What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-05-31 compared with 2021-06-01 · 773 added, 796 removed, 944 unchanged (62% of the section changed)

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We have audited the accompanying consolidated balance sheets of Mesa Laboratories, Inc.

(the “Company”) as of March 31, 2021 and 2020, the related consolidated statements of income, comprehensive income (loss), stockholders' equity, and cash flows for each of the years in the three-year period ended March 31, 2021, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of March 31, 2022 and 2021, the related consolidated statements of income, comprehensive (loss) income, stockholders' equity, and cash flows for each of the years in the three-year period ended March 31, 2022, and the related notes (collectively referred to as the “financial statements”).

We also have audited the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”).

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded an acquired entity from its assessment of internal control over financial reporting as of March 31, 2022 because it was acquired by the Company in a purchase business combination during the year ended March 31, 2022.

We have also excluded this entity from our audit of internal control over financial reporting.

The acquired entity represents approximately 32% and 18% of assets (exclusive of intangible assets and goodwill) and revenues, respectively, for the year ended March 31, 2022.

Definition and Limitations of Internal Control over Financial Reporting

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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.          

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combination –

Refer to Notes 1 and 4

Critical Audit Matter Description

As disclosed in Note 4 to the consolidated financial statements, the Company completed an acquisition of Agena Bioscience, Inc.

for total cash consideration of approximately $300.8 million, net of cash acquired, on October 20, 2021.

The Company accounted for the transaction as a business combination using the acquisition method of accounting. 

Accordingly, the assets acquired and liabilities assumed were recognized at their respective acquisition date fair values.

We identified the allocation of the purchase price related to the Agena Bioscience, Inc.

acquisition as a critical audit matter.

The principal considerations for our determination include the inherent judgment involved in selecting market-based assumptions used in the estimated cash flow projections, including forecasts of future revenue growth rates, customer attrition rates, royalty rates and discount rates.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures performed to address this critical audit matter included the following, among others:

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over business combinations

Tested management’s process for estimating the fair value of intangible assets.

This included evaluating, with the assistance of our fair value specialists, the appropriateness of the valuation methods, testing the completeness and accuracy of data provided by management, and evaluating the reasonableness of key assumptions with respect to the expected future net discounted cash flows including the future revenue growth rates, customer attrition rates, royalty rates, and discount rates. 

Evaluated the reasonableness of the expected future net discounted cash flows including the future revenue growth rates, the customer attrition rates, the royalty rates, and the discount rates involved considering the past performance of the acquired business and the Company, as well as economic and industry forecasts, and considering whether they were consistent with evidence obtained in other areas of the audit.

Additionally, evaluated the reconciliation of the weighted average cost of capital to the internal rate of return for reasonableness and consistency.

We performed sensitivity analyses of the significant assumptions around the future revenue growth rate, the customer attrition rate, the royalty rates, and discount rates within the valuation models.

We evaluated the Company’s disclosures related to the business combinations.

Income Taxes –

Refer to Notes 1 and 14 to the financial statements

Refer to Notes 1 and 12

Critical Audit Matter Description

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Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.

We identified management’s calculation of income tax expense and deferred tax assets and liabilities (net of valuation allowance) as a critical audit matter because of the significant judgments and estimates management makes to determine these amounts.

We identified management’s calculation of the provision for income taxes as a critical audit matter because of the significant judgments and estimates management makes to determine these amounts.

Performing audit procedures to evaluate the reasonableness of management’s interpretation of tax law in various foreign jurisdictions, and its estimate of the associated provisions and tax charges required a high degree of auditor judgment and increased effort.

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Our audit procedures performed to address this critical audit matter included the following, among others:

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over income taxes balances and disclosures, including the provision for income taxes and deferred tax assets and liabilities (including valuation allowance).

We assessed the Company’s income tax expense and deferred tax assets and liabilities by:

Evaluating the Company’s income tax provision calculation, including testing the appropriateness of income tax rates applied and of income allocations among the taxing jurisdictions, and the mathematical accuracy of the calculation.

Evaluating the Company’s analyses supporting its conclusions as to the recognition and measurement of deferred tax assets and liabilities, including the calculation of the deferred tax asset resulting from the carryover of net operating losses.

Evaluating management’s assessment of the Company’s ability to utilize the deferred tax assets in future years.

Evaluating the Company’s disclosures related to the provision for income taxes and deferred tax assets and liabilities (including valuation allowance).

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over income tax balances and disclosures, including the provision for income taxes

We assessed the Company’s income tax provision by:

Testing the provision for income taxes, including the effective tax rate reconciliation, permanent and temporary differences and uncertain tax positions, by evaluating communications with tax advisors, and testing the underlying data for completeness and accuracy.

Utilizing personnel with specialized knowledge and skill in domestic and international tax to assist in (i) evaluating management’s application of domestic and foreign tax laws and (ii) evaluating the calculation of the deferred tax attributes.

Evaluating the significant assumptions used by management in establishing and measuring tax-related assets and liabilities, including the application of recent tax laws and regulations.

Evaluating the Company’s disclosures related to the provision for income taxes.

/s/ Plante & Moran, PLLC

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23,787  

Inventories, net

24,606  

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Prepaid expenses and other

Prepaid income taxes  

Total current assets

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Deferred tax asset

Intangibles, net

11,830  

Customer relationships, net

176,688  

93,548  

Intellectual property, net

53,273  

12,606  

Other intangibles, net

20,156  

291,166  

160,841  

$ 707,369  

$ 601,475  

LIABILITIES AND STOCKHOLDERS’

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Accrued payroll and benefits

14,717  

Unearned revenues

Income taxes payable  

13,830  

Other accrued expenses

11,611  

Total current liabilities

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Other long-term liabilities

Credit facility

49,000  

Convertible senior notes, net of discounts and debt issuance costs

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72,459  

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

16,116  

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Year Ended March 31,

$ 107,028  

$ 93,401  

$ 81,798  

26,909  

24,286  

21,337  

Total revenues

133,937  

117,687  

103,135  

Cost of revenues

Cost of products

33,120  

40,445  

30,250  

Cost of services

13,803  

11,880  

11,969  

Total cost of revenues

46,923  

52,325  

42,219  

87,014  

65,362  

60,916  

Operating expenses

18,480  

12,910  

General and administrative

45,697  

37,826  

31,295  

Research and development

10,388  

Impairment of goodwill and long-lived assets

Legal settlement

Total operating expenses

74,656  

57,439  

51,135  

Operating income

12,358  

Nonoperating expenses:

Nonoperating (income) expenses

Interest expense and amortization of debt discount

Interest (income)

( 107 )  

( 960 )  

Other expense (income), net

( 483 )  

Other (income) expense, net

Total nonoperating expense

10,055  

Earnings before income taxes

Income tax (benefit) expense  

( 971 )  

$ 3,274  

$ 1,778  

$ 7,484  

Income tax expense (benefit)

Earnings per share

$ 0.66  

$ 0.42  

$ 1.95  

Diluted  

$ 0.64  

$ 0.41  

$ 1.86  

Weighted-average common shares outstanding

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Mesa Laboratories, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive (Loss) Income

(In thousands except per share data)

Year Ended March 31,

$ 3,274  

$ 1,778  

$ 7,484  

Other comprehensive income (loss):

Other comprehensive (loss) income

Foreign currency translation adjustments

26,485  

( 8,367 )  

Comprehensive income (loss)

$ 29,759  

$ ( 6,589 )  

$ 5,105  

Comprehensive (loss) income

See accompanying notes to consolidated financial statements.

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Retained Earnings

March 31, 2018  

3,801,439  

30,516  

68,281  

99,361  

Exercise of stock options and vesting of restricted stock units

88,699  

Dividends paid, $0.64 per share

( 2,462 )  

Stock-based compensation expense

Foreign currency translation

( 2,379 )  

March 31, 2019

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$ 111,311  

Exercise of stock options and vesting of restricted stock units

65,752  

Proceeds from issuance of common stock, net of issuance costs of $ 5,568

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84,995  

Proceeds from conversion feature of convertible senior notes, due 2025, net of allocated costs and deferred taxes of $8,338  

Proceeds from conversion feature of convertible senior notes, due 2025, net of allocated costs and deferred taxes of $ 8,338

22,735  

Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes

65,752  

Dividends paid, $0.64 per share

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Stock-based compensation expense

Currency translation recognized in earnings from the exit of Cold Chain Packaging Division  

( 187 )  

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( 8,367 )  

Net income  

March 31, 2020

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145,935  

Exercise of stock options and vesting of restricted stock units

Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes

63,428  

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406,227  

*Accumulated Other Comprehensive Income (Loss).

See accompanying notes to consolidated financial statements.

Mesa Laboratories, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year Ended March 31,

Cash flows from operating activities:

$ 3,274  

$ 1,778  

$ 7,484  

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization  

17,660  

Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes

125,059  

Stock-based compensation  

Impairment loss on goodwill and long-lived assets  

Non-cash interest and debt amortization  

Amortization of step-up in inventory basis  

Dividends paid, $ 0.64 per share

( 3,339 )  

Deferred taxes  

Stock-based compensation expense

11,391  

Foreign currency translation

( 12,450 )  

Cash provided by changes in operating assets and liabilities  

Accounts receivable, net  

Cumulative adjustment due to adoption of ASU 2020-06

( 22,735 )  

March 31, 2022

5,265,627  

Inventories  

Prepaid expenses and other assets  

$ 313,460  

Accounts payable  

$ 76,675  

Accrued liabilities and taxes payable  

$ 3,666  

$ 393,801  

Unearned revenues  

*Accumulated Other Comprehensive Income (Loss).

See accompanying notes to consolidated financial statements.

Mesa Laboratories, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year Ended March 31,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Stock-based compensation

Non-cash interest and debt amortization

Amortization of step-up in inventory basis

Deferred taxes

Cash provided by changes in operating assets and liabilities:

Accounts receivable, net

Prepaid expenses and other assets

Accounts payable

Accrued liabilities and taxes payable

Unearned revenues

Net cash provided by operating activities

37,073  

26,988  

30,554  

Cash flows from investing activities:

Acquisitions  

( 184,102 )  

Purchases of property, plant and equipment  

( 1,992 )  

( 1,498 )  

Proceeds from the sale of assets  

Acquisitions, net of cash acquired

Purchases of property, plant and equipment

Proceeds from the sale of assets

Net cash (used in) investing activities

( 1,992 )  

( 185,585 )  

Cash flows from financing activities:

Proceeds from the issuance of common stock, net  

145,935  

84,995  

Proceeds from the issuance of convertible senior notes, net  

172,500  

Proceeds from the issuance of debt  

Dividends  

( 3,165 )  

( 2,722 )  

Payments of contingent consideration  

( 304 )  

( 11 )  

Proceeds from the exercise of stock options  

Payment of debt issuance costs  

( 664 )  

( 5,430 )  

Payments of debt  

( 23,000 )  

Net cash provided by (used in) financing activities

146,228  

231,277  

Effect of exchange rate changes on cash and cash equivalents  

( 1,485 )  

Net increase in cash and cash equivalents

182,485  

71,195  

Proceeds from the issuance of debt

Payments of debt

Proceeds from the exercise of stock options

Payments of contingent consideration

Proceeds from the issuance of common stock, net

Proceeds from the issuance of convertible senior notes, net

Payment of debt issuance costs

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

81,380  

10,185  

Cash and cash equivalents at end of period

$ 263,865  

$ 81,380  

$ 10,185  

Supplemental non-cash activity:

Deferred tax liability related to the conversion option associated with the convertible senior notes

$ 7,359  

Contingent consideration as part of an acquisition

Cash paid for:

Income taxes paid

$ 1,367  

$ 2,634  

$ 5,870  

Interest paid

$ 2,372  

$ 1,627  

$ 1,637  

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements

(dollar amounts in thousands, unless otherwise specified)

(dollar and share amounts in thousands, unless otherwise specified)

Description of Business and Summary of Significant Accounting Policies

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the “Company,”

or “Mesa Labs.”

We are a multinational manufacturer, developer, and seller of quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements.

We have manufacturing operations in North America and Europe and our products are marketed by our sales personnel in North America, Europe, and Asia, and by independent distributors in these areas as well as throughout the rest of the world.

We are a multinational manufacturer, developer, and seller of life sciences tools and critical quality control products and services, many of which are sold into niche markets driven by regulatory requirements.

We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and Asia Pacific, and by independent distributors in these areas as well as throughout the rest of the world.

We prefer markets in which we can establish a strong presence and achieve high gross margins.

March 31, 2021 , we managed our operations in 

four  reportable segments, or divisions.

Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries.

The division also provides testing and laboratory services, mainly to the dental industry.

Our Instruments division designs, manufactures, and markets quality control hardware and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, and environmental air sampling industries.

During the year ended 

March 31, 2020, we added a new reportable segment:

Biopharmaceutical Development as a result of our acquisition of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition"), which is discussed further in Note 4.

 "Significant Transactions." Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions.

Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biotherapeutic drugs.

Our Continuous Monitoring division designs, develops, and markets systems which are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments. 

Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended 

As described in Note 14 .

 "Segment Data," following the acquisition of Agena Bioscience, Inc. on 

October 20, 2021 ,  we changed our financial reporting segments to align with strategic shifts in the way we manage our business units.

March 31, 2022, 

and unallocated corporate expenses are reported within Corporate and Other.

Principals of Consolidation and Basis of Presentation

we managed our operations in 

four  reportable segments, or divisions:

Sterilization and Disinfection Control  - manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries.

The division also provides testing and laboratory services, mainly to the dental industry.

Biopharmaceutical Development  - develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions.

Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacture of biotherapeutic drugs.

Customers include biopharmaceutical research, development, and manufacturing teams at biopharmaceutical companies and academic research and development laboratories. 

Calibration Solutions  - develops, manufactures, and sells quality control and calibration products used to measure or calibrate temperature, pressure, pH, humidity, and other such parameters for health and safety purposes, primarily in hospital, medical device manufacturing, pharmaceutical manufacturing, and various laboratory environments.

This division represents a combination of the historical Instruments and Continuous Monitoring reportable segments.

Clinical Genomics  - develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by labs to perform clinical genomic testing in several therapeutic areas such as newborn screenings, pharmacogenetics, and oncology.

This division is a new reportable segment comprised entirely of Agena’s operations.

For more information on Mesa’s acquisition of Agena, see Note 4.

“Significant Transactions.”

Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended March 31, 2020) and unallocated corporate expenses are reported within Corporate and Other.

Principles of Consolidation and Basis of Presentation

Our Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include our accounts and wholly owned subsidiaries after elimination of all intercompany accounts and transactions.

GPT results are consolidated with Mesa's financial statements beginning November 1, 2019, the first full day following the acquisition.

Prior period results have not been recast and are therefore not comparable with the year ending March 31, 2021.

Agena results are consolidated with Mesa's financial statements beginning October 20, 2021, the day of the acquisition.

Prior period results have not been recast and are therefore not comparable with the year ending March 31, 2022 , except all prior year segment data presented has been reclassified to conform to current year presentation, as described in Note 14.

"Segment Data." Our change in financial reporting segments has not  resulted in any change to previously reported consolidated amounts.

Prior Period Reclassification

Certain amounts presented in Note 2.

"Revenue Recognition" in prior periods of fiscal year 2022 have been reclassified out of revenues from consumables and into revenues from hardware and services. These reclassifications have not  resulted in any change to consolidated financial statements for the year ended March 31, 2022.

Management Estimates

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Foreign Currency

Exchange rate adjustments resulting from foreign currency transactions are recognized in net earnings, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income (loss) within stockholders’

Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S.

dollars are translated into U.S.

dollars at period end exchange rates, and statements of income accounts are translated at weighted average rates. 

Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than the U.S.

dollar are translated into U.S.

dollars at period end exchange rates, and revenue and expense accounts are translated at weighted average period rates. 

Fair Value of Financial Instruments

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Revenue Recognition

Our revenues are generated from product sales, including hardware and perpetual license software and consumable products, as well as services, including product installations, discrete and ongoing maintenance services, and software subscriptions.

Our revenues come from product sales, which include consumables and hardware;

as well as services, which include discrete and ongoing calibration, testing, and maintenance services and contracts.

Revenues are recognized when we satisfy our performance obligations under the terms of a contract, which occurs when control of the promised products or services transfers to our customers. We recognize as revenue the amount of consideration we expect to receive in exchange for transferring products or services to our customers (the transaction price).

For all revenue arrangements, prices are fixed at the time of purchase and no price protections or variables are offered.

Substantially all of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

For all revenue contracts, prices are fixed at the time of purchase and no price protections or variables are offered.

The significant majority of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

We generally recognize revenues as follows:

Product sales:

Our performance obligations related to product sales generally consist of the promise to sell tangible goods to distributors or end users.

Control of these goods is typically transferred upon shipment, at which time our performance obligation is satisfied and revenue is recognized.

For products requiring installation, control transfers to the customer and revenue is recognized when our technicians have completed the installation at the customer’s location.

Our performance obligations related to product sales generally consist of the promise to sell tangible goods and integrated software to distributors or end users. Control of these goods is typically transferred upon shipment, at which time our performance obligation is satisfied and revenue is recognized.

For products requiring Mesa's personnel to complete installation, control transfers to the customer and revenue is recognized when our technicians have completed the installation at the customer’s location.

Purchase orders typically provide evidence of an arrangement for product sales.

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Services: 

We generate service revenues from three categories:

1 ) discrete installation of hardware and software products, 2 ) discrete calibration, testing, and maintenance services, and 3 ) contracted and recurring calibration, testing, and maintenance services and software license subscriptions.

Performance obligations arise when discrete services are contracted in advance and performed at a future time, often at the time of the customer’s choosing.

In such cases, our performance obligation is satisfied and revenue is recognized upon the customer’s acceptance of completion of the specified work.

Alternately, performance obligations arising from annual service contracts are satisfied by completing any service that is contractually required during the contract period, if requested by the customer, or simply by the passage of time if no services are requested.

Performance obligations arising from software subscriptions are satisfied by the passage of time.

For both annual service contracts and software subscriptions, revenue is recognized on a straight-line basis over the life of the contract in a faithful depiction of our obligation to provide services over the contract period.

We generate service revenues from discrete or contracted calibration, testing, and maintenance services performed on our hardware products.

Performance obligations arise when discrete services are contracted in advance and performed at a future time, often at the time of the customer’s choosing.

In such cases, our performance obligation is satisfied and revenue is recognized upon completion of the specified work.

Alternately, performance obligations arising from ongoing service contracts are satisfied by completing any service that is contractually required during the contract period, if requested by the customer, or simply by the passage of time if no services are requested. For ongoing service contracts, revenue is recognized on a straight-line basis over the life of the contract in a faithful depiction of our obligation to provide services over the contract period.

Evidence of a service arrangement may be in the form of a formal contract or a purchase order. 

Collectability is reasonably assured through our customer review process, and payment is typically due within 60 days or less.

Upon adoption of Accounting Standards Codification ("ASC") 

606, we elected the practical expedient to expense commission costs as incurred.

For the substantial majority of our contracts, which have original durations of one year or less, we have elected not  to disclose the expected timing or allocated transaction prices of future performance obligations.

Upon adoption of Accounting Standards Codification 606, we elected the practical expedient to expense commission costs as incurred.

The substantial majority of our contracts have original durations of one year or less, and we have elected not  to disclose the expected timing or allocated transaction prices of future performance obligations.

Additionally, we have elected the practical expedient to not assess whether a significant financing component exists when the period between when we perform our performance obligation and when the customer remits payment is one year or less.

None of our contracts contained a financing component as of March 31, 2021 or March 31, 2020. 

None of our contracts contained a financing component as of March 31, 2022  or March 31, 2021. 

Contracts with customers may contain multiple performance obligations.

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Standalone selling prices are based on the price at which the performance obligation is sold separately.

If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines. 

Discounts may be approved at the time of purchase and are included within a contract’s fixed transaction price.

Discounts are typically allocated to the performance obligations included in the contract based on the standalone values of such obligations.

Shipping and handling

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Our performance obligation with respect to shipping and handling consists of a promise to secure such services from a third party on behalf of our customers.

Shipping and handling for inventory and materials we purchase is included as a component of inventory on the Consolidated Balance Sheets, and in cost of revenues when products are sold. 

Shipping and handling for inventory and materials we purchase is included as a component of inventory on the Consolidated Balance Sheets, and expensed to cost of revenues when products are sold

Unearned Revenues

Certain of our products have associated annual service contracts whereby we provide repairs, technical support, and various other analytical or maintenance services.

In the event these contracts are paid in advance by the customer, the associated amounts are deferred and recognized ratably over the term of the service period, generally one year.

Certain of our products may be sold with associated time-based service contracts whereby we provide repairs, technical support, parts, and various analytical or maintenance services.

In the event these contracts are paid in advance by the customer, the associated amounts are recorded as an unearned revenue liability and recognized as revenue ratably over the term of the service period, generally one year.

Accrued Warranty Expense

We provide a limited product warranty on our products and, accordingly, accrue an estimate of the related warranty expense at the time of sale.

Cash and Equivalents

We classify all highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents, including highly liquid investments in money market funds with original maturities of three months or less.

All cash equivalents are carried at cost, approximating fair value.

We typically provide assurance-type limited product warranties on our products and, accordingly, accrue for estimates of related warranty expenses.

Cash and Cash 

We classify any highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents.

All cash equivalents are carried at cost, approximating fair value. 

Accounts Receivable and Allowance for Doubtful Accounts

All trade accounts are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for any write-offs and net of allowances for doubtful accounts.

All trade accounts receivable are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for any write-offs and net of allowances for doubtful accounts.

Allowances for doubtful accounts represent our best estimate and current expectation of future credit losses from trade accounts.

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We do not believe our trade accounts receivable represent significant concentrations of credit risk due to our diversified portfolio of individual customers and geographical areas.

Differences may arise between estimated and actual losses, which could materially affect the provision for credit losses and, therefore, net earnings. We recorded $ 100 , $ 1  and $ 13  of expense associated with doubtful accounts for the years ended March 31, 2021 , 

2020 and 2019 , respectively.

See "Recently Adopted Accounting Pronouncements" for further information regarding credit losses for accounts receivable and our April 1, 2020 adoption of ASU 

2016 - 13,  

Financial Instruments - Credit Losses (Topic 

Measurement of Credit Losses on Financial Instruments , as modified by ASU 

2018 - 19,  

Codification Improvements to Topic 

326,  Financial Instruments - Credit Losses .

Inventories are stated at the lower of cost or net realizable value using a weighted average methodology.

Differences may arise between estimated and actual losses, which could materially affect the provision for credit losses and, therefore, net earnings. We recorded $ 304 , $ 100 , and $ 1  of expense associated with doubtful accounts for the years ended March 31, 2022, 2021, and 2020, respectively. 

Inventories are stated at the lower of cost or net realizable value using a weighted average costing methodology.

Inventories acquired in an acquisition are recorded at fair market value.

Our work in process and finished goods inventories include the costs of raw materials, labor and overhead, which are estimated based on trailing twelve months of expense and standard labor hours for each product.

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We monitor inventory costs relative to selling prices and perform physical cycle count procedures on inventories throughout the year to determine if a lower of cost or net realizable value reserve is necessary.

We estimate and maintain an inventory reserve as needed for such matters as excess or obsolete inventory, shrinkage, and scrap. Once inventory is written down, a new cost basis is established that is not subsequently written back up in future fiscal years.

We estimate and maintain an inventory reserve as needed for such matters as excess or obsolete inventory, shrinkage, and scrap. This reserve may fluctuate as our assumptions change due to new information, discrete events, or changes in our business, such as entering new markets or discontinuing a specific product;

however, once inventory is written down, a new cost basis is established that is not subsequently written back up in future periods.

Property, Plant and Equipment

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Any changes in estimated useful lives are recorded prospectively.

Estimated useful lives of depreciable assets are as follows:

Estimated useful lives of significant classes of depreciable assets are as follows:

Buildings / Building improvements 40 (years or less)

Office equipment 7 (years or less)

Manufacturing equipment 

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3 (years or less)

Land is not depreciated and construction in progress is not depreciated until placed in service.

Leasehold improvements are depreciated over the lesser of the economic life or the remaining term in the respective lease. 

We adopted ASU 2016 - 02,  “Leases (Topic 842 )”

(“ASC 842”

) as of April 1, 2019.

Leasehold Improvements 

Lesser of the economic life or the remaining term in the respective lease

Land is not depreciated and construction in progress is not depreciated until placed in service, at which time it is assigned a useful life consistent with the nature of the asset. 

Under ASC 842, we determine whether contractual arrangements contain a lease at the inception of the arrangement.

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We do not have any finance leases.

not recognize assets or liabilities for leases with lease terms of less than 12 months and our short-term leases are not material.

Under ASU 2016 - 02, a contract is a lease or contains one when ( 1 ) the contract contains an explicitly or implicitly identified asset and ( 2 ) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration.

not recognize assets or liabilities for leases with terms of less than 12 months, and our short-term leases are not material.

A contract is a lease or contains one when ( 1 ) the contract contains an explicitly or implicitly identified asset and ( 2 ) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration.

Operating lease assets and liabilities are recognized at the lease commencement date.

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Adjustments would also be made for accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets, none of which are present in any of our current lease contracts.

When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease, otherwise we use our incremental borrowing rate based on the information available at lease commencement. 

When we acquire a business, we retain the acquiree's classification of its leases.

We evaluate the ROU assets and liabilities in accordance with ASC 842.

Our leases typically contain rent escalations over the lease term.

We recognize expense for these leases on a straight-line basis over the lease term.

Lease expense is recorded in cost of products, selling, general and administrative, or research and development on our Consolidated Statements of Income, depending on the nature of use of the underlying asset.

Lease expense is recorded in cost of products, selling, general and administrative, or research and development on our Consolidated Statements of Income, depending on the nature of use of the underlying asset.

Many of our leases include one or more renewal or termination options exercisable at our discretion, which are included in the determination of the lease term if we are reasonably certain to exercise the option.

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Our goodwill and other intangible assets result from acquisitions of existing businesses.

Upon acquisition, we record the fair value of identifiable indefinite and definite lived intangible assets using, among other sources of relevant information, independent appraisals, or actuarial or other valuations.

Upon acquisition, we record the fair values of identifiable indefinite and definite lived intangible assets using, among other sources of relevant information, independent appraisals, or actuarial or other valuations.

Intangible assets affect the amount of future amortization expense and possible impairment charges we may incur.

Goodwill and indefinite lived intangible assets (trademarks we intend to renew and continue using indefinitely) are not subject to amortization and are tested for impairment qualitatively, and if necessary, quantitatively, at least annually during the fourth quarter of our fiscal year, or when events or changes in circumstances indicate it may be more likely than not that carrying value exceeds fair value.

Goodwill and indefinite lived intangible assets (certain tradenames we intend to renew and continue using indefinitely) are not subject to amortization and are tested for impairment qualitatively, and if necessary, quantitatively, at least annually during the fourth quarter of our fiscal year, or when events or changes in circumstances indicate it may be more likely than not that carrying value exceeds fair value.

We perform impairment tests of goodwill at the reporting unit level and tests for other indefinite lived intangible assets at the asset level.

Intangible assets deemed to have definite lives are amortized on a straight-line basis over their useful lives, generally ranging from five to 15 years (See Note 8.

“Goodwill and Long-Lived Assets”).

Intangible assets deemed to have definite lives are amortized on a straight-line basis over their useful lives, generally ranging from five to fifteen years (See Note 6.

“Goodwill and Intangible Assets”).

We determine the useful lives of finite intangible assets based on the specific facts and circumstances related to each asset, and we evaluate the appropriateness of assigned useful lives at least annually.

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See “Fair Value of Financial Instruments” for a description of input levels.

Significant assumptions include, among others, the weighted average cost of capital, net sales growth, and terminal growth rates.

In certain cases, management uses other market information when available to estimate fair value.

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We conduct research and development activities for the purpose of developing new products and enhancing the functionality, effectiveness, reliability, and accuracy of existing products.

Research and development expense is predominantly comprised of labor costs and third -party consultants.

Research and development expense is predominantly comprised of labor costs and third -party consultants, but we may from time to time, purchase in-process research and development with the intention of developing a saleable product.

Research and development costs are expensed as incurred.

Debt Accounting

As of March 31, 2021, our long-term debt balance is related to our 1.375 % convertible senior notes due 2025, which were issued in August 2019 and are carried at their principal amount less unamortized debt discount.

We account for our convertible notes as separate liability and equity components.

We established the initial carrying amount of the liability component by estimating the fair value of a similar liability without an associated conversion feature.

The initial carrying value of the equity component was calculated by deducting the initial carrying value of the liability component from the principal amount of the Notes as a whole.

We then allocated transaction costs related to the issuance of the Notes to the liability and equity components in proportion to their initial carrying values.

Debt discount is amortized to interest expense in our Consolidated Statements of Income over the term of the convertible notes using the effective interest rate method.

We assess the equity classification of the cash conversion feature and the long-term debt classification of the liability component quarterly.

Convertible Debt

Convertible debt instruments without embedded derivatives such as our

1.375 % convertible senior notes due

2025  are recorded as long-term liabilities in our Consolidated Balance Sheets and will remain thus classified until the criteria necessary for conversion as described in Note

“Indebtedness”

have been met.

When the Notes can be converted at the option of the noteholders, depending on the expected timing and likelihood of conversion, the Notes 

may be reclassified as short-term liabilities.

We apply the if-converted method to calculate the potentially dilutive impact of the Notes on earnings per share.

For further information, including a discussion of changes to our accounting for convertible debt, see “Recently Adopted Accounting Pronouncements.”

Stock-based Compensation

We issue shares in the form of stock options and full-value awards as part of employee compensation pursuant to the Mesa Laboratories, Inc.

2014 Equity Plan (the "2014 Equity Plan"). 

We issue shares in the form of stock options and full-value awards as part of employee compensation pursuant to the Mesa Laboratories, Inc.

2014  Equity Plan (the "2014  Equity Plan") and Mesa Laboratories, Inc.

2021 Equity Incentive Plan (the "2021 Equity Plan" or together, "the Equity Plans"). 

Stock options and service-based stock awards generally vest equally over a three to 

five year term and stock options generally expire after 

six  years. Awards granted to non-employee directors generally vest one year from the grant date.

five year term and stock options generally expire after six to 

ten years. Awards granted to non-employee directors generally vest one year from the grant date.

We recognize stock-based compensation expense based on the fair value of stock awards at the grant date and recognize the expense over the related service period using a straight line vesting expense schedule.

We allocate stock-based compensation expense to cost of revenues, selling, research and development, and general and administrative expense in the Consolidated Statements of Income.

The 2021 Equity plan includes retiree provisions, which result in the acceleration of stock-based compensation for expense for retiree-eligible participants.

Compensation expense related to employees eligible to retire and retain full rights to the awards is recognized over the calculated service period required to earn the award according to the plan provisions.

The fair value of each granted stock option is estimated on the grant date using the Black-Scholes option valuation model.

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Restricted stock units ("RSUs") issued by us are equivalent to nonvested shares under the applicable accounting guidance.

The fair value of RSUs is based on the closing price of Mesa Labs' common stock on the award date, less the present value of expected dividends not received during the vesting period.

The fair value of RSUs is based on the closing price of Mesa's common stock on the award date, less the present value of expected dividends not received during the vesting period.

Expense for performance-based RSUs ("PSUs") is recognized when it is probable the performance goal will be achieved.

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Compensation expense on stock awards subject to performance conditions is recognized over the longer of the estimated performance goal attainment period or time vesting period.

As of each reporting period, we estimate the number of PSUs expected to vest based on our current estimate of performance compared to the target metrics in the award documents, and if necessary, a cumulative-effect adjustment is recorded.   

We allocate stock-based compensation expense to cost of revenues, selling, research and development, and general and administrative expense in the Consolidated Statements of Income.

Earnings  

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

Diluted earnings per share (“diluted EPS”) is computed similarly to basic earnings per share, except it includes the effects of potential common shares related to stock options, restricted stock units, performance share units, and convertible debt in periods in which such effects are dilutive.

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Acquisition related contingent consideration liabilities consist of estimated amounts due under various acquisition agreements and are typically based on either revenues growth or specified profitability growth metrics.

At each reporting period, we evaluate the expected future payments and the associated discount rate to determine the fair value of the contingent consideration, and we record any necessary adjustments in other expense, net on the Consolidated Statements of Income.

As of March 31, 2022, there are no outstanding contingent consideration liabilities.

Legal Contingencies

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Certain adjustments to the assessed fair values of acquired assets or liabilities made subsequent to the acquisition date but within the measurement period are recorded as adjustments to goodwill.

Any adjustments subsequent to the measurement period are recorded within earnings. We expense all costs as incurred related to an acquisition in selling, general, and administrative expenses.

Any adjustments subsequent to the measurement period are recorded within earnings. We expense all acquisition costs as incurred related to an acquisition in selling, general, and administrative expenses.

Results of operations of the acquired company are included in our Consolidated Financial Statements from the date of the acquisition forward.

If actual results are not consistent with our assumptions and estimates, or if our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future.

For the years ended March 31, 2021 , 

2020 and 2019 , our acquisitions of businesses (net of cash acquired) totaled $ 0 , $ 184,102 , and $ 4,840 , respectively.

For the years ended March 31, 2022, 2021 and 2020 , our acquisitions of businesses (net of cash acquired) totaled $ 300,793 , $ 0 , and $ 184,102  respectively.

Business Consolidation Costs

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These estimates represent management's judgement about the outcome of future events.

The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus ("COVID- 19 " ), and it is not possible to accurately predict the future impact of COVID- 19 .

 However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected by the impacts of COVID- 19  during the near term: 

The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus ("COVID- 19" ), the conflict in Ukraine, and other factors.

It is not possible to accurately predict the future impact of such events and circumstances. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected in the near term: 

Estimates regarding the future financial performance of the business used in the impairment tests for goodwill and long-lived assets acquired in a business combination;

however, our impairment test conducted during the three months ended March 31, 2021 concluded that goodwill is not impaired;

however, our impairment test conducted during the quarter ended March 31, 2022 concluded that goodwill is not impaired;

Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions;

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Estimates of the net realizable value of inventory.

Immaterial Error Corrections

During the 

three  months ended 

September 30, 2020, 

we identified an immaterial error in the design of our Enterprise Resource Planning tool that resulted in a system failure to eliminate intercompany cost of revenues for certain types of transactions.

The error resulted in an overstatement of cost of goods sold and an understatement in gross profit for the Continuous Monitoring, Instruments, and Sterilization and Disinfection Control divisions. The issue began during the 

three  months ended 

June 30, 2019; 

we have determined that 

no  financial statement prior to 

April 1, 2019 

was misstated as a result of the previously uneliminated balances in cost of revenues. 

In accordance with Staff Accounting Bulletin ("SAB") 

Materiality , and SAB 

Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements , we evaluated the error quantitatively and qualitatively and determined that the related impact was 

not  material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the 

three  months ended 

September 30, 2020. 

In considering the quantitative and qualitative materiality, we concluded that the impact of the error correction is 

not  material in absolute dollar amount, especially since reported results for the year ended March 31, 2020 included various new non-cash charges that reduced net income below historical levels. Accordingly, we have revised previously reported financial information for the immaterial error.

We performed manual intercompany elimination calculations and determined that cost of revenues and accumulated other comprehensive income were overstated by $429  for the year ended 

March 31, 2020, 

which would increase operating income and net income by 

$429  and diluted earnings per share by 

 there was 

no  income tax impact on the full year adjustment since the inventory balance was 

not  misstated.  To correct the immaterial error, we have restated retained earnings as of 

March 31, 2020.

Additionally, during the 

three  months ended 

June 30, 2020, 

cost of revenues was overstated by $372, which after the impact of taxes would increase net income by $192  and diluted earnings per share by 

 We restated retained earnings as of 

June 30, 2020 

in the amount of $ 192 .

The immaterial error has no impact on total cash flows for any of the periods presented.

The presentation of the balance sheet for the year ended March 31, 2020 and components of the purchase price allocation shown in Note 4.

"Significant Transactions" inaccurately classified deferred tax assets and deferred tax liabilities which has been corrected in the related disclosures presented herewith.

The error did not affect disclosures related to income taxes, net income, or the statement of cash flows;

it was limited to the balance sheet presentation of the deferred tax line items. 

Recently Issued Accounting Pronouncements

2020,  the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 

2020 - 06,  

Debt with Conversion and Other Options and Derivatives and Hedging Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , which simplifies the accounting for convertible instruments such as our 1.375% convertible senior notes due 

August 15, 2025 ( the "Notes"). The ASU is effective for annual reporting periods beginning after 

December 15, 2021, and early adoption is permitted for annual periods beginning after December 15, 2020. 

The update permits the use of either the modified retrospective or full retrospective method of adoption.

We intend to adopt the ASU on a modified retrospective basis effective April 1, 2021. 

Under the ASU, the Notes will be recorded in their entirety as a liability and will no longer be bifurcated between equity and liability components.

Upon adoption, the $ 30,092 equity conversion feature recorded to common stock (which represents $ 31,073 less allocated issuance costs of $ 981 ) will be removed, as will the associated unamortized discount of $ 22,799 .

The net effect of these adjustments, which represents historical non-cash interest expense of $ 7,293 , will be recorded as an increase in the balance of beginning retained earnings as of April 1, 2021.

We are currently evaluating the expected deferred tax and other impacts of adoption. 

In December 2019, the FASB issued ASU No.

2019 - 12, Simplifying the Accounting for Income Taxes .

The new standard removes certain exceptions to the general principles in ASC 740  

Income Taxes  and also clarifies and amends existing guidance to provide for more consistent application.

This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

We intend to adopt the standard effective April 1, 2021.

The ASU is currently not expected to have a material impact on our consolidated financial statements.

We have reviewed all recently issued accounting pronouncements and have concluded that they are either 

not  applicable to us or are 

not  expected to have a significant impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

June 2016, 

the FASB issued ASU 

2016 - 13,  

Financial Instruments - Credit Losses (Topic 

Measurement of Credit Losses on Financial Instruments , as modified by ASU 

2020,  the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 

2020 - 06,  

Codification Improvements to Topic 

326,  Financial Instruments - Credit Losses , which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The ASU was effective for public business entities for fiscal years beginning after 

Debt with Conversion and Other Options and Derivatives and Hedging Accounting for Convertible Instruments and Contracts in an Entity's Own Equity  ("ASU 

2020 - 06" ), which simplifies the accounting for certain financial instruments with characteristics of both liabilities and equity, such as the Notes due 

2020 - 06  also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance.

It is effective for annual reporting periods beginning after 

December 15, 2021, 

with early adoption permitted.

including interim periods within those fiscal years.

Early adoption is permitted at the beginning of any fiscal year after 

December 15, 2020. 

The update permits the use of either the modified retrospective or full retrospective method of transition.

We early adopted ASU 

2020 - 06  effective 

April 1, 2021 

we adopted the ASU using the modified retrospective transition method.

We recorded a net decrease to beginning retained earnings of $ 9  as of 

on a modified retrospective basis, and our adoption of this standard had a material effect on our consolidated financial statements.

Upon adoption, we derecognized the $ 22,735  equity conversion feature, net of taxes, that was recorded to common stock, and we derecognized the deferred tax liability of $ 5,747 .

We recorded an increase of $ 22,799  in aggregate to the Notes balance as a result of the reversal of the separation of the debt and equity components of the convertible debt.

The net effect of these adjustments, which represents 

$5,683  of historical non-cash interest expense, net of taxes, was recorded as an increase in the balance of beginning retained earnings as of 

April 1, 2021. 

due to the cumulative effect of adopting Topic 

326's  requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on our trade receivables.

As a result of the adoption of the ASU, our allowance for doubtful accounts as of 

March 31, 2021 

reflects our best estimate of the expected future losses for our accounts receivable based on current economic conditions. We have accounted for the macroeconomic impact of the COVID- 19  pandemic in our estimates, but due to the unprecedented nature of the impact of the pandemic, our estimates 

change, and future actual losses 

differ from current estimates.

We will continue to monitor economic conditions and will revise our estimate of expected future losses for accounts receivable as necessary.  

The adoption of this standard has significantly decreased the amount of non-cash interest expense recognized in our Consolidated Statement of Income as a result of eliminating the discount associated with the equity component.

Our statements of cash flows reflect the lower non-cash interest expense in effect after the adoption of ASU 

In each period in which the Notes have been outstanding, we have always intended to settle the Notes in shares of common stock rather than in cash, and therefore, we have applied the if-converted method to calculate the potentially dilutive impact of the Notes on earnings per share.

In each reporting period, we have determined that the Notes were antidilutive.

Due to decreases in non-cash interest expense that will result from the adoption of ASU 

2020 - 06,  it is likely the Notes will have a dilutive effect in future periods, which would decrease our diluted earnings per share. 

October 28, 2021, 

the FASB issued Accounting Standard Update 

2021 - 08  ("ASU 

2021 - 08" ), 

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which amends ASC 805  to require acquiring entities to apply ASC 

606  to recognize and measure contract assets and contract liabilities acquired in a business combination.

Prior to adoption, an acquirer generally recognized such items at fair value on acquisition date. 

We early adopted ASU 

2021 - 08  upon its issuance effective 

October 28, 2021 

and applied the amendments retrospectively to the Agena Acquisition.

As a result of adopting ASU 

2021 - 08,  we recognized Agena's deferred revenue at its recorded book value rather than at fair value, after determining that Agena's application of ASC 

606  was appropriate and the underlying accounting for deferred revenue included 

no  material errors. 

Revenue Recognition

We design, manufacture, market, sell, and maintain quality control instruments and software, consumables, and services driven primarily by the regulatory requirements of niche markets.

Our consumables, such as biological indicator test strips are typically used on a standalone basis;

however, some of our chemical solutions, such as protein synthesis and calibration solutions are critical to the ongoing use of our instruments.

Hardware and software sales, such as medical meters, protein synthesizers, wireless sensor systems, and data loggers are generally driven by our acquisition of new customers, growth of existing customers, or customer replacement of existing equipment.

Hardware sales may be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.

We also offer on-demand and annual service contracts to support customers' use of our equipment.

We evaluate our revenues internally based on product line, the timing of revenue generation, and the nature of goods and services provided.

Typically, discrete revenue is recognized at the shipping point or upon completion of the service, while contracted revenue is recognized over a period of time reflective of the performance obligation period in the applicable contract.

Consumables are typically used on a one -time basis requiring frequent replacement in our customers' operating cycles. Substantially all of our revenues and related receivables are generated from contracts with customers that are 

12  months or less in duration.

The following tables present disaggregated revenues for the years ended March 31, 2021 , 

2020 and 2019 :

We develop, manufacture, market, sell, and maintain life sciences tools and quality control instruments and related software, consumables, and services.

Sales of hardware and software, such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, and data loggers, are generally driven by our acquisition of new customers, growth of existing customers, or customers replacing existing equipment.

Hardware sales may 

be offered with accompanying software licenses, which in some cases are required for the hardware to function.

We also offer discrete and ongoing service and maintenance contracts on our instruments.

Consumables are typically used on a one -time basis and require frequent replacement in our customers' operating cycles.

Some of our consumables, such as biological indicator test strips, are used on a standalone basis.

Others, including reagents used for molecular and genetic analysis and solutions used for protein synthesis and instrument calibrations, are critical to the ongoing use of our instruments. 

Revenues from our new Clinical Genomics segment are derived from our recently acquired Agena business (See Note 4 .

 "Significant Transactions").

These revenues consist of sales of instruments and consumables used in molecular and genetic analysis, as well as sales of discrete and contracted instrument maintenance agreements.

We evaluate our revenues internally based on operating segment, the timing of revenue generation, and the nature of goods and services provided.

Typically, discrete revenues are recognized at shipping point or upon completion of a service, while contracted revenues are recognized over time based on the performance obligation period in the applicable contract.

The significant majority of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

The following tables present disaggregated revenues for the years ended March 31, 2022, 2021 and 2020 :

Year Ended March 31, 2022

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Biopharmaceutical Development

Continuous Monitoring

Calibration Solutions

Clinical Genomics (1)

Corporate and Other

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$ 22,271  

$ 91,808  

Hardware and Software

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11,212  

19,097  

Contracted Revenues

Services and Software

15,816  

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Biopharmaceutical Development

Continuous Monitoring

Calibration Solutions

Clinical Genomics (1)

Corporate and Other

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$ 63,009  

$ 53,311  

Hardware and Software

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44,019  

Contracted Revenues

Services and Software

Total Revenues

10,850  

15,626  

Contracted Revenues

11,283  

Total Revenues

$ 53,119  

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$ 46,926  

$ 133,937  

Year Ended March 31, 2020

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Biopharmaceutical Development (2)

Continuous Monitoring

Calibration Solutions

Clinical Genomics (1)

Corporate and Other

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$ 2,436  

$ 53,311  

Hardware and Software

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11,556  

14,936  

Contracted Revenues

Services and Software

Total Revenues

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$ 117,687  

( 1 ) Revenues in the Clinical Genomics division represent transactions subsequent to the Agena Acquisition on October 20, 2021 .

( 2 ) Revenues in the Biopharmaceutical Development division represent transactions subsequent to the acquisition of Gyros Protein Technologies Holding AB on October 31, 2019 .

Contract Balances

Our contracts have varying payment terms and conditions.

Some customers prepay for services, resulting in unearned revenues or customer deposits, called contract liabilities, which are included within unearned revenues or other accrued expenses in the accompanying Consolidated Balance Sheets.

Some customers prepay for products and services, resulting in either unearned revenues or customer deposits, called contract liabilities, which are included within unearned revenues, other accrued expenses, and other long-term liabilities in the accompanying Consolidated Balance Sheets.

Contract assets would exist when sales are recorded (for example, the control of the goods or services has been transferred to the customer), but customer payment is contingent on a future event besides the passage of time (such as satisfaction of additional performance obligations).

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A summary of contract liabilities is as follows:

Contract liabilities balance as of March 31, 2020

Contract liabilities as of March 31, 2021

$ 8,994  

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Contract liabilities added during the year ended March 31, 2022, net of revenues recognized

11,866  

Contract liabilities balance as of March 31, 2022

$ 15,069  

Contract liabilities primarily relate to service and software contracts with original expected durations of 12 months or less and will be recognized to revenue as time passes. 

Contract liabilities primarily relate to service contracts with original expected durations of 12 months or less and will be recognized to revenue as time passes.

Contract liabilities of $3,478 added during the year ended 

March 31, 2022  are attributable to the acquisition of Agena.

"Significant Transactions."  

Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt.

Due to their short-term nature, the carrying values of cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value.

As of March 31, 2021  and March 31, 2020 , respectively, cash and cash equivalents on our Consolidated Balance Sheets included $ 230,822  and $ 66,735 held in a money market account.

We classify cash equivalents within Level 1 of the fair value hierarchy, and we value them using quoted market prices in active markets.

The financial instruments that subject us to the highest concentration of credit risk are cash and cash equivalents and accounts receivable. It is our policy to invest in highly liquid cash equivalent financial instruments with high credit ratings and to maintain low single issuer exposure (except U.S.

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt.

Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value. Cash equivalents on our Consolidated Balance Sheets consisted of $0  held in a money market account as of March 

31, 2022,  compared to $ 230,822  held in a money market account as of 

March 31, 2021. 

We used the money market funds for the Agena Acquisition, see Note 4.

 "Significant Transactions." We measure our cash equivalents at fair value using quoted market prices in an active market, and we classify them within Level 

1  of the fair value hierarchy.

Historically, the financial instruments that subject us to the highest concentration of credit risk are cash and cash equivalents and accounts receivable. It is our policy to invest in highly liquid cash equivalent financial instruments with high credit ratings and to maintain low single issuer exposure (except U.S.

treasuries). Concentration of credit risk with respect to accounts receivable is limited to customers to which we make significant sales.

To manage credit risk, we consider the creditworthiness of new and existing customers, and we and regularly review outstanding balances and payment histories.

To manage credit risk, we consider the creditworthiness of new and existing customers, and we regularly review outstanding balances and payment histories.

We may require pre-payments from customers under certain circumstances and may limit future purchases until payments are made on past due amounts. We reserve an allowance for potential write-offs of accounts receivable, but we have not written off any significant accounts to date.

12 unchanged sentences

$ 188,780  

During the year ended March 31, 2021, we entered into a revolving credit facility which has a variable interest rate;

there is no balance outstanding on the credit facility as of March 31, 2021.

"Indebtedness" for further discussion on the Notes and the revolving credit facility. 

Assets recognized or disclosed at fair value on the Consolidated Financial Statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets.

The carrying value of the Notes increased as a result of the adoption of ASU 

2020 - 06,  discussed further in Note 

 "Description of Business and Summary of Significant Accounting Policies" and Note 8 .

 "Indebtedness." 

Assets recognized or disclosed at fair value in the Consolidated Financial Statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets, including those that were part of the Agena Acquisition.

These assets are measured at fair value if determined to be impaired.

Fair values assigned to the assets and liabilities acquired in the GPT Acquisition were measured using Level 3 inputs, as discussed in Note 4.

"Significant Transactions." There were no transfers between fair value hierarchy levels during the years ended 

March 31, 2021 and March 31, 2020 . 

Preliminary fair values assigned to assets acquired and liabilities assumed in the Agena Acquisition, except deferred revenues, were measured using Level 

3  inputs, as discussed further in Note 4.

 "Significant Transactions." There were 

no  transfers between the levels of the fair value hierarchy during the fiscal years ended March 31, 2022 

March 31, 2021.

Significant Transactions

Business Consolidation Costs

Butler, New Jersey

During the year ended March 31, 2021, we made the decision to close our facility located in Butler, New Jersey during the quarter ending June 30, 2021.

The facility is primarily used in the production of our gas flow calibration and air sampling equipment, which is part of our Instruments division.

Our manufacturing facility in Lakewood, Colorado is currently undergoing renovations that will allow it to accommodate the production of the gas flow calibration and air sampling equipment.

Consolidating the production of these products is expected to reduce facilities costs and streamline our use of lean manufacturing tools under central management to further encourage production efficiencies.

As a result of the facility consolidation, we incurred a total of $ 588  of business consolidation costs during the year ended March 31, 2021, which were recorded to cost of revenues, selling, and general and administrative expense on the Consolidated Statements of Income.

Of the total expense, $ 335 related to severance, and $ 248 related to other costs, including accelerated depreciation.

As of March 31, 2021, a total of $ 317 remained outstanding and accrued, which primarily relates to severance costs.

We do not expect to incur any material expenses related to the Butler, New Jersey consolidation in future periods. 

Dissolution of Packaging Division

We exited the packaging business (formerly the Cold Chain Packaging Reportable Segment) during the year ended March 31, 2020 because it has historically been our least profitable segment and was no longer aligned with our long-term strategic goals. During the year ended March 31, 2020, we assisted our customers in transitioning their business to other packaging vendors and we stopped purchasing new inventory. As a result of completing our final sales in the division, we wrote off the remaining value of intangibles and goodwill, resulting in a charge to impairment of goodwill and long-lived assets of $ 276 during the year ended March 31, 2020.

During the year ended March 31, 2019 we recorded an impairment of goodwill and long-lived assets of $ 4,774 due to the decline of the packaging division.

We incurred $ 51  and $ 150  of severance and facility closure expenses during the years ended March 31, 2020 and March 31, 2019, respectively.

All amounts have been paid and no further exit costs are expected to be incurred.

We have stopped presenting Cold Chain Packaging as a reportable segment, instead presenting the results of its operations as part of Corporate and Other, which aligns with Management's approach in evaluating the business.

GPT Acquisition

October 31, 2019, 

we completed the acquisition of 

100 % of the outstanding shares of GPT, which comprises our newest reportable segment, Biopharmaceutical Development.

The acquisition of GPT expanded our presence into a new market, immunoassays and peptide synthesis solutions that accelerate the discovery, development, and manufacture of biotherapeutic drugs. GPT systems include laboratory instruments, consumables, kits, and software that maximize laboratory productivity by miniaturizing and automating immunoassays at the nanoliter scale.

GPT's protein detection is used most frequently by pharmaceutical and biotech companies that are developing protein-based drugs.

This division also provides instruments, consumables, and software for the chemical synthesis of peptides from amino acids which are used in the discovery of new peptide-based drug therapies. After adjustments, we paid cash consideration of $ 181,547  to the sellers in the transaction. The acquisition was considered a stock purchase for tax purposes. 

Fair Value of Net Assets Acquired

We accounted for the GPT Acquisition as the purchase of a business, and GPT's results of operations have been included in our consolidated statements of operations and cash flows from the date of acquisition. Under the acquisition method of accounting, the net assets of GPT were initially recorded as of the acquisition date at their respective estimated fair values using information obtained during due diligence and from other sources.

Subsequent to the closing of the transaction, we obtained additional information related to the facts and circumstances that existed at the acquisition date, and we refined our valuation models, assumptions, and inputs accordingly in order to more accurately estimate fair value for the purchase price allocation.

The preparation of the valuation required the use of Level 

3  inputs, which are subject to significant assumptions and estimates.

Critical estimates included, but were 

not  limited to, future expected cash flows, including projected revenues and expenses, and applicable discount rates. 

During the year ended March 31, 2021, we finalized the valuation of net assets acquired. The significant purchase price allocation changes during the year ended March 31, 2021 

a net decrease of $ 6,002  in the value of intangible assets; a decrease of $ 3,752  in the value of the inventory step-up; an increase of $ 878  in the value of property, plant and equipment, net;

and increases of $ 1,899  to other accrued expenses and $ 500  to accounts receivable, net related to GPT's sales tax obligations that were partially indemnified in our sale and purchase agreement.

See Note 15 .

 "Commitments and Contingencies" for more information on the sales tax liability.

We also made adjustments to deferred tax assets and deferred tax liabilities primarily due to the tax effect of the aforementioned changes to the purchase price allocation.

During year ended March 31, 2021, 

the cumulative net decrease to amortization expense recorded as a result of the decrease to intangible assets was $ 344 , which is comprised of a benefit of $ 522 recorded in general and administrative costs and $ 178  of expense recorded in cost of revenues. Additionally, a $ 207  cumulative increase to depreciation expense was recorded to general and administrative costs as a result of the increase in the fair value of property, plant and equipment. 

The cumulative impacts of all adjustments have been reflected in the consolidated financial statements as of and for the year ended March 31, 2021.

The components and allocation of the purchase price consist of the following amounts:

Acquisition of Agena Bioscience, Inc.

October 20, 2021 ,  we completed the acquisition of Agena Bioscience, Inc., which aligned with our overall acquisition strategy, moved our business towards the life sciences tools sector, and expanded our market opportunities, particularly in Asia. Agena is a leading clinical genomics tools company that develops, manufactures, markets, and supports proprietary instruments and related consumables and services that enable genetic analysis for a broad range of diagnostic and research applications.

Using Agena's MassARRAY® instruments and chemical reagent solutions, customers can analyze DNA samples for a variety of high volume clinical testing applications, such as inherited genetic disease testing, pharmacogenetics, various oncology tests, infectious disease testing, and other highly-differentiated applications. Agena sells its products primarily to clinical labs, including large specialty, reference and pathology labs, as well as a variety of academic, hospital, and government facilities.

Agena’s products are marketed directly to laboratories as well as to in vitro diagnostic development partners globally.

Agena's products are differentiated in the market because they combine the throughput and analytical capabilities of mass spectrometry with the flexibility, ease-of-use and cost advantages of PCR methods.

We funded the acquisition and transactions relating thereto with cash on hand and borrowings under the Credit Facility.

 "Indebtedness" for additional details regarding the Credit Facility.

At the completion of the Agena Acquisition on 

October 20, 2021 ,  each Agena common share issued and outstanding was converted into the right to receive $ 5.96  per share in cash, subject to adjustment, without interest. We paid $ 300,793 , net of cash acquired, but inclusive of working capital adjustments, to complete the Agena Acquisition.

Of the cash consideration we paid, approximately $ 267,000  represented cash consideration to holders of Agena’s preferred and common stock, approximately $ 2,000  represented cash consideration paid for the settlement of Agena’s warrants, and approximately $ 31,800  represented cash consideration for the settlement of Agena's vested stock options as of the closing date.

Preliminary Allocation of Purchase Price

We accounted for the Agena Acquisition as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the acquiree's identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values, except contract assets and liabilities recorded at book value in accordance with ASU 

2021 - 08,  and are consolidated with those of Mesa.

Significant judgments and estimates are required when performing valuations.

The relief from royalty method was used to value our trade names and developed technology, while the multi-period excess earnings method, a form of the income approach, was used to value our customer relationships.

These methods involve the use of significant estimates and assumptions depending on the underlying asset being valued, but may include internal rate of return, revenue growth rates, customer attrition rate, and royalty rates, all of which are considered Level 

3  inputs.

We obtained the information used to prepare the preliminary valuation during due diligence and from other sources.

These estimates were based on assumptions that we believe to be reasonable; however, actual results 

differ from these estimates.

Some of these estimates, especially customer attrition and internal rate of return are highly sensitive and a small change in estimate could materially change the calculated value of intangibles.

During the quarter ended 

March 31, 2022, we continued refining the valuation of net assets acquired in the Agena Acquisition. The significant purchase price allocation changes during quarter ended 

March 31, 2022 

a net decrease of $ 4,300  in the value of intangible assets; an increase of $ 1,400  in the value of the inventory step-up;

and a decrease of $ 1,144  in the value of property, plant and equipment, net.

We also made adjustments to deferred tax assets and deferred tax liabilities primarily due to the tax effect of these changes to the purchase price allocation. In addition to changes to valuation of intangible assets, we reassessed our estimate of the remaining useful lives of intangible assets and property, plant and equipment acquired. The net effect of the changes to the expected remaining useful life and the intangible asset valuation was a cumulative net increase to amortization expense amounting to $ 1,932 , of which $ 472  of expense was recorded to cost of revenues and $1,460  was recorded in general and administrative costs during the quarter ended March 31, 2022.

The following table summarizes the allocation of the preliminary purchase price as of 

October 20, 2021:

Life (in years)

Cash and cash equivalents

$ 7,544  

Accounts receivable

Accounts receivable (a)

11,100  

Prepaid income taxes

Prepaid expenses and other

Other current assets (b)

25,480  

Property, plant and equipment

Total current assets

44,124  

Property, plant and equipment/noncurrent assets

15,832  

Deferred tax asset

Intangible assets:

Customer relationships

135,880  

Non-compete agreements

Acquired technology

Customer relationships (d)

103,800  

Intellectual property (d)

45,400  

Tradenames (d)

15,700  

Total Assets acquired

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Accounts payable

Accrued salaries and payroll taxes

10,735  

Other short-term liabilities

Unearned revenues

Other accrued expenses

Deferred taxes

Other current liabilities

12,295  

Other long-term liabilities

Total current liabilities

17,182  

Deferred tax liability

27,765  

Other noncurrent liabilities

Total liabilities assumed

$ 53,210  

Total closing amount, net of cash acquired

Total purchase price, net of cash acquired

$ 300,793  

(a) Accounts receivable is composed of trade accounts receivable, which is expected to be collected. 

GPT's finished goods inventory includes $ 8,066 of inventory-step up, which is required to be reported at fair value at the time of acquisition.

The inventory step-up was amortized to cost of revenues over approximately 

eight  months following the acquisition date, which resulted in a temporary reduction in gross profit for the business.

During the period from 

November 1, 2019 through March 31, 2020 ,  we recorded $ 8,502  of amortization of inventory step-up costs in cost of revenues on the Consolidated Statements of Income.

The final inventory valuation was completed during the year ended March 31, 2021 and was lower than our preliminary valuation, resulting in a cumulative effect decrease of $ 436  in amortization of inventory step-up costs. 

Customer relationships and acquired technology are being amortized on a straight-line basis over a 

10 -year period.

Amortization expense for customer relationships is recorded to general and administrative expenses;

amortization expense for acquired technology is recorded to cost of revenues.

During the year ended March 31, 2021, $ 7,487 of amortization expense related to the GPT intangible assets was recorded to general and administrative costs, and $ 1,430 of amortization expense was recorded to cost of goods sold and allocated to the Biopharmaceutical Development division, including the cumulative-effect benefit to amortization expense discussed above.

Trademarks associated with this acquisition are considered indefinite-lived intangibles. The estimated fair value of identifiable intangible assets was determined primarily using the income approach, which requires a forecast of all expected future cash flows associated with the identified intangible assets. 

Acquired goodwill of $ 85,130 , all of which is allocated to the Biopharmaceutical Development reportable segment, represents the value expected to arise from projected organic revenues growth that is expected to exceed that of our legacy divisions, and the value expected to arise from the opportunity to expand into a new market with well-established market share.

(a) Trade receivables, which is expected to be collected. 

(b) Includes $ 7,462  of inventory step-up, which was amortized entirely within fiscal year 

 Our evaluation of the valuation of inventory was complete as of March 31, 2022.

(c) Acquired goodwill of $ 135,880 , all of which is allocated to the Clinical Genomics reportable segment, represents the value expected to arise from the value of expanded market opportunities, expected synergies, and assembled workforce, 

none  of which qualify as amortizable intangible assets.

The goodwill acquired is 

not  deductible for income tax purposes.

Acquisition related costs of $ 1,399  for the year ended 

March 31, 2020 are not included as a component of consideration transferred but are expensed in the periods in which the costs are incurred and are reflected on the Consolidated Statements of Income in general and administrative expenses.

(d) Customer relationships, intellectual property, and tradenames are currently expected to be amortized on a straight line basis over a weighted average 10.9  year period.

The identified intangible assets will be amortized on a straight line basis over their useful lives, which approximates the pattern over which the assets' economic benefits are expected to be consumed over time.

Amortization expense for customer relationships and tradenames will be amortized to general and administrative expenses;

amortization expense for intellectual property will be recorded to cost of revenues.

During the period from 

October 20, 2021 

March 31, 2022, 

$ 4,454  of amortization expense was recorded to general and administrative costs and $ 2,538  of amortization expense was recorded to cost of revenues in the Clinical Genomics Division, including the cumulative effect catch up.

Our valuation of intangible assets is considered to be complete as of March 31, 2022.

Going forward, we expect to record amortization expense of $ 2,490  and $ 1,419 to general and administrative costs and costs of revenues, respectively, each quarter.

This preliminary purchase price allocation is subject to revision as more detailed analyses are completed with respect to prepaid taxes, tax accruals, and deferred tax positions.

If additional information about the fair value of assets acquired and liabilities assumed becomes available, we 

further revise the preliminary purchase price allocation as soon as is practical, but will 

not  do so more than 

one  year from the acquisition date.

Only items identified as of the acquisition date are considered for subsequent adjustment.

Any such revisions or changes 

Acquisition-related costs, such as legal and advisory fees of $ 1,244  for the year ended March 31, 2022, are 

not  included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred and are reflected on the Consolidated Statements of Income in general and administrative expenses.

Unaudited Pro Forma Information

GPT's operations contributed $ 33,892 to revenues and ($ 9,006 ) of net loss to our consolidated results during the year ended March 31, 2021, including cumulative-effect adjustments. The loss includes over $ 8,900  in amortization of intangibles acquired in a business combination and over $ 3,000 of realized and unrealized losses on foreign currency.

We included the operating results of GPT in our Consolidated Statements of Income beginning November 1, 2019, immediately subsequent to the acquisition date.

The following pro forma financial information presents the combined results of operations of Mesa Labs and GPT as if the acquisition had occurred on April 1, 2018, after giving effect to certain pro forma adjustments.

The pro forma adjustments reflected include only those adjustments that are factually supportable and directly attributable to the GPT Acquisition and that have a recurring impact;

they do not reflect any adjustments for anticipated expense savings resulting from the acquisition and are not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on April 1, 2019 

Agena's operations contributed $ 32,840  to revenues and ( $7,779 ) of net loss to our consolidated results during fiscal year 

2022,  including the inventory-step up amounting to $ 7,462  that was fully amortized in fiscal year 

2022 and $1,949  of additional intangible assets amortization related to the application of purchase accounting. We included the operating results of Agena in our Consolidated Statements of Income beginning on 

October 20, 2021, 

the acquisition date.

The following pro forma financial information presents the combined results of operations of Mesa and Agena as if the acquisition had occurred on 

April 1, 2020 

after giving effect to certain pro forma adjustments.

The pro forma adjustments reflected only include those adjustments that are directly attributable to the Agena Acquisition, are factually supportable and have a recurring impact;

they do 

not  reflect any adjustments for anticipated expense savings resulting from the acquisition and are 

not  necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on 

April 1, 2020 

or of future results.

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Pro forma net income (2)

18,953  

( 1 ) Net revenues were adjusted to include net revenues of GPT. 

( 2 ) Pro forma adjustments to net earnings attributable to Mesa Labs include the following:

Excludes acquisition-related transaction costs incurred in the year ended March 

Excludes interest expense attributable to GPT's external debt that was paid off as part of the acquisition.

Total GPT amortization expense of $ 8,930  for each of the years ended March 31, 2020 

and March 31, 2019 

based on the adjusted fair value of amortizable intangible assets acquired.

Additional charge to cost of revenues of $ 8,066 included in the year ended March 31, 2019 

based on the step-up value of inventory.

$ 8,596  was excluded from the year ended March 31, 2020 based on the step-up value of inventory which would have been included and fully amortized within the first year of the acquisition.

Additional stock-based compensation expense representing expense for performance share units awarded to certain key GPT employees.

Income tax effect of the adjustments made at a blended federal and state statutory rate (approximately 25 %).

( 1 ) Net revenues were adjusted to include net revenues of Agena. 

( 2 ) Pro forma adjustments to net earnings attributable to Mesa include the following:

Excludes acquisition-related transaction costs incurred in the year ended March 

Excludes interest expense attributable to Agena external debt that was paid off as part of the acquisition.

Amortization expense of $ 15,636 for the years ended March 31, 2022 and 2021, respectively, based on the fair value of amortizable intangible assets acquired.

$ 7,462 was excluded from the year ended 

March 31, 2022 

based on the step up value of inventory which would have been fully amortized within the 

first six  months of the acquisition.

Additional charge to cost of revenues of $7,462  was included in the year ended March 

31 , 2021  based on the step up value of inventory.

Additional stock based compensation expense representing expense for performance share units awarded to certain key Agena employees.

Income tax effect of applicable adjustments made at a blended federal and state statutory rate (approximately 

GPT Acquisition

October 31, 2019, 

we completed the acquisition of 

100 % of the outstanding shares of GPT, which comprises our Biopharmaceutical Development segment.

GPT's protein detection is used most frequently by pharmaceutical and biotech companies that are developing protein-based drugs.

IBP Acquisition

On April 1, 2019, we completed a business combination (the “IBP Acquisition”) whereby we acquired all of the common stock of IBP Medical GmbH, a company whose business manufactures medical meters used to test various parameters of dialysis fluid (dialysate) and the proper calibration and operation of dialysis machines. During the year ended March 31, 2020, we allocated the purchase price according to the fair value of assets acquired and liabilities assumed using information obtained during due diligence and through the use of financial and other information available to us.

Fair value of the assets and liabilities acquired was determined using Level 3 inputs (unobservable inputs) based on a discounted cash flow method. 

Under the terms of the IBP agreement, as amended, we are required to pay contingent consideration if the company is able to achieve certain development and regulatory milestones.

During the year ended March 31, 2021, we paid $ 296 in conjunction with IBP's attainment of two  of the milestones.

We expect that IBP will achieve its final two milestones during the three months ending June 30, 2021, and we will pay approximately $ 237 to fulfill our obligation under the contingent consideration arrangement.

Inventories consisted of the following:

March 31, 2021

March 31, 2020

Raw materials

$ 5,755  

$ 4,738  

Work in process

Finished goods

Inventories, net

$ 11,178  

$ 14,230  

The remaining balance of the adjustment to step up inventory acquired in the GTP Acquisition to fair value, which was included in finished goods, was $ 0  and $ 2,901 , respectively, as of 

March 31, 2021 and 

On April 1, 2019, we completed a business combination whereby we acquired all of the common stock of IBP Medical GmbH, a company whose business manufactures medical meters used to test various parameters of dialysis fluid (dialysate) and the proper calibration and operation of dialysis machines.

Restructuring

Butler, New Jersey

We completed the previously announced closure of our Butler, New Jersey facility during the year ended 

March 31, 2022. 

"Significant Transactions." 

Property, Plant and Equipment

Property, plant and equipment were as follows:

March 31, 2021

March 31, 2020

18,857  

18,880  

Manufacturing equipment

12,163  

Computer equipment

Construction in progress

38,328  

34,807  

Accumulated depreciation

( 16,330 )  

Property, plant and equipment, net

$ 21,998  

$ 22,066  

During the year ended March 31, 2021, as part of the finalization of the purchase price adjustment of GPT, we recorded an increase of $ 878  in the value of property, plant and equipment, net.

Depreciation expense for the years ended March 31, 2021 , 

2020 and 

2019 was $ 2,959 , $ 2,234 , and $ 2,338 respectively.

The facility was primarily used in the production of our gas flow calibration and air sampling equipment, which is part of our Calibration Solutions division.

Our manufacturing facility in Lakewood, Colorado is currently undergoing renovations that will allow it to better accommodate the production of the gas flow calibration and air sampling equipment.

As a result of the facility consolidation, we incurred $ 77  of severance costs during the year ended 

March 31, 2022, 

which were recorded to cost of revenues, selling, and general and administrative expense on the Consolidated Statement of Income.

March 31, 2022, 

there were 

no  outstanding accrued costs, and we do 

not  expect to incur any material expenses related to the Butler, New Jersey facility closure in future periods.

We have operating leases for buildings and office equipment. The following table presents the lease balances within the Consolidated Balance Sheets related to our operating leases:

10 unchanged sentences

Other long-term liabilities

Operating lease right of use assets and liabilities increased significantly during the year ended March 31, 2022 

due to the Agena Acquisition.

See Note 4.

"Significant Transactions" for details.

We accounted for the five  property leases acquired as part of our acquisition of Agena by measuring the lease liability at the present value of the remaining lease payments as if the acquired lease were a new lease for Mesa.

These properties are used for office, laboratory, and manufacturing space.

The components of lease costs, the weighted average remaining lease term and the weighted average discount rate were as follows:

2 unchanged sentences

$ 1,973  

$ 1,130  

Variable lease expense

4 unchanged sentences

Weighted average discount rate

The weighted average discount rate on operating leases declined significantly as a result of the new leases acquired in the Agena Acquisition.

These new lease ROU assets and liabilities were calculated using lower discount rates than leases commenced prior to fiscal year 2022.

Supplemental cash flow information related to leases was as follows:

2 unchanged sentences

$ 1,896  

Operating lease assets obtained in exchange for operating lease obligations

$ 1,192  

Operating lease assets obtained in exchange for operating lease obligations 

10,577  

Maturities of lease liabilities are as follows as for the years ending March 31:

1 unchanged sentence

Future value of lease liabilities

10,543  

imputed interest

1 unchanged sentence

$ 10,204  

Goodwill and Long-Lived Assets

Goodwill arises from the excess purchase price of acquired businesses over the fair value of acquired tangible and intangible assets, less assumed liabilities.

We assess the goodwill of each of our reporting units for impairment at least annually during the fourth quarter of our fiscal year and as triggering events occur that indicate it may be more likely than not that an impairment exists.

We begin by performing a qualitative goodwill assessment, and if the results of that test indicate it is more likely than not an impairment exists for any reporting unit, we then perform a quantitative goodwill impairment test on the reporting unit.

When we perform quantitative impairment tests, we estimate the fair value of the reporting unit using the income approach.

Under the income approach, fair value is estimated as the present value of the reporting unit's estimated future cash flows.

The projected cash flows incorporate various assumptions related to weighted average cost of capital, growth rates specific to the reporting unit, assumptions for net sales growth, and terminal growth rates.  

Goodwill and Intangible Assets

Goodwill arises from the excess purchase price of acquired businesses over the fair value of acquired tangible and intangible assets, less assumed liabilities.  

The change in the carrying amount of goodwill was as follows:

1 unchanged sentence

Biopharmaceutical Development

Continuous Monitoring

Corporate and Other

Calibration Solutions

Clinical Genomics

March 31, 2020

6 unchanged sentences

11,337  

( 2,446 )  

77,162  

Goodwill related to GPT acquisition

March 31, 2021

$ 30,153  

$ 93,399  

March 31, 2020

$ 37,289  

$ 160,841  

Effect of foreign currency translation

( 403 )  

1 unchanged sentence

( 52 )  

Effect of foreign currency translation

Goodwill related to Agena acquisition

135,880  

Goodwill adjustment related to GPT acquisition

March 31, 2022

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Net Carrying Amount

Intellectual property

Customer relationships

$ 244,157  

4 unchanged sentences

$ 93,548  

Intellectual property

65,893  

( 12,620 )  

Customer relationships

53,273  

2 unchanged sentences

12,606  

Other Intangibles

25,350  

( 5,194 )  

Non-compete agreements

20,156  

6 unchanged sentences

$ 111,741  

The increase in the carrying amount of intangible assets was attributable to changes in foreign currency and adjustments to the preliminary purchase price of GPT that are discussed further in Note 4 .

 "Significant Transactions." We acquired trade names as part of the GPT acquisition, which are valued at $ 4,990  as of March 31, 2021 and are considered to be indefinite lived.

As these trade names are not subject to amortization, they are tested for impairment at least annually or more frequently if triggering events indicate it may be more likely than not that an impairment exists. 

The increase in the goodwill and intangible assets balance from 

March 31, 2021 

March 31, 2022 

is related to the Agena Acquisition, partially offset by changes in foreign currency rates.

 "Significant Transactions" for more information.

The range of useful lives and weighted-average remaining useful lives of amortizable intangible assets as of March 31, 2022 were as follows: 

Weighted Average

Estimated Useful Life

Weighted Avg.

Remaining Life

Intellectual Property

10 - 15  

5 - 10  

Customer Relationships

5 - 10  

Non-compete Agreements

5 - 10  

Intellectual Property

Other Intangibles

The following is estimated amortization expense for the years ending March 31:

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Amortization expense of intangibles acquired in a business combination for the years ended 

March 31, 2021 , 

2020 and 

2019 was $ 14,513 , $ 10,637 , and $ 7,090 respectively.

March 31, 2022, 2021 and 2020 was $ 21,806 , $ 14,513 , and $ 10,637 respectively.

Supplemental Balance Sheets Information

5 unchanged sentences

$ 3,504  

Wages payable

Wages and paid-time-off payable

Payroll related taxes

10 unchanged sentences

Current operating lease liabilities

Interest payable

Professional services fees

Contingent consideration

Customer deposits

Income taxes payable

Total other accrued expenses

1 unchanged sentence

$ 9,945  

Credit Facility

On March 5, 2021, we entered into a four -year senior secured credit agreement that includes 1 ) a revolving credit facility in an aggregate principal amount of up to $ 75,000 , 2 ) a swingline loan in an aggregate principal amount not exceeding $ 5,000 , and 3 ) letters of credit in an aggregate stated amount not exceeding $ 2,500 at any time. The Credit Facility also provides for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $ 25,000 and at a maximum $ 75,000 , subject to the satisfaction of certain conditions and lender considerations (together, the available facilities are referred to as the "Credit Facility").

The Credit Facility bears interest at either a base rate or a Eurodollar rate, plus an applicable spread.

We have recorded customary lender fees totaling $ 664  within prepaid expenses and other and other assets on the Consolidated Balance Sheets.

The fees are being expensed on a straight line basis over the life of the agreement. 

The most restrictive financial covenants include a maximum leverage ratio of 5.50 to 1.00 for the first four testing dates on which the line of credit is outstanding;

5.0 to 1.0 on each of the fifth, sixth, seventh, and eighth testing dates;

and 4.5 to 1.0 on each testing date following the eighth testing date, except that we may have a leverage ratio of 5.75 to 1.0 for a period of four consecutive quarters following a permitted acquisition.

The Credit Agreement also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0.

Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales.

As of March 31, 2021, we were in compliance with all required covenants.

As of and throughout the year ended March 31, 2021, we had no outstanding balance under the Credit Agreement.

Convertible Notes

On August 12, 2019, we issued an aggregate principal amount of $ 172,500 of convertible senior notes (the “Notes).

Net proceeds after deducting underwriting discounts and commissions and other related offering expenses payable approximated $ 167,070 .

The Notes mature on August 15, 2025, unless earlier repurchased or converted, and bear interest at a rate of 1.375 % payable semi-annually in arrears on February 15 and August 15 of each year beginning February 15, 2020. 

The Notes are initially convertible at a rate of 

3.5273  shares of common stock per 

$1,000  principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 283.50  per share of common stock.

Noteholders may convert their Notes at their option only in the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending December 

31, 2019 (and only during such calendar quarter), if the last reported sale price per share of 

our common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(ii) during the five consecutive business days immediately after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets;

and (iv) at any time from, and including, April 

15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

Our current intent is to settle conversions entirely in shares of common stock.

We will reevaluate this policy from time to time as we receive conversion notices from noteholders.

If a fundamental change occurs prior to the maturity date, holders may require us to repurchase all or a portion of their Notes for cash at a price equal to 

100 % of the principal amount of the Notes to be repurchased plus unpaid accrued interest.

Noteholders who convert their Notes in connection with a notice of a redemption or a make-whole fundamental change may be entitled to a premium in the form of an increase in the conversion rate of the Notes.  

The circumstances required to allow noteholders to convert their Notes were met once during year ended March 31, 2021;

however, none of the note holders exercised their option to convert.

As of March 31, 2021, the Notes were not convertible as the circumstances for conversion were not satisfied on that date, thus classification of the Notes as a long-term liability on our Consolidated Balance Sheets as of March 31, 2021 remains appropriate.

The if-converted value of the Notes did not exceed the principal balance as of March 31, 2021.

We accounted for the issuance of the Notes by bifurcating the Notes into liability and equity components.

The carrying amount of the liability component was $ 141,427 upon issuance as calculated by measuring the fair value of a similar debt instrument that does 

not  have an associated convertible feature using the income approach.

The implied interest rate (a Level 3 unobservable input) assuming no conversion option was estimated using the Tsiveriotis-Fernandez model;

all other assumptions used in measuring the fair value represent factors market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs.

The carrying amount of the equity component, representing the value of the conversion option, was $ 31,073 and was determined by deducting the fair value of the liability component from the par value of the Notes.

The equity component is not remeasured provided it continues to meet the conditions for equity classification.

The excess of the principal amount of the liability component over its carrying amount (the debt discount) is being amortized to interest expense using the effective interest method over the six -year contractual term of the Notes.

Debt issuance costs related to the Notes include discounts and commissions payable to the initial purchasers of $ 5,175  and third party offering costs of $ 255 .

We allocated the total amount incurred to the liability and equity components of the Notes based on their relative values.

Issuance costs attributable to the liability component were $ 4,452  and will be amortized to interest expense using the effective interest method over the contractual term.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’

The net carrying amount of the Notes was as follows:

Property, plant and equipment consisted of the following:

March 31, 2022

March 31, 2021

Principal outstanding

21,537  

18,857  

Unamortized debt discount

Manufacturing equipment

17,336  

Unamortized debt issuance costs

12,163  

Net carrying value

Computer equipment

Construction in progress

46,346  

38,328  

The net carrying amount of the equity component of the Notes was as follows:

Accumulated depreciation

( 17,726 )  

Property, plant and equipment, net

$ 28,620  

$ 21,998  

Depreciation expense for the years ended 

March 31, 2022, 2021 and 2020 was $ 3,262 , $ 2,959 , and $ 2,234 , respectively. 

Inventories consisted of the following:

March 31, 2022

March 31, 2021

Amount allocated to conversion option

Raw materials

$ 14,172  

$ 5,755  

allocated issuance costs and deferred taxes

Work in process

Finished goods

Inventories, net

$ 24,606  

Equity component, net

$ 11,178  

As of March 31, 2022, $ 11,802  of total inventory on hand is attributable to the new Clinical Genomics division.

Credit Facility

March 5, 2021, 

we entered into a 

four -year senior secured credit agreement that includes 

1 ) a revolving credit facility in an aggregate principal amount of up to $ 75,000 , 

2 ) a swingline loan in an aggregate principal amount 

not  exceeding $ 5,000 , and 

3 ) letters of credit in an aggregate stated amount 

not  exceeding $ 2,500  at any time. The agreement also provides for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $ 25,000  and at a maximum $ 75,000 , subject to the satisfaction of certain conditions and lender considerations.

Amounts borrowed under the Credit Facility bear interest at either a base rate or a Eurodollar rate, plus an applicable spread.

The weighted average interest rate on borrowing under our line of credit during the year ended March 31, 2022 

We are obligated to pay quarterly unused commitment fees of between 

0.15 % and 

0.35 % of the Credit Facility’s aggregate principal amount, based on our leverage ratio.

Since the Credit Facility's inception, the rate applied to our unused commitment fees has been 

We incurred unused commitment fees of $ 78  for the year ended March 31, 2022, 

and the balance of unamortized customary lender fees was $ 484  and $ 650  as of 

March 31, 2022 

March 31, 2021, respectively.

On our Consolidated Balance Sheets, the short term portion of unamortized fees is recorded within prepaid expenses and other, and the long term portion is recorded in other assets.

The fees are being expensed on a straight line basis over the life of the agreement.

The financial covenants in the Credit Facility include a maximum leverage ratio of 

5.50  to 

1.00  for the 

four  testing dates on which the line of credit is outstanding; 

5.0  to 

1.0  on each of the fifth, sixth, seventh, and 

eighth  testing dates;

4.5  to 

1.0  on each testing date following the 

eighth  testing date, except that we 

have a leverage ratio of 

5.75  to 

1.0  for a period of 

four  consecutive quarters following a permitted acquisition.

The Credit Facility also stipulates a minimum fixed charge coverage ratio of 

1.25  to 

 Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales.

March 31, 2022, 

we were in compliance with all required covenants.

October 18, 2021, 

we borrowed $ 70,000  under the Credit Facility to provide a portion of the cash needed to complete the Agena Acquisition as further discussed in Note 4.

 "Significant Transactions." Subsequent to the Agena Acquisition, we repaid $ 21,000  against our outstanding balance during the year ended March 31, 

 As of 

March 31, 2022, 

the outstanding balance under our Credit Facility was $49,000.

Convertible Notes

August 12, 2019, 

we issued an aggregate principal amount of $ 172,500  of convertible senior notes.

The Notes mature on 

August 15, 2025, 

unless earlier repurchased or converted, and bear interest at a rate of 

1.375 % payable semi-annually in arrears on 

February 15 

August 15 

each year beginning on 

February 15, 2020. 

The Notes are initially convertible at a conversion rate of 

3.5273  shares of common stock per 

$1,000  principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 283.50  per share of common stock. Noteholders 

convert their Notes at their option only in the following circumstances:

during any calendar quarter commencing after the calendar quarter ended on December 31, 2019 ( and only during such calendar quarter), if the last reported sale price per share of our common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(ii) during the 

five  consecutive business days immediately after any 

10  consecutive trading day period (such 

10  consecutive trading day period, the “measurement period”) in which the trading price per 

$1,000  principal amount of Notes for each trading day of the measurement period was less than 

98%  of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets;

(iv) at any time from, and including, 

2025  until the close of business on the 

second  scheduled trading day immediately before the maturity date. 

Upon conversion, we will pay or deliver, as the case 

be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

Our current intent is to settle conversions entirely in shares of common stock.

We will reevaluate this policy from time to time as we receive conversion notices from note holders.

The circumstances necessary for conversion were 

not  met during the year ended March 31, 2022.

March 31, 2022, the Notes are classified as a long-term liability on our Consolidated Balance Sheets as the circumstances necessary for conversion were 

not  satisfied as of the end of the period. The if-converted value of the Notes did 

not  exceed the principal balance as of 

March 31, 2022.

Debt issuance costs related to the Notes are comprised of discounts and commissions payable to the initial purchasers of $ 5,175  and 

third  party offering costs of $ 255 .

The debt issuance costs are being amortized to interest expense using the effective interest method over the 

six -year contractual term of the Notes.

Due to our adoption of ASU 

2020 - 06  on 

April 1, 2021, 

no  longer bifurcate the Notes into a liability and an equity component in our Consolidated Balance Sheets (see Note 

 "Description of Business and Summary of Significant Accounting Policies").

The Notes are accounted for entirely as a liability, and the issuance costs of the Notes are accounted for wholly as debt issuance costs.

The equity conversion feature that was recorded to common stock, as well as the unamortized debt discount and amortization expense attributable to equity, have been derecognized.

The net carrying amount of the Notes was as follows:

March 31, 2022

March 31, 2021

Principal outstanding

$ 172,500  

Unamortized debt discount attributable to equity

Unamortized debt issuance costs

( 3,135 )  

Net carrying value

$ 169,365  

$ 145,675  

We recognized interest expense on the Notes as follows:

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The effective interest rate of the liability component of the note is approximately 1.9 %.

See "Recently Issued Accounting Pronouncements" in Note 1.

"Description of Business and Summary of Significant Accounting Policies" for the impact our anticipated April 1, 2021 adoption of ASU 2020 - 06 is expected to have with respect to the Notes. 

Prior to the adoption of ASU 

2020 - 06 ,  the effective interest rate was approximately 

Stock Transactions and Stock-Based Compensation

(dollars and shares in thousands, except per share values)

In November 2005, our Board of Directors approved a program to repurchase up to 300,000 shares of our outstanding common stock.

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Shares of common stock repurchased will be cancelled and repurchases of shares of common stock will be funded through existing cash reserves.

There were no repurchases of our shares of common stock under this plan during the years ended March 31, 2021 , 

2020 and 

As of March 31, 2021 , we have purchased 162,486 shares under this plan.

There were no repurchases of our shares of common stock under this plan during the years ended March 31, 2022, 2021 and 2020 .

As of March 31, 2022 , we have purchased 162  shares under this plan.

Under applicable law, Colorado corporations are not permitted to retain treasury stock.

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Public Offerings of Common Stock 

On June 12, 2020, we completed the sale and issuance of a total of 600,000 shares of our common stock and on June 19, 2020, our underwriters exercised in full their option to purchase an additional 90,000 shares of our common stock.

On June 12, 2020, we completed the sale and issuance of a total of 600  shares of our common stock, and on June 19, 2020, our underwriters exercised in full their option to purchase an additional 90  shares of our common stock.

The offering price to the public was $ 225.00 per share.

The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses we paid, was $ 145,935 .

On August 12, 2019, we completed the sale and issuance of a total of 431,250 shares of our common stock, which includes our underwriters' exercise in full of an option to purchase up to 

56,250 additional shares.

On August 12, 2019, we completed the sale and issuance of a total of 431  shares of our common stock, which includes our underwriters' exercise in full of an option to purchase up to 

56  additional shares.

The offering price to the public was $ 210.00 per share.

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Stock-Based Compensation

During fiscal year 

2022,  our shareholders approved the Mesa Laboratories, Inc. 

2021  Equity Incentive Plan (the 

"2021  Equity Plan"), which authorizes the issuance of 

330  shares of common stock to eligible participants.

2021  Equity Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to grant equity awards, or to delegate its authority under the plan to make grants (subject to certain legal and regulatory restrictions), including the authority to determine the individuals to whom awards will be granted, the type of awards and when the awards are to be granted, the number of shares to be covered by each award, the vesting schedule, and all other terms and conditions of the awards.

203  shares were available for future grants as of March 31, 2022.

2021  Equity Plan includes retiree provisions, which result in the acceleration of stock-based compensation expense for retiree-eligible participants.

Pursuant to the Mesa Laboratories, Inc.

2014 Equity Plan, we grant stock options, RSUs and PSUs to employees and non-employee directors.

We issue new shares of common stock upon the exercise of stock options and the vesting of RSUs and PSUs.

Shares issued pursuant to awards granted prior to The 2014 Equity Plan were issued subject to previous stock plans, and some vested awards are still outstanding under previous plans. For the purposes of counting the shares remaining as available under the 2014 Equity Plan, each share issuable pursuant to outstanding full value awards, such as RSUs and PSUs, counts as five shares issued, whereas each share underlying a stock option counts as one share issued.

Under the 2014 Plan, 1,100,000 shares of common stock have been authorized and reserved for eligible participants, of which 44,039 shares were available for future grants as of March 31, 2021 .

Stock-based compensation expense recognized in the Consolidated Financial Statements was as follows:

2014 Equity Plan and the 2021 Equity Plan (together referred to as "the 2014 and 2021 Equity Plans"), we grant stock options, RSUs and PSUs to employees and non-employee directors.

For purposes of counting the shares remaining available under the 2014 Equity Plan, each share issuable pursuant to outstanding full value awards, such as RSUs and PSUs, counts as five shares issued, whereas each share underlying a stock option counts as one share issued.

For purposes of counting the shares remaining under the 

2021  Equity Plan, each share underlying a stock option or a full value award counts as 

one  share used.

We issue new shares of common stock upon the exercise of stock options and the vesting of RSUs and PSUs. 

Under the 2014 Plan, 1,100 shares of common stock have been authorized and reserved for eligible participants, all of which have been issued as of March 31, 2022. 

Shares issued pursuant to awards granted prior to the 2014 Equity Plan were issued subject to previous stock plans, and 3  vested awards are still outstanding under previous plans.

Stock-based compensation expense recognized in the Consolidated Financial Statements was as follows: 

Year Ended March 31,

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The expected life of options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules, and expectations of future employee behavior.

The majority of options granted during the year ended March 31, 2021 vest equally on the first, second, and third  anniversary of the grant date. Expected stock price volatility is based on historical volatility of our own stock price over the period of time commensurate with the expected life of the award.

The substantial majority of options granted during the years ended March 31, 2022 and March 31, 2021 

vest equally on the first, second, and third  anniversary of the grant date. Expected stock price volatility is based on the historical volatility of our own stock price over the period of time commensurate with the expected life of the award.

The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option.

2 unchanged sentences

We base forfeiture rates on company-specific historical experience of similar awards for similar subsets of our employee population.

Stock option activity under The 2006 Equity Compensation plan and The 2014 Equity Plan as of March 31, 2021, and changes for the year then ended are presented below (shares and dollars in thousands, except per-share data):

Stock option activity under the 2021 Equity Plan and legacy plans as of March 31, 2022 , and changes for the year then ended are presented below:

Stock Options

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Aggregate Intrinsic Value

Outstanding at March 31, 2020

Outstanding as of March 31, 2021

$ 129.55  

4 unchanged sentences

191.52  

115.23  

Awards exercised or distributed

6 unchanged sentences

$ 12,636  

Vested and expected to vest, March 31, 2021

Exercisable and expected to vest, March 31, 2022

$ 174.79  

1 unchanged sentence

The total intrinsic value of stock options exercised during the years ended 

March 31, 2021 , 

2020 and 

2019 was $ 9,559 , $ 9,574 , and $ 10,895 , respectively.

March 31, 2022, 2021 and 2020 was $ 15,209 , $ 9,559 , and $ 9,574 , respectively.

Unrecognized stock-based compensation expense for stock options as of 

March 31, 2022 was $ 3,915  and is expected to be recognized over a weighted average period of 1.8  years.

The total fair value of options vested was $ 2,005 , $ 1,912 , and $ 2,400 during the years ended March 31, 2021 , 

2020 and 

2019 , respectively.

The weighted-average grant price of awards granted during the years ended March 31, 2020 

and March 31, 2019 

was $ 206.35  and $ 144.96 , respectively.

The total fair value of options vested was $ 2,856 , $ 2,005 , and $ 1,912  during the years ended March 31, 2022, 2021 and 2020 , respectively.

The weighted-average grant price of awards granted during the years ended March 31, 2021 and 2020 was $ 226.72  and $ 206.35 , respectively.

Time-Based Restricted Stock Units (RSUs)

RSU activity under The 2014 Equity Plan was as follows (shares and dollars in thousands, except per-share data):

RSU activity under the 2014 and 2021 Equity Plans was as follows (shares and dollars in thousands, except per-share data):

Time-Based Restricted Stock Units

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$ 13,019  

There were 34  RSUs with a weighted average grant date fair value per share of $ 206.30  that are expected to vest as of March 31, 2021 .

For the years ended March 31, 2020 

and 2019, the weighted average fair value per RSU granted was $ 213.31  and $ 157.14 , respectively.

There were 48 time-based RSUs with a weighted average grant date fair value per share of $ 251.94 that are expected to vest as of March 31, 2022 .

For the years ended March 31, 2021 and 2020, the weighted average fair value per RSU granted was $ 231.61  and $ 213.31 , respectively.

Unrecognized stock-based compensation expense for RSUs that we have determined are probable of vesting was $ 7,942  as of March 31, 2022 .

The total fair value of RSUs vested was $ 1,819 , $ 959 , and $ 460 during the years ended March 31, 2021 , 

2020 and 

The total fair value of RSUs vested was $ 5,320 , $ 1,819 , $ 959  during the years ended March 31, 2022, 2021 and 2020 .

Performance-Based Restricted Stock Units (PSUs)

PSU activity under The 2014 Equity Plan was as follows (shares and dollars in thousands, except per-share data):

PSU activity under the 2014 and 2021 Equity Plans was as follows:

Performance-Based Restricted Stock Units

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$ 4,884  

Awards forfeited or expired at target

Awards granted

302.15  

Performance adjustment

Awards distributed

( 29 )  

197.81  

Nonvested as of March 31, 2022 at target

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$ 283.88  

For the year ended March 31, 2020, and March 31, 2019, the average fair value per PSU granted was $ 215.47 and $ 192.99 .

Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $ 841  as of March 31, 2021 

and is expected to be recognized over a weighted average period of 0.6 years.

No PSUs were distributed during the years ended March 31, 2021, March 31, 2020, or 

13,531  

(A) During the quarter ended 

June 30, 2021, 

the fiscal year 

2019  PSUs vested and were paid at 

280% of target, based on actual performance results and completion of service conditions.

In addition, the PSUs granted to employees of Gyros Protein Technologies Holding AB vested at 

60% of target, following a modification of the performance targets by the Compensation Committee of the Board of Directors during fiscal year 

There were no PSUs granted during the year ended March 31, 2021.

For the year ended March 31, 

2020, the average fair value per PSU granted was $ 215.47 .

Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $ 11,651 as of March 31, 2022 

and is expected to be recognized over a weighted average period of 2.8  years.

No PSUs were distributed during the years ended March 31, 2021 and 2020.

During the 

third  quarter of fiscal year 

2022,  we awarded 

7  PSUs to key employees of Agena that are subject to both service and performance conditions ("Agena PSUs").

The Agena PSUs had a grant date fair value of $ 305.79  per share and vest based on continued service, completion of certain compliance requirements, and achievement of specific financial performance targets for the period from 

October 20, 2021 

through 

March 31, 2023. 

During the year ended March 31, 2020, we awarded PSUs to key employees of GPT that are subject to both service and performance conditions ("GPT PSUs").

Originally, the GPT PSUs had a grant date fair value of $ 240.52  per share and vest based on continued service, completion of certain compliance requirements related to the acquisition;

and achievement of specific financial performance targets for the period from January 1, 2020 through March 31, 2021.

The quantity of shares that will be issued upon vesting would range from 0 % to 150 % of the targeted number of shares;

if financial performance is less than 90 % of targets, then no shares would vest.

During the year ended March 31, 2021, our Compensation Committee modified the performance targets for these grants, and as a result, they will vest at 60 % of the modified performance target.

We recorded the change to the performance target as a modification of the award, resulting in $ 432  of expense recorded during the three months ended March 31, 2021 and we expect to record an additional $ 18 of expense during the three months ending June 30, 2021.

We expect to issue 2 shares to recipients of GPT PSUs during the three months ending June 30, 2021. 

During the year ended March 31, 2020, we awarded 8 PSUs (the "FY 20  PSUs") that are subject to both service and performance conditions to eligible employees.

The FY 20  PSUs had a grant date fair value of $ 202.00 per share and vest based on our achievement of specific performance criteria for the three -year period from April 1, 2019 through March 31, 2022 and on a pro-rata basis after 12 months of continued service through June 15, 2022.

The quantity of shares that will be issued upon vesting will range from 0 % to 200 % of the targeted number of shares;

if the defined minimum targets are not met, then no shares will vest.

During the year ended March 31, 2021, we adjusted our estimate of the FY 20  PSUs that we expect to vest based on results achieved and expected to be achieved and we recorded total cumulative effect catch-ups of $ 394  ($ 290  after taxes and $ 0.06 per basic and diluted share). As a result of our new estimate of achievement against our performance targets, we expect expense associated with the FY 20  PSUs that are expected to vest to be approximately $ 95  per quarter.

The quantity of shares that will be issued upon vesting will range from 

50 % to 

 if financial performance is less than 

50%  of targets, then 

no  shares will vest. Based on actual and projected performance through the year ended March 

31, 2022,  we decreased our estimate of Agena PSUs expected to vest from 8 to 4 shares, resulting in a release of $ 295 of expense recorded to selling and administrative expense during the year ended March 31, 2022.

October 28, 2021, 

the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of performance stock units covering a target of 

40  shares (“PSUs”) that is subject to both performance and service conditions to our Chief Executive Officer.

The performance period of the award is the 

three -year period from 

April 1, 2021 

through 

March 31, 2024 

and the service period commences on 

October 28, 2021 

and ends on 

October 27, 2024, 

October 27, 2025, 

October 27, 2026, on which dates eligible PSUs will vest and be distributed.

The performance metrics are cumulative GAAP revenues over the performance period and cumulative adjusted operating income over the performance period. The quantity of shares that will be issued upon vesting will range from 

0  to 

 if financial performance targets are 

not  met, then 

no  shares will vest. 

During the year ended March 31, 2022, 

we awarded 11 PSUs (the "FY19  PSUs") with a grant date fair value of $ 192.99 per share.

The awards vest both based on our achievement of specific performance criteria for the three -year period from April 1, 2018 through March 31, 2021, as well as on a pro-rata basis after 12 months of continued service through June 15, 2021.

Subject to final adjustments, we expect to issue 27  shares under the FY 19  PSUs plan based on actual performance results.

During the year ended March 31, 2021, we recorded net cumulative effect true ups of $ 997 ($ 734  net of tax and $ 0.15 and $ 0.14  per basic and diluted share, respectively) related to the FY19  PSUs.

During the three months ending June 30, 2021, 

we expect to record an additional $ 364  of expense representative of the ongoing service element of the award.

the Compensation Committee of the Board of Directors modified a time-based restricted stock award granted to our Chief Executive Officer during fiscal year 

2017,  distributing 

3  remaining outstanding shares effective 

June 8, 2021. 

The original award required vesting of 

1  award on each of 

March 20, 2022, 

2023,  and 

 As a result of the modification, we recognized the previously unrecognized compensation cost of $ 351  during the year ended March 31, 2022 .

Performance-based RSUs vest upon completion of the service period described in the award agreement and based on achievement of the financial targets described in the award agreements.

We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the financial targets on a straight-line basis over the service period. During fiscal year 

2020,  we awarded 

8  PSUs (the "FY 

20  PSUs") that are subject to both service and performance conditions to eligible employees.

20  PSUs had a grant date fair value of $ 202.00  per share and vest based on our achievement of specific performance criteria for the 

three -year period from 

April 1, 2019 

through 

March 31, 2022 

and on a pro-rata basis after 

12  months of continued service through 

June 15, 2022. 

The quantity of shares that will be issued upon vesting will range from 

200 % of the targeted number of shares;

if the defined minimum targets are 

not  met, then 

no  shares will vest.

Based on actual performance through the year ended March 

31, 2022,  we increased our estimate of FY 

20  PSUs expected to vest from 

6  to 

9  shares, resulting in a cumulative effect true up of $ 650  recorded during the year ended March 31 

 We expect to record $ 129  of expense related to the FY 

20  PSUs in the first  quarter of fiscal year 

Earnings 

(dollars and shares in thousands, except per share values)

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

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Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect. 

The impact of the assumed conversion of the Notes calculated under the if-converted method was anti-dilutive, and as such shares underlying the Notes were excluded from the diluted EPS calculation for the year ended March 31, 2021 . 

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share (shares in thousands):

For the Year Ended March 31,

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share:

Year Ended March 31,

Net income available for shareholders

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 The following stock awards were excluded from the calculation of diluted EPS:

For the Year Ended March 31,

Year Ended March 31,

Assumed conversion of convertible debt

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Under this plan, we match 100 % of the first 4 % of pay contributed by each eligible employee, and contributions vest immediately. Participation is voluntary, and employees are eligible on the first day of the month following their start date.

For certain GPT subsidiaries, we have maintained the terms of the 401 (K) plan that was in effect for the business immediately prior to acquisition.

Under this plan, we match 100 % of the first 6 % of pay contributed by each eligible employee, and contributions vest over three years. For the years ended March 31, 2021 , 

2020 and 

2019 , respectively, we contributed $ 935 , $ 661 , and $ 663 to 401 (K) retirement plans on behalf of employees.

This plan also became effective for Agena employees upon completion of the Agena Acquisition on October 20, 2021.

Prior to the year ended March 31, 2022, certain employees of our Biopharmaceutical Development division were subject to the terms of a 401 (K) plan in effect when we originally acquired the businesses comprising the division.

Under the pre-existing plan, we matched 100 % of the first 6 % of pay contributed by each eligible employee, and contributions vested over three years.

In July 2022, all employees under the pre-existing plan became subject to the terms of the Mesa Laboratories, Inc.

401 (K) Retirement Plan. 

During the years ended March 31, 2022, 2021 and 2020 , respectively, we contributed $ 1,185 , $ 935 , and $ 661  to Mesa Laboratories, Inc.

401 (K) retirement plans on behalf of employees.

Earnings before income taxes are as follows:

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( 474 )  

Total deferred tax benefit

( 3,503 )  

Total deferred tax expense

( 3,503 )  

Total income tax (benefit) expense

Total income tax expense (benefit)

$ 1,703  

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$ 11,274  

$ 8,990  

Stock compensation deductible differences

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( 56,145 )  

( 4,723 )  

Property, plant and equipment

( 3,284 )  

Currency translation adjustment

( 185 )  

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Federal income taxes at statutory rates

$ 1,811  

State income taxes, net of federal benefit

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( 1,816 )  

Foreign-derived intangible income deduction  

( 999 )  

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( 165 )  

Interest reserve adjustment

Limitation for 162(m)

Foreign rate differential  

( 176 )  

Total income tax (benefit) expense

Total income tax expense (benefit)

$ 1,703  

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We expect the examinations for these tax years to be completed during the year ending March 31, 2023.

We recognize interest and penalties related to unrecognized tax benefits in other expense and general and administrative expense, respectively. Accrued interest and penalties related to unrecognized tax benefits were $ 0 , $ 19  and $ 40 as of March 31, 2021 , 

2020 and 

2019 , respectively.

A reconciliation of the changes in the balance of unrecognized tax benefit amounts is as follows:

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$ 1,361  

Decreases related to prior period tax positions

( 629 )  

Increase (decreases) related to prior period tax positions

( 629 )  

2 unchanged sentences

$ 1,329  

During the year ended March 31, 2021, we recorded an income tax benefit of approximately $ 630 , including interest, related to our foreign-derived intangible income deduction recognition based on updated Treasury Regulations, and application of those regulations to our operations, which reduced the effective tax rate by 6.0 %.

The remaining amount of tax benefits that, if recognized, would affect the effective tax rate was $ 64 as of March 31, 2021, excluding interest and penalties.

During the year ended March 31, 2022, we recorded an income tax expense of approximately $ 1,179  related to our reserve associated with the acquired Agena Federal and California Research and Development credits, which increased the effective tax rate by 33.0%.

 The remaining amount of tax benefits that, if recognized, would affect the effective tax rate was $ 1,329  as of March 31, 2022, excluding interest and penalties.

We expect that the remaining amount of unrecognized tax benefits will change in the next 12 months;

however, we do not expect the change to have a significant impact on our consolidated statements of operations or consolidated balance sheets.

however, we do not expect the change to have a significant impact on our consolidated statements of income or consolidated balance sheets.

At this time, we expect resolution of the uncertain tax position within 12 months.

As of March 31, 2021 , and March 31, 2020, respectively, undistributed earnings of our foreign subsidiaries amounted to $ 9,951 and $ 12,900 , respectively.

As of March 31, 2022 , and March 31, 2021, undistributed earnings of our foreign subsidiaries amounted to $ 11,580  and $ 9,951 , respectively.

Those earnings are considered indefinitely reinvested and, accordingly, no U.S.

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tax liability.

Furthermore, as a result of the Tax Cuts and Job Act, a significant portion of the distribution may 

Furthermore, as a result of the Tax Cuts and Jobs Act, a significant portion of the distribution may 

not be subject to current U.S.

income taxes, resulting in no foreign tax credits. 

As of March 31, 2021 , we had $27,547 of gross net operating losses for foreign tax purposes.

As of March 31, 2022 , we had $26,137  of gross net operating losses for foreign tax purposes.

The foreign net operating losses do not expire.

Furthermore, Gyros U.S. had gross net operating loses of $ 11,936 and $ 11,449 , for federal and state tax purposes, respectively, of which the federal net operating losses do not expire, and the state net operating losses begin to expire in the 2022 tax year. In addition, we had $ 16  of foreign tax credit carryovers which will expire in the tax year 2029.

 Gyros U.S. also had $ 153 of Research and Development credit carryforward which will begin to expire in the 2030 tax year.

Commitments and Contingencies

Furthermore, Gyros U.S. had gross net operating losses of $ 7,870  and $ 3,941 , for federal and state tax purposes, respectively, of which the federal net operating losses do not expire, while the state net operating losses began to expire in the 2022 tax year.

Agena Bioscience had domestic gross net operating losses of $ 11,667 and $ 6,744 , for federal and state tax purposes, respectively, of which the federal net operating losses do not expire, and the state net operating losses begin to expire in the 2034 tax year. In addition, we had $ 16  of foreign tax credit carryovers which will expire in the tax year 2029.

 Gyros U.S. also had $ 212 and $ 105 , for federal and state purposes, respectively, of Research and Development credit carryforward which will begin to expire in the 2030 tax year for federal purposes and begin to expire in the 2037 tax year for state purposes.

Agena Bioscience had $ 3,718 and $ 3,244 , for federal and state tax purposes, respectively, of Research and Development credit carryforward, which will begin to expire in the 2034 tax year for federal purposes, and do not expire for state purposes.

 Commitments and Contingencies

We are party to various legal proceedings arising in the ordinary course of business.

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we determined that certain subsidiaries of GPT had established nexus in various jurisdictions during prior periods without properly collecting and remitting sales tax, and in certain cases had collected sales tax and not  remitted it.

We estimate the total net exposure including interest and penalties is $ 2,714 , which is included in other accrued expenses on the Consolidated Balance Sheets.

Approximately $ 1,899  of the liability is considered a preacquisition contingency and is included in purchase accounting, which is described in further detail in Note 4 .

 "Significant Transactions." The remainder of the liability represents $ 565  of sales tax payable for sales made in states where we have established nexus and $ 250  of interest incurred on the liabilities subsequent to the date of acquisition.

The estimated accrued liability for this matter is included in other accrued expenses on the Consolidated Balance Sheets.

The balance was $ 2,080  and $ 2,714  as of March 31, 2022 and 2021, respectively. Approximately $ 1,899  of the liability is considered a preacquisition contingency and was included in purchase accounting.

The amount ultimately remitted may differ from our estimates, which could materially impact the financial statements. We reevaluate the estimated liability each reporting period.

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March 31, 2023.

 Segment Data

Segment information is prepared on the same basis that our CEO, who is our Chief Operating Decision Maker, uses to manage the segments, evaluate financial results, and make key operating decisions.

We have four reportable segments based primarily upon product type:

Sterilization and Disinfection Control, Instruments, Biopharmaceutical Development, and Continuous Monitoring. When determining the reportable segments, we aggregated operating segments based on their similar economic and operating characteristics.

We evaluate the performance of our operating segments based on revenues, organic revenues growth, and gross margin.

The accounting policies of the operating segments are the same as those described in Note 1.

"Description of Business and Summary of Significant Accounting Policies." The following tables set forth our segment information:

The acquisition of Agena discussed in Note 4 .

 "Significant Transactions," expanded our presence further into the life sciences tools market and provided an impetus for the creation of our new Clinical Genomics reportable segment.

This strategic shift in our business also resulted in a change to the way we manage other business units, and as a result, our historical Instruments and Continuous Monitoring reportable segments have been combined to create Calibration Solutions.

Prior year amounts have been recast to conform to current year presentation.

Our change in financial reporting segments has not  resulted in any change to previously reported consolidated amounts.

We have four reportable segments organized primarily by product type:

Sterilization and Disinfection Control, Biopharmaceutical Development, Calibration Solutions, and Clinical Genomics.

When determining our reportable segments, we aggregated operating segments based on their similar economic and operating characteristics.

We evaluate the performance of our operating segments based on revenues, organic revenues growth, and gross profit.

The accounting policies of the operating segments are the same as those described in Note 

 "Description of Business and Summary of Significant Accounting Policies."

The following tables set forth our segment information:

Year Ended March 31,

Total revenues (a)

Revenues (a):

Sterilization and Disinfection Control

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$ 49,660  

32,465  

Biopharmaceutical Development

45,579  

33,892  

Biopharmaceutical Development

13,851  

Calibration Solutions

46,872  

Continuous Monitoring

46,926  

51,713  

Clinical Genomics

32,840  

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Corporate and Other (b)

Total revenues (a)

Total revenues

$ 184,335  

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$ 117,687  

Gross profit (loss)

Gross profit:

Sterilization and Disinfection Control

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$ 35,797  

Biopharmaceutical Development

28,605  

21,035  

Calibration Solutions

24,989  

Biopharmaceutical Development

26,112  

Continuous Monitoring

28,765  

Clinical Genomics

11,941  

Reportable segment gross profit

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$ 87,014  

$ 65,362  

Reconciling items:

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12,358  

Nonoperating expense, net

Nonoperating expense

10,055  

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and unallocated corporate expenses are reported within Corporate and Other. 

Year Ended March 31,

Depreciation and amortization

Sterilization and Disinfection Control

Biopharmaceutical Development

Continuous Monitoring

Reportable segment depreciation and amortization

Corporate and Other (c)

14,956  

10,909  

Depreciation and amortization

$ 17,660  

$ 12,990  

$ 9,428  

Capital expenditures

Sterilization and Disinfection Control

Biopharmaceutical Development

Continuous Monitoring

Reportable segment capital expenditures

Corporate and Other

Capital expenditures

$ 1,992  

$ 1,498  

$ 1,262  

Amortization of intellectual property is included in the calculation of gross margin by segment.

Amortization pertaining to other types of intangible assets, such as customer relationships and trademarks, is included in general and administrative on the Consolidated Statements of Income.

Within the table above, the depreciation and amortization costs that are included in calculating the gross margin of the noted segment are included;

other costs such as amortization that is recorded to general and administrative expense is shown in corporate and other. 

The following table sets forth net inventories by reportable segment.

Our chief operating decision maker is not provided with any other segment asset information. 

March 31, 2021

March 31, 2020

Our chief operating decision maker is not provided with any other segment asset information.

Sterilization and Disinfection Control

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Biopharmaceutical Development

Continuous Monitoring

Reportable segment Inventory  

Calibration Solutions

Clinical Genomics

11,802  

Reportable segment inventory

24,606  

Corporate and administrative

Total inventories

11,178  

Corporate and Other

Total inventories, net

$ 24,606  

The following table sets forth a summary of long-lived assets by geographic area. Long-lived assets exclude goodwill and intangible assets acquired in a business combination. 

$ 11,178  

The following table sets forth a summary of long-lived assets by geographic area. Long-lived assets exclude goodwill and intangible assets acquired in a business combination and deferred tax assets. 

As of March 31,

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No foreign country exceeds 10%  of total revenues.

Quarterly Results (unaudited)

Quarterly financial information for the years ended 

March 31, 2021 and 

2020 is summarized as follows.

Earnings per share per quarter will not sum to reported annual earnings per share due to differences in average outstanding shares as reported on a quarterly basis (in thousands, except per share data):

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

$ 29,941  

$ 31,860  

$ 34,172  

$ 37,964  

20,340  

21,285  

20,653  

24,736  

Net income (loss)

( 4,542 )  

Basic earnings (loss) per share

$ 0.27  

$ 0.52  

$ ( 0.89 )  

$ 0.76  

Diluted earnings (loss) per share

( 0.89 )  

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

$ 26,288  

$ 25,536  

$ 31,655  

$ 34,208  

16,204  

15,586  

14,803  

18,769  

( 4,504 )  

Basic earnings per share

$ 1.20  

$ 0.76  

$ ( 1.03 )  

Diluted earnings per share

( 1.03 )  

Subsequent Events

In April 2021, our Board of Directors declared a quarterly cash dividend of $ 0.16 per share of common stock, payable on June 15, 2021 , to shareholders of record at the close of business on May 31, 2021 .

On April 5, 2022, we entered into an Open Market Sale Agreement SM  with Jefferies LLC as sales agent, pursuant to which we may issue and sell, from time to time, through Jefferies, shares of our common stock with an aggregate value of up to $ 150 million.

In April 2022, we announced a corporate restructuring that, among other things, resulted in the elimination of the Senior Vice President of Commercial Operations role.

As a result, we are formally aligning each of our business units under general managers who will oversee sales, customer service, research and development, as well as financial operations of the business unit for which they are responsible.

We incurred $557 of general and administrative expenses associated with the corporate restructuring in the fourth quarter of fiscal year 2022.

These changes, among others, are expected to result in a total of $ 195  of severance in the first quarter of fiscal year 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data