Description of the Company and Operating Environment

Astrotech Corporation (Nasdaq: ASTC) (“Astrotech,” “the Company,” “we,” “us” or “our”), a Washington corporation organized in 1984, is an Austin, Texas based technology company that has evolved from over 30 years in the human spaceflight, Space Shuttle and Department of Defense (“DOD”) satellite programs. The Company has become a leader in the commercialization of space technologies, and we continuously evaluate potential investment opportunities where we can leverage our significant entrepreneurial experience, operating experience and vast network to add value for our shareholders.

Our Business

Segment Information – With the sale of the ASO business (see Note 4), the Company now operates a single reportable business unit, Spacetech. Since the Company operates in one segment, all financial segment information required by FASB ASC 280 can be found in the consolidated financial statements.

Spacetech

Spacetech is a technology incubator designed to commercialize space-industry technologies. This business unit is currently pursuing three distinct opportunities:

1^st Detect

1^st Detect develops, manufactures and sells miniaturized transportable mass spectrometers and related equipment. Mass spectrometers, in general, measure the mass and relative abundance of ions in a sample to create a “mass spectrum.” This resulting mass spectrum is a unique fingerprint that can be compared to a reference library of mass spectra to verify the identity of a sample. Mass spectrometers can identify chemicals with more accuracy and precision than competing instruments given their extreme sensitivity and specificity, and they are a staple of almost all analytical laboratories. 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 instruments that are significantly smaller, lighter, faster and less expensive than competing mass spectrometers, and significantly more sensitive and accurate than other competing chemical detectors at a lower price point. Our efforts have resulted in a technology that has been or may be deployed in the following areas:


•	Explosive device detection in airports


•	Military


•	Industrial process controls


•	Food and beverage


•	Semiconductor


•	Oil and gas


•	Laboratory research


•	Petrochemical and refining

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.


•	OEM-1000 - the OEM-1000 is a mass spectrometer 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 mass spectrometer technology, which includes the addition and integration of gas chromatography and continuous 24/7 operational features.

Astrogenetix

Astrogenetix is a biotechnology company formed to commercialize vaccine targets discovered in the unique environment of microgravity. 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 was created to commercialize identified government funded satellite image correction technologies. During the third quarter of 2015, Astral acquired software from Image Trends in a transaction pursuant to Section 363 of the U.S. Bankruptcy Code. Image Trends created film defect correction technology by expanding upon technology first developed by IBM and Kodak. The acquisition excluded (a) certain assets, including Image Trends' consulting practice, (b) existing customer contracts that used the software acquired and (c) substantially all of Image Trends' liabilities. The total cost of the selected assets Astral acquired was $1.8 million, of which, $422 thousand consisted of debt and legal expenses contributed by the minority owner of Astral in connection with the bidding and sale process in the bankruptcy court. The processes that were critical in producing sales from the software “as is” were not acquired. In conjunction with the asset purchase, we were able to hire several engineers who were critical in the creation of the software. These engineers were hired to help the Company enhance the software technology to meet future opportunities and position Astral 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.