		—		1,496
Time deposits: 91-360 days	4,438		—		4,440		—		4,440
Time deposits: over 360 days	4,990		—		4,993		—		4,993
Total	$	31,677	$	17,227	$	14,424	$	—	$	31,651

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Commitments and Contingencies (Detail Textuals)	1 Months Ended
	Jul. 31, 2014 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Lump sum payment received	$ 50,000

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Fair Value Measurement (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mutual Funds	$ 14,508	$ 17,227
Mutual Funds, fair value	14,508	17,227
Held-to-maturity securities, remaining maturities from 1-3 years	2,427	2,073
Held-to-maturity securities, remaining maturities from 1-3 years, fair value	2,410	2,057
Held-to-maturity securities, remaining maturities from 3-5 years	1,088	1,453
Held-to-maturity securities, remaining maturities from 3-5 years, fair value	1,079	1,438
Held-to-maturity securities, maturities from 1-90 days	950	1,496
Held-to-maturity securities, maturities from 1-90 days, fair value	949	1,496
Held-to-maturity securities, maturities from 91-360 days	5,735	4,438
Held-to-maturity securities, maturities from 91-360 days, fair value	5,740	4,440
Held-to-maturity securities, maturities over 360 days	2,742	4,990
Held-to-maturity securities, maturities over 360 days, fair value	2,741	4,993
Investments	27,450	31,677
Investments, fair value	27,427	31,651
Fair Value Inputs Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mutual Funds, fair value	14,508	17,227
Investments, fair value	14,508	17,227
Fair Value Inputs Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Held-to-maturity securities, remaining maturities from 1-3 years, fair value	2,410	2,057
Held-to-maturity securities, remaining maturities from 3-5 years, fair value	1,079	1,438
Held-to-maturity securities, maturities from 1-90 days, fair value	949	1,496
Held-to-maturity securities, maturities from 91-360 days, fair value	5,740	4,440
Held-to-maturity securities, maturities over 360 days, fair value	2,741	4,993
Investments, fair value	$ 12,919	$ 14,424

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Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) $ in Thousands	3 Months Ended
	Sep. 30, 2015 USD ($)
Income Statement [Abstract]
Other comprehensive income, tax effect of reclassification adjustment	$ 33
Other Comprehensive Income - Tax Effect of reclassication adjustment	$ 2

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Receivables - Indemnity Holdback Related to the Asset Sale

3 Months Ended

Sep. 30, 2015

Working Capital And Indemnity Holdback Related To Asset Sale Receivable [Abstract]

Receivables - Indemnity Holdback Related to the Asset Sale

Receivables – Indemnity Holdback Related to the Asset Sale

In August 2014, the Company completed the Asset Sale. The net purchase price was $59.3 million, which included a working capital adjustment of $1.7 million. As of September 30, 2015, the Company received cash of $53.2 million and recorded a receivable of $6.1 million for the indemnity holdback. As of the date of this quarterly report on Form 10-Q, no claims have been asserted against the indemnity holdback. The indemnity holdback amount, minus any amounts previously released in respect of indemnity claims or held back with respect to pending claims, will be released within three days after the 18^th month anniversary of the closing of the Asset Sale pursuant to the terms of an escrow agreement.

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Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Sep. 30, 2015

Equity [Abstract]

Schedule of accumulated other comprehensive income

(In thousands)	Accumulated Other Comprehensive Income (Loss)
Unrealized Gain in Mutual Fund Investments
Balance at June 30, 2015	$	(23	)
Current period change in other comprehensive income (loss) before reclassifications	(94		)
Reclassification to net (loss) income for realized losses	6
Balance at September 30, 2015	$	(111	)

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Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Amounts attributable to Astrotech Corporation, basic and diluted:
Loss from continuing operations before income taxes	$ (3,451)	$ (2,597)
Income tax (expense) benefit	(2)	1,325
Net loss from continuing operations	(3,453)	(1,272)
Loss from continuing operations, net of tax	(3,364)	(1,272)
Less: Net loss attributable to noncontrolling interest	(89)	0
Income from discontinued operations, net of tax	0	24,555
Net (loss) income attributable to Astrotech Corporation	(3,364)	23,283
Less: State of Texas deemed dividend (Note 12)	0	531
Net (loss) income attributable to Astrotech Corporation applicable to common shareholders	$ (3,364)	$ 22,752
Denominator:
Denominator for basic net (loss) income per share attributable to Astrotech Corporation — weighted average common stock outstanding (in shares)	20,705	19,548
Basic and diluted net income (loss) per common share:
Net loss attributable to Astrotech Corporation from continuing operations (in dollars per share)	$ (0.16)	$ (0.09)
Net income from discontinued operations (in dollars per share)	0.00	1.25
Net (loss) income attributable to Astrotech Corporation (in dollars per share)	$ (0.16)	$ 1.16

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Income Taxes

3 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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 September 30, 2015, the Company established a full valuation allowance against all of its net deferred tax assets.

To the extent that a loss from continuing operations can be utilized to offset the income otherwise resulting from discontinued operations, it has been recognized as a tax benefit from continuing operations. To the extent that a loss or credit carryover can be utilized to offset the income from discontinued operations, it has been recognized as a tax benefit from discontinued operations.

For the three months ended September 30, 2015 and 2014, the Company incurred pre-tax losses from continuing operations in the amount of $3.5 million and $2.6 million, respectively. The total effective tax rate for continuing operations was approximately 0% and 51% for the three months ended September 30, 2015 and 2014, respectively.

For the three months ended September 30, 2015 and 2014, the Company’s effective tax rate differed from the federal statutory rate of 35%, primarily due to recording changes to the valuation allowance placed against its net deferred tax assets. 

FASB ASC 740, Income Taxes (“FASB ASC 740”) 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 has an unrecognized tax benefit of $0.1 million for the three months ended September 30, 2015 and 2014.

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 through present for federal purposes and fiscal years ended 2006 through present for state purposes.