ASTROTECH CO. The following information should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes included below in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Business OverviewAstrotech Corporation (Nasdaq: ASTC) ("Astrotech ," the "Company," "we," "us," or "our"), aDelaware corporation organized in 1984, is a mass spectrometry company that launches, manages, and commercializes scalable companies based on its innovative core technology through its wholly-owned subsidiaries:
?
property related to the Astrotech Mass Spectrometer Technology™ (the "AMS
Technology").
? 1st
detectors capable of also detecting narcotics. It was developed for use at
airports, cargo and other secured facilities, and borders worldwide.
1st Detect holds an exclusive AMS Technology license from ATI for air
passenger and cargo security applications.
?
the hemp and cannabis market with initial focus on optimizing yields in the
extraction and distillation processes. AgLAB holds an exclusive AMS Technology
license from ATI for agriculture applications.
?
screen for volatile organic compound ("VOC") metabolites found in a person's
breath that could indicate they may have a bacterial or viral infection.
BreathTech holds an exclusive AMS Technology license from ATI for breath
analysis applications.
ATI owns and licenses the AMS Technology, the platform mass spectrometry technology originally developed by 1st Detect. Long recognized as the gold standard in chemical detection, mass spectrometry has historically been considered to be too costly, bulky, and cumbersome. In contrast, the AMS Technology has been designed to be comparatively inexpensive, small, and easy to use. Unlike other technologies, the AMS Technology works under ultra-high vacuum, which eliminates competing molecules, yielding higher resolution and fewer false alarms. The intellectual property includes 23 granted patents and one additional patent in process along with extensive trade secrets. With a number of diverse market opportunities for the core technology, ATI is structured to license the intellectual property for different fields of use. ATI currently licenses the AMS Technology to three wholly-owned subsidiaries ofAstrotech on an exclusive basis, including to 1st Detect for use in the security and detection market, to AgLAB for use in the agriculture market, and to BreathTech for use in breath analysis applications.
ATI has contracted with Sanmina Corporation ("Sanmina"), a leading contract manufacturer with a worldwide presence, to manufacture our mass spectrometer products. Leveraging their expertise, Sanmina has helped to improve the manufacturability and reliability of our systems.
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Table of Contents 1stDetect Corporation 1st Detect, a licensee of ATI for the security and detection market, has developed the TRACER 1000™, the world's first mass spectrometer ("MS") based explosives trace detector ("ETD") certified by theEuropean Civil Aviation Conference ("ECAC"), designed to replace the ETDs used at airports, cargo and other secured facilities, and borders worldwide. We believe that ETD customers are unsatisfied with the currently deployed ETD technology, which is driven by ion mobility spectrometry ("IMS"). We further believe that IMS-based ETDs are fraught with false positives, as they often misidentify personal care products and other common household chemicals as explosives, causing facility shutdowns, unnecessary delays, frustration, and significant wasted security resources. In addition, there are hundreds of different types of explosives, but IMS-based ETDs have a very limited threat detection library reserved only for those few explosives of largest concern. Adding additional compounds to the detection library of an IMS-based ETD fundamentally reduces the instrument's performance, further increasing the likelihood of false alarms. In contrast, adding additional compounds to the TRACER 1000's detection library does not degrade its detection capabilities, as it has a virtually unlimited and easily expandable threat library. In order to sell the TRACER 1000 to airport and cargo security customers in theEuropean Union and certain other countries, we obtained ECAC certification. We are currently selling the TRACER 1000 to customers who accept ECAC certification. We have deployed the TRACER 1000 in approximately 20 locations in 11 countries throughoutEurope andAsia . OnAugust 25, 2021 , 1st Detect announced that it secured an important landmark purchase order from a distributor for the TRACER 1000, representing the first units to be deployed at an airport security checkpoint for passenger screening. These systems were sold to the customer during the second quarter of fiscal year 2022. Inthe United States , we are working with theU.S. Transportation Security Administration ("TSA") towards air cargo certification. OnMarch 27, 2018 , we announced that the TRACER 1000 was accepted intoTSA's Air Cargo Screening Technology Qualification Test ("ACSQT") and, onApril 4, 2018 , we announced that the TRACER 1000 was beginning testing withTSA for passenger screening at airports. OnNovember 14, 2019 , we announced that the TRACER 1000 had been selected by theTSA's Innovation Task Force to conduct live checkpoint screening atMiami International Airport . With similar protocols as ECAC testing, we have received valuable feedback from all programs. Following ECAC certification and our early traction within the cargo market, testing for cargo security continued with theTSA . With the onset of the COVID-19 pandemic, all testing within theTSA was put on hold; however, we resumed cargo testing during the summer of 2020, and we subsequently announced onSeptember 9, 2020 , that the TRACER 1000 passed the non-detection testing portion of theTSA's ACSQT. Due to delays caused by COVID-19,TSA cargo detection testing is ongoing, but has proceeded much more slowly than originally anticipated. As a result, efforts are primarily focused on our other opportunities.TSA cargo detection testing is the final step to be listed on the Air Cargo Screening Technology List ("ACSTL") as an "approved" device. If approved, the TRACER 1000 will be approved for cargo sales inthe United States .AgLAB Inc. AgLAB, an exclusive licensee of ATI for the agriculture market, has developed the AgLAB-1000™ series of mass spectrometers for use in the hemp and cannabis market with initial focus on optimizing yields in the extraction and distillation processes. The AgLAB product line is a derivative of our core AMS Technology. The AMS Technology provides a significant competitive advantage due to its small size, rugged design, quick analysis, and ease of use. AgLAB recently completed several successful field trials to demonstrate that the AgLAB-1000-D2™ can be used in the distillation process to significantly boost the potency and weight yields of THC and CBD oil manufacturing. We plan to launch a family of "process control" instruments, methods, and solutions that we believe could be valuable additions to many nutraceutical extraction and distillation laboratories.BreathTech Corporation BreathTech, an exclusive licensee of ATI for use in breath analysis, is developing the BreathTest-1000™, a breath analysis tool to screen for VOC metabolites found in a person's breath that could indicate they may have a bacterial or viral infection. While vaccines have been deployed to mitigate the most serious effects of COVID-19, many people remain unvaccinated and new variants continue to pose a significant and evolving threat. New tools to aid in the battle against COVID-19 and other diseases remain of the utmost importance to help more quickly identify that an infection may be present, and BreathTech, in conjunction withCleveland Clinic , is developing a quick and easy to use device to help determine the presence of infections. 38
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InJune 2022 , we expanded our existing study that initially focused on COVID-19 withCleveland Clinic to use the BreathTest-1000 to screen for a variety of diseases spanning the entire body. The project will focus on detecting bloodstream infections, respiratory infections such as influenza types A and B and respiratory syncytial virus ("RSV"), carriage of Staphylococcus aureus, and Clostridioides difficile ("C. diff") infections. Development of the BreathTest-1000 follows our results in pre-clinical trials for the BreathDetect-1000™, a rapid self-serve breathalyzer that was designed to detect bacterial infections in the respiratory tract, including pneumonia. The pre-clinical trials were conducted in collaboration with UT Health San Antonio in 2017. COVID-19 We are subject to risks and uncertainties as a result of the COVID-19 pandemic. To date, we have seen delays with respect to theTSA certification process and parts of our supply chain, particularly the impact of the global semiconductor and electronics shortage, which has now resulted in product pricing inflation. In addition, although passenger demand for air travel has rebounded, the overall recovery of the airline industry and ancillary services remains highly uncertain and is dependent upon, among other things, the number of cases declining around the globe, public health impacts of new COVID-19 variants, the continued administration of vaccines to unvaccinated populations, and the duration of immunity granted by vaccines. We continue to manage production, to secure alternative supplies where available, and to take other proactive actions. We believe that we will be able to pass the inflation caused by raw materials shortages and increased shipping costs to our customers by increasing the price of our instruments. If supply chain shortages become more severe or longer term in nature, our business and results of operations could be adversely impacted; however, we do not expect this issue to materially adversely affect our liquidity position. The long-term impact of the COVID-19 pandemic on our business may not be fully reflected until future periods. We continue to evaluate the current and potential impact of the pandemic on our business, results of operations, and consolidated financial statements. We also continue to actively monitor developments and business conditions, including those that may be related to additional COVID-19 variants and other diseases, that may cause us to take further actions that alter business operations as may be required by applicable authorities or that we determine are in the best interests of our employees, customers, suppliers, and stockholders.
Coronavirus Aid, Relief and Economic Security Act (the "CARES Act")
OnMarch 27, 2020 , the CARES Act was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The most significant relief measures which we qualified for are a loan pursuant to the Paycheck Protection Program for which we have received full forgiveness, alternative minimum tax credit refunds, employee retention credit, and payroll tax deferral. The payroll tax deferral was effective from the enactment date throughDecember 31, 2020 , and the deferred amount will be repaid in two installments. 50% of the deferred amount has been paid as ofDecember 31, 2021 , and the remainder will be due byDecember 31, 2022 . The deferred payroll taxes are recorded within accrued liabilities on the condensed consolidated balance sheets.
We will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to us, and the potential impacts on our business.
Critical Accounting Estimates
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 ("U.S.
GAAP"). The preparation of these financial statements requires us to make
estimates and judgments that directly affect the reported amounts of assets,
liabilities, revenues, expenses, and related disclosure of contingent assets and
liabilities in the Company's consolidated financial statements and accompanying
notes. A critical accounting estimate is one that involves a significant level
of estimation uncertainty and have had or are reasonably likely to have a
material impact on our financial condition or results of operations. 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. Management continuously
evaluates its critical accounting policies and estimates, including those used
in evaluating the recoverability of long-lived assets, recognition of revenue,
valuation of inventory, and the recognition and measurement of loss
contingencies, if any. Actual results may differ from these estimates under
different assumptions or conditions. We believe the following accounting
policies require us to make significant judgments and estimates in the
preparation of our consolidated financial statements:
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Revenue Recognition
We adopted the provisions of Accounting Standards Codification ("ASC") Topic 606
"Revenue from Contracts with Customers" ("Topic 606") in fiscal year 2019.
Under Topic 606, we recognize revenue when our customers obtain control of the
goods, warranty services are delivered, or performance obligations are met.
Revenue for our product sales is recognized when control of the promised goods
or services is transferred to our customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those goods or
services. Revenue related to extended product warranty arrangements is deferred
and recognized over time, as services are delivered. To determine the
appropriate amount of revenue to be recognized for arrangements determined to be
within the scope of Topic 606, we perform the following five steps: (i)
identification of the promised goods or services in the contract; (ii)
determination of whether the promised goods or services are performance
obligations including whether they are distinct in the context of the contract;
(iii) measurement of the transaction price, including the assessment of the
constraint on variable consideration; (iv) allocation of the transaction price
to the performance obligations; and (v) recognition of revenue when, or as we
satisfy each performance obligation. As part of the accounting for arrangements
under Topic 606, we must use significant judgment to determine: (a) the
performance obligations based on the determination under step (ii) above; (b)
the transaction price under step (iii) above; and (c) the standalone selling
price for each performance obligation identified in the contract for the
allocation of transaction price in step (iv) above. We also use judgment to
determine whether milestones or other variable consideration should be included
in the transaction price as described below. The transaction price is allocated
to each performance obligation based on the relative stand-alone selling price
of each performance obligation in the contract, and we recognize revenue based
on those amounts when, or as, the performance obligations under the contract are
satisfied.
The standalone selling price is the price at which an entity would sell a
promised good or service separately to a customer. Management estimates the
standalone selling price of each of the identified performance obligations in
our customer contracts, maximizing the use of observable inputs. Because we have
not sold the same goods or services in our contracts separately to any customers
on a standalone basis and there are no similar observable transactions in the
marketplace, we estimate the standalone selling price of each performance
obligation in our customer arrangements based on observable independent pricing
of our products when available or, if unavailable, our estimate of costs to be
incurred to fulfil our obligations associated with the performance, plus a
reasonable margin.
We determined that our only contract liability under Topic 606 is deferred
revenue. Amounts received prior to revenue recognition are recorded as deferred
revenue in the consolidated balance sheets. Amounts are recorded as accounts
receivable when our right to consideration is unconditional.
We recognize revenue on product sales to customers when the transfer of control
happens. We recognize revenue on training when the service has been rendered. We
include a standard one-year warranty with our product sales. These standard
warranties are accounted for at the time product revenues are recognized. We
also offer warranty extensions for an additional fee. Revenue related to
warranty extensions is recognized on a straight-line basis over the term.
Product revenues are recorded net of variable consideration, including
discounts.
Impairment of Long-lived Assets
We review the carrying amount of our long-lived assets, including property and
equipment, for impairment whenever events or changes in business circumstances
indicate that the carrying amount of an asset or an asset group may not be fully
recoverable. If indicators of impairment exist, an impairment loss would be
recognized when the estimated undiscounted future cash flows expected to result
from the use of the asset or asset group and its eventual disposition are less
than its carrying amount. The impairment charge is determined based upon the
excess of the carrying value of the asset over its estimated fair value, with
estimated fair value determined based upon an estimate of discounted future cash
flows or other appropriate measures of estimated fair value. For purposes of
recognition of impairment for long-lived assets, we group assets and liabilities
at the lowest level for which cash flows are separately identifiable.
Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is
computed using standard cost, which approximates actual cost on a first-in,
first-out basis. We reserve or write down inventory for estimated obsolescence,
inventory in excess of reasonably expected sales, or unmarketable inventory, in
an amount equal to the difference between the cost of inventory and the
estimated market value, based upon assumption about future demand and market
conditions. If actual market conditions are less favorable than those projected,
additional inventory adjustments may be required. Inventory impairment charges
establish a new cost basis for inventory and charges are not reversed
subsequently to income, even if circumstances later suggest that increased
carrying amounts are recoverable.
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Table of Contents Warranty Provision The standard warranty periods we provide for our products can range from one to seven years. We establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience, and for any known or anticipated product warranty issues. Our warranty obligations are impacted by a number of factors, including historical warranty costs, actual product failure rates, service delivery costs, and the use of materials. If our actual results are different from our assumptions, increases or decreases to warranty reserves could be required, which could impact our cost of revenue and gross margins.
Results of Operations for the Years Ended
Selected financial data for the fiscal years endedJune 30, 2022 and 2021 of our operations are as follows: Years Ended June 30, (In thousands) 2022 2021 Variance Revenue$ 869 $ 334 $ 535 Cost of revenue 677 298 (379 ) Gross profit 192 36 156 Gross margin percentage 22 % 11 % 11 % Operating expenses Selling, general and administrative 6,006 4,741 (1,265 ) Research and development 2,781 2,692 (89 ) Disposal of corporate lease - 513 513 Total operating expenses 8,787 7,946 (841 ) Other income and (expense), net 265 (235 )
500
Gain from extinguishment of debt - PPP loan - 542 (542 ) Income tax benefit - - - Net loss$ (8,330 ) $ (7,603 ) $ (727 ) Net unrealized losses, net of zero tax expense (1,176 ) (23 ) (1,153 ) Total comprehensive loss$ (9,506 ) $ (7,626 ) $ (1,880 ) Revenue - Total revenue increased significantly by$535 thousand , or 160.2%, to$869 thousand for the fiscal year endedJune 30, 2022 , compared to$334 thousand for the fiscal year endedJune 30, 2021 . All of the fiscal year 2022 revenue was comprised of sales related to our TRACER 1000 units to distributors to the airport security market and DHL (Deutsche Post AG). In fiscal year 2021, all of our revenue was related to sales of the TRACER 1000 to DHL (Deutsche Post AG) and distributors. Cost of Revenue and Gross Profit - Cost of revenue is comprised of labor, materials, shipping, warranty reserve, and overhead allocation related to the sale of TRACER 1000 units. Gross profit is comprised of revenue less cost of revenue. Cost of revenue increased$379 thousand , or 127.2%, for the fiscal year endedJune 30, 2022 , compared to the year endedJune 30, 2021 , due to the increase in revenue described above. Gross profit increased$156 thousand , or 433.3%, and gross margin increased to 22% during the fiscal year endedJune 30, 2022 , compared to the year endedJune 30, 2021 , as we have increased production and benefited from associated volume discounts. Further, we have benefited from implementing specific enhancements to our technology that have improved the reliability of our systems.
Operating Expenses - Our operating expenses increased
• Selling, General and Administrative Expenses - Our selling, general and
administrative expenses increased by
ended
an increase in restricted non-cash equity compensation for employees to
incentivize long-term employee retention, director fees for our lead
independent director, and legal expenses related to our ongoing derivative
litigation.
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• Research and Development Expenses - Research and development expenses
increased
to the year ended
related to contractors and consultants and equipment for development of our
BreathTech and AgLAB products.
• Disposal of long-lived assets decreased
of our corporate office lease and the disposal of the leasehold improvement
assets and ROU assets and lease liabilities associated with that lease in
fiscal year 2021. As a result of this termination, our net cash savings over
the remainder of the lease was estimated to be approximately
Other income and (expense), net - Other income, net for the year endedJune 30, 2022 was$265 thousand compared to other expense, net of$235 thousand for the year endedJune 30, 2021 . During fiscal year 2022, other income and expense, net was driven by increased income earned on short-term, capital-preservation investments as interest rates have increased and a reduction of interest expense from the partial payment of related party notes inSeptember 2021 which was the primary driver of the prior year other expense, net.
Gain from extinguishment of PPP loan - We received full forgiveness of our PPP
promissory note from the
Income Taxes - Our income tax benefit did not change for the year endedJune 30, 2022 , compared to the year endedJune 30, 2021 . The realization of tax benefits depends on the existence of future taxable income. Pursuant to ASC 740 "Income Taxes", a valuation allowance has been established on all of our deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity During the fiscal year 2021, we successfully completed several public offerings of our common stock, raising net proceeds of approximately$67.6 million which will be used to satisfy our short-term and long-term capital needs. We expect that our short- and long-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense associated with rollout of our AgLAB and BreathTech products to commercial customers, additional research and development expenses associated with expanding our product offerings, and expenses associated with being a public company. Our short-term capital expenditure needs relate primarily to the expansion of our research and development capabilities and optimization of existing business processes. We believe that our cash and cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months following the date these consolidated financial statements are issued. Funding Requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development efforts and expand our business efforts. Furthermore, we have incurred and will continue to incur additional costs as a result of being a public company. Accordingly, we will need to obtain additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs, or future commercialization efforts. Because of the numerous risks and uncertainties associated with our research and development efforts, we are unable to estimate the exact amount of our operating capital requirements. Our future capital requirements will depend on many factors, including: ? future research and development efforts; ? our ability to enter into and terms and timing of any collaborations, licensing agreements, or other arrangements; 42
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Table of Contents ? the costs of sales, marketing, distribution and manufacturing efforts; ? our headcount growth and associated costs as we expand our business; ? the costs of preparing, filing and prosecuting patent applications,
maintaining and protecting our intellectual property rights and defending
against intellectual property related claims; and
? the costs of operating as a public company.
Until such time, if ever, as we can generate positive cash flows from
operations, we expect to finance our additional cash needs through a combination
of equity offerings, debt financing, equity financing, merging, or engaging in a
strategic partnership. To the extent that we raise additional capital through
the sale of equity, our existing stockholders will be diluted, and the terms of
those securities may include liquidation or other preferences that adversely
affect the rights of holders of common stock. Debt financing, if available, may
involve agreements that include covenants limiting or restricting our ability to
take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends.
If we raise funds through additional strategic alliances or licensing
arrangements with third parties, we may have to relinquish valuable rights to
our technologies or future revenue streams or to grant licenses on terms that
may not be favorable to us. If we are unable to raise additional funds through
equity offerings, debt financings, equity financing or engaging in a strategic
partnership, we may be required to delay, limit, or reduce our expansion
efforts.
Consolidated Balance Sheet
Total assets for the year ended June 30, 2022 were $56.2 million compared to
total assets of $65.6 million as of the end of fiscal year 2021. The following
table sets forth the significant components of the consolidated balance sheet as
of June 30, 2022 , compared with June 30, 2021 :
Years Ended June 30,
(In thousands) 2022 2021 Variance
Assets:
Current assets $ 54,950 $ 65,110 $ (10,160 )
Property and equipment, net 1,098 263 835
Operating leases, right-of-use asset, net 162 249 (87 )
Other assets, net 11 11 -
Total $ 56,221 $ 65,633 $ (9,412 )
Liabilities and stockholders' equity:
Current liabilities $ 2,682 $ 4,211 $ (1,529 )
Lease liabilities, net of current portion 303 215 88
Stockholders' equity 53,236 61,207 (7,971 )
Total $ 56,221 $ 65,633 $ (9,412 )
Current assets - Current assets decreased $10.2 million as of June 30, 2022 ,
compared to June 30, 2021 , as a result of cash used for continuing operating
expenses and for the partial repayment of the related party notes.
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Property and equipment, net - Property and equipment increased$835 thousand as ofJune 30, 2022 , compared toJune 30, 2021 , due to purchases of R&D equipment relating to our BreathTech and AgLAB product development as well as the addition of leasehold improvement assets related to our R&D facility inAustin .
Operating leases, right-of-use asset - Operating leases, right-of-use asset
decreased
Current liabilities - Current liabilities decreased
Other long-term liabilities - Other long-term liabilities increased$88 thousand for the year endedJune 30, 2022 , compared toJune 30, 2021 , due to an increase in non-current lease liabilities related to a financing lease for R&D equipment. Cash Flows
The following is a summary of the change in our cash and cash equivalents:
Years Ended June 30,
(In thousands) 2022 2021 Variance
Change in cash and cash equivalents:
Net cash used in operating activities $ (6,792 ) $ (7,398 ) $ 606
Net cash used in investing activities (596 ) (27,585 ) 26,989
Net cash (used in) provided by financing
activities (2,095 ) 67,570 (69,665 )
Net change in cash and cash equivalents $ (9,483 ) $ 32,587 $ (42,070 )
Cash and Cash Equivalents
At June 30, 2022 , we held cash and cash equivalents of $26.4 million and our net
working capital was approximately $52.3 million . At June 30, 2021 , we held cash
and cash equivalents of $35.9 million and our net working capital was
approximately $60.9 million . Cash and cash equivalents decreased by
approximately $9.5 million during the year ended June 30, 2022 , due to funding
our continuing operating expenses as well as partial repayment of the related
party notes.
Operating Activities
Net cash used in operating activities was $6.8 million for the year ended June
30, 2022 , compared to cash used in operating activities of $7.4 million for the
year ended June 30, 2021 . This decrease was caused by less inventory
purchases in fiscal year 2022 compared to 2021, partially offset by a decrease
in accounts payable as well as the receipt of an alternative minimum tax credit
in the prior period.
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Table of Contents Investing Activities Net cash used in investing activities for the year endedJune 30, 2022 decreased$27.0 million , compared to the year endedJune 30, 2021 . The decrease in cash used in investing activities was due to purchasing short-term available-for-sale investments in the fourth quarter of fiscal year 2021. Financing Activities Cash used in financing activities was$2.1 million for the year endedJune 30, 2022 , compared to cash provided by financing activities of$67.6 million for the year endedJune 30, 2021 . This change in cash for financing activities was the result of the sale of common stock through equity offerings in fiscal year 2021, compared to the repayment of the principal amount of$1.0 million and accrued interest of$172 thousand on the 2020 Note (as defined below) and$1.0 million of the principal amount and$330 thousand of accrued interest on the 2019 Note (as defined below) in fiscal year 2022. The remaining balance of$500 thousand of the 2019 Note was extended toSeptember 5, 2022 . Debt OnSeptember 5, 2019 , the Company entered into a related party term note with a principal amount of$1.5 million (the "2019 Note"), and onFebruary 13, 2020 , the Company entered into a second related party term note with a principal amount of$1.0 million (the "2020 Note"). As ofJune 30, 2022 , we held debt through the 2019 Note totaling$500 thousand . During fiscal year 2022, upon maturity of the 2019 Note and 2020 Note, we paid the principal amount of$1.0 million and accrued interest of$172 thousand on the 2020 Note and the 2020 Note was canceled, and$1.0 million of the principal amount and$330 thousand of accrued interest on the 2019 Note. The maturity date on the remaining balance of$500 thousand of the 2019 Note was extended toSeptember 5, 2022 . For more information regarding the 2019 Note and the 2020 Note, see Note 7.
Contractual Obligations and Commitments
The following table summarized our commitments to settle contractual obligations as ofJune 30, 2022 : Payments Due by Period (In thousands) Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years Operating lease commitments (1)$ 197 $ 104 $ 93 - - Finance lease commitments (2) 375 154 221 - - Debt obligations (3) 555 555 - - - Total$ 1,127 $ 813 $ 314 $ - $ -
(1) Consists of payments due for our lease of research and development space in
(2) Consists of payments due for our leases of two pieces of equipment that
expire between
(3) Consists of the contractually required payment of principal and interest payable under the 2019 Note.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
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