MESA LABORATORIES INC /CO/ 10-K

Item 8. Financial Statements and Supplementary Data   [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]       Stockholders and Board of Directors Mesa Laboratories, Inc. Lakewood, Colorado   Opinions on the Financial Statements and Internal Control over Financial Reporting   We have audited the accompanying consolidated balance sheets of Mesa Laboratories, Inc. (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”).   In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on criteria established in the COSO framework.   Basis for Opinions   The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.   Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. 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.     Page 40 Table of Contents   Definition and Limitations of Internal Control over Financial Reporting   A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (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 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.   Page 41 Table of Contents   Income Taxes – Refer to Notes 1 and 12 Critical Audit Matter Description   The Company’s income tax expense includes U.S., state, local and international income taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities. The tax rate used to determine the deferred tax assets and liabilities is based on the enacted tax rate for the year and the manner in which the differences are expected to reverse. 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 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.   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 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   We have served as the Company’s auditor since 1986. Denver, Colorado                                                           May 31, 2022   Page 42 Table of Contents     Mesa Laboratories, Inc. Consolidated Balance Sheets (In thousands, except share amounts)       March 31,     March 31,       2022     2021   ASSETS                 Current assets                 Cash and cash equivalents   $ 49,346     $ 263,865   Accounts receivable, less allowances of $ 630 and $ 218 , respectively     41,224       23,787   Inventories, net     24,606       11,178   Prepaid expenses and other     9,142       4,919   Total current assets     124,318       303,749   Property, plant and equipment, net     28,620       21,998   Deferred tax asset     1,318       616   Other assets     11,830       2,530   Customer relationships, net     176,688       93,548   Intellectual property, net     53,273       12,606   Other intangibles, net     20,156       5,587   Goodwill     291,166       160,841   Total assets   $ 707,369     $ 601,475                     LIABILITIES AND STOCKHOLDERS’ EQUITY                 Current liabilities                 Accounts payable   $ 7,897     $ 4,473   Accrued payroll and benefits     14,717       9,388   Unearned revenues     13,830       8,777   Other accrued expenses     11,611       9,945   Total current liabilities     48,055       32,583   Deferred tax liability     39,224       16,275   Other long-term liabilities     7,924       715   Credit facility     49,000       -   Convertible senior notes, net of discounts and debt issuance costs     169,365       145,675   Total liabilities     313,568       195,248   Stockholders’ equity                 Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,265,627 and 5,140,568 shares, respectively     313,460       317,652   Retained earnings     76,675       72,459   Accumulated other comprehensive income     3,666       16,116   Total stockholders’ equity     393,801       406,227   Total liabilities and stockholders’ equity   $ 707,369     $ 601,475     See accompanying notes to consolidated financial statements.   Page 43 Table of Contents     Mesa Laboratories, Inc. Consolidated Statements of Income (In thousands, except per share data)       Year Ended March 31,       2022     2021     2020                             Revenues                         Product   $ 149,422     $ 107,028     $ 93,401   Service     34,913       26,909       24,286   Total revenues     184,335       133,937       117,687   Cost of revenues                         Cost of products     54,747       33,120       40,445   Cost of services     20,498       13,803       11,880   Total cost of revenues     75,245       46,923       52,325   Gross profit     109,090       87,014       65,362   Operating expenses                         Selling     28,310       18,480       12,910   General and administrative     60,311       45,788       38,174   Research and development     15,767       10,388       6,355   Total operating expenses     104,388       74,656       57,439   Operating income     4,702       12,358       7,923   Nonoperating (income) expenses                         Interest expense and amortization of debt discount     3,885       8,024       5,504   Other (income) expense, net     ( 2,757 )     2,031       ( 1,443 ) Total nonoperating expense     1,128       10,055       4,061   Earnings before income taxes     3,574       2,303       3,862   Income tax expense (benefit)     1,703       ( 971 )     2,084   Net income   $ 1,871     $ 3,274     $ 1,778                             Earnings per share                         Basic   $ 0.36     $ 0.66     $ 0.42   Diluted   $ 0.35     $ 0.64     $ 0.41                             Weighted-average common shares outstanding                         Basic     5,212       4,975       4,200   Diluted     5,335       5,124       4,371     See accompanying notes to consolidated financial statements.   Page 44 Table of Contents     Mesa Laboratories, Inc. Consolidated Statements of Comprehensive (Loss) Income (In thousands except per share data)       Year Ended March 31,       2022     2021     2020                             Net income   $ 1,871     $ 3,274     $ 1,778   Other comprehensive (loss) income                         Foreign currency translation adjustments     ( 12,450 )     26,485       ( 8,367 ) Comprehensive (loss) income   $ ( 10,579 )   $ 29,759     $ ( 6,589 )   See accompanying notes to consolidated financial statements.   Page 45 Table of Contents     Mesa Laboratories, Inc. Consolidated Statements of Stockholders’ Equity (In thousands, except share amounts)       Common Stock                               Number of Shares     Amount     Retained Earnings     AOCI*     Total   March 31, 2019     3,890,138     $ 39,823     $ 73,303     $ ( 1,815 )   $ 111,311   Proceeds from issuance of common stock, net of issuance costs of $ 5,568     431,250       84,995       -       -       84,995   Proceeds from conversion feature of convertible senior notes, due 2025, net of allocated costs and deferred taxes of $ 8,338     -       22,735       -       -       22,735   Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes     65,752       4,945       -       -       4,945   Dividends paid, $0.64 per share     -       -       ( 2,722 )     -       ( 2,722 ) Stock-based compensation expense     -       5,525       -       -       5,525   Currency translation recognized in earnings from the exit of Cold Chain Packaging Division     -       -       -       ( 187 )     ( 187 ) Foreign currency translation     -       -       -       ( 8,367 )     ( 8,367 ) Net income     -       -       1,778       -       1,778   March 31, 2020     4,387,140       158,023       72,359       ( 10,369 )     220,013   Proceeds from the issuance of common stock, net of issuance costs of $ 9,315     690,000       145,935       -       -       145,935   Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes     63,428       4,426       -       -       4,426   Dividends paid, $ 0.64 per share     -       -       ( 3,165 )     -       ( 3,165 ) Stock-based compensation expense     -       9,268       -       -       9,268   Foreign currency translation     -       -       -       26,485       26,485   Adoption of accounting standards, net     -       -       ( 9 )     -       ( 9 ) Net income     -       -       3,274       -       3,274   March 31, 2021     5,140,568       317,652       72,459       16,116       406,227   Exercise of stock options and vesting of restricted stock units, net of shares withheld for taxes     125,059       7,152       -       -       7,152   Dividends paid, $ 0.64 per share     -       -       ( 3,339 )     -       ( 3,339 ) Stock-based compensation expense     -       11,391       -       -       11,391   Foreign currency translation     -       -       -       ( 12,450 )     ( 12,450 ) Cumulative adjustment due to adoption of ASU 2020-06     -       ( 22,735 )     5,684       -       ( 17,051 ) Net income     -       -       1,871       -       1,871   March 31, 2022     5,265,627     $ 313,460     $ 76,675     $ 3,666     $ 393,801     *Accumulated Other Comprehensive Income (Loss).   See accompanying notes to consolidated financial statements.   Page 46 Table of Contents     Mesa Laboratories, Inc. Consolidated Statements of Cash Flows (In thousands)         Year Ended March 31,       2022     2021     2020   Cash flows from operating activities:                         Net income   $ 1,871     $ 3,274     $ 1,778   Adjustments to reconcile net income to net cash provided by operating activities:                         Depreciation and amortization     25,068       17,660       12,990   Stock-based compensation     11,391       9,268       5,525   Non-cash interest and debt amortization     1,029       5,397       3,314   Amortization of step-up in inventory basis     7,462       ( 436 )     8,502   Deferred taxes     128       ( 3,503 )     ( 1,971 ) Other     ( 534 )     161       ( 13 ) Cash provided by changes in operating assets and liabilities:                         Accounts receivable, net     ( 6,752 )     ( 647 )     ( 1,665 ) Inventories     ( 1,045 )     929       414   Prepaid expenses and other assets     ( 3,606 )     2,878       ( 432 ) Accounts payable     1,370       967       ( 61 ) Accrued liabilities and taxes payable     255       ( 317 )     ( 2,147 ) Unearned revenues     2,586       1,442       754   Net cash provided by operating activities     39,223       37,073       26,988   Cash flows from investing activities:                         Acquisitions, net of cash acquired     ( 300,793 )     -       ( 184,102 ) Purchases of property, plant and equipment     ( 4,432 )     ( 1,992 )     ( 1,498 ) Proceeds from the sale of assets     -       -       15   Net cash (used in) investing activities     ( 305,225 )     ( 1,992 )     ( 185,585 ) Cash flows from financing activities:                         Proceeds from the issuance of debt     70,000       -       -   Payments of debt     ( 21,000 )     -       ( 23,000 ) Dividends     ( 3,339 )     ( 3,165 )     ( 2,722 ) Proceeds from the exercise of stock options     7,152       4,426       4,945   Payments of contingent consideration     ( 237 )     ( 304 )     ( 11 ) Proceeds from the issuance of common stock, net     -       145,935       84,995   Proceeds from the issuance of convertible senior notes, net     -       -       172,500   Payment of debt issuance costs     -       ( 664 )     ( 5,430 ) Net cash provided by financing activities     52,576       146,228       231,277   Effect of exchange rate changes on cash and cash equivalents     ( 1,093 )     1,176       ( 1,485 ) Net (decrease) increase in cash and cash equivalents     ( 214,519 )     182,485       71,195   Cash and cash equivalents at beginning of period     263,865       81,380       10,185   Cash and cash equivalents at end of period   $ 49,346     $ 263,865     $ 81,380     Cash paid for:                         Income taxes paid   $ 3,048     $ 1,367     $ 2,634   Interest paid   $ 2,762     $ 2,372     $ 1,627     See accompanying notes to consolidated financial statements.   Page 47 Table of Contents   Mesa Laboratories, Inc. Notes to Consolidated Financial Statements (dollar and share amounts in thousands, unless otherwise specified)     Note 1. Description of Business and Summary of Significant Accounting Policies   Description of Business   In this Annual Report on Form 10 -K, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company,” or "Mesa."   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.   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. As of  March 31, 2022,  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.   Page 48 Table of Contents   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. 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   The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our Consolidated Financial Statements and accompanying notes. Actual results could differ from our estimates under different assumptions or conditions.   Summary of Significant Accounting Policies   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 within stockholders’ equity. 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 Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. We determine fair value based on the following input hierarchy:   Level 1: Quoted prices for identical assets or liabilities in active markets.   Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated with observable market data.   Level 3: Unobservable inputs supported by little or no market activity. Pricing models, discounted cash flow methodologies, and other similar techniques involving significant management judgment or estimation typically require unobservable inputs.   Page 49 Table of Contents   Revenue Recognition 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 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 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. Products sold include an assurance-type warranty which is accounted for as part of accrued warranty expense.    Services:  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 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, 2022  or March 31, 2021.    Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. 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 Payments made by customers to us for shipping and handling costs are included in revenues on the Consolidated Statements of Income, and our expenses are included in cost of revenues. 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 expensed to cost of revenues when products are sold .    Unearned Revenues 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.   Page 50 Table of Contents   Accrued Warranty Expense We typically provide assurance-type limited product warranties on our products and, accordingly, accrue for estimates of related warranty expenses.   Cash and Cash  Equivalents 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 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. We estimate credit losses based on historical information, current and expected future economic and market conditions, and reviews of the current status of customers’ trade accounts receivable. Customers are pooled based on shared specific risk factors such as historical credit loss patterns. In circumstances in which we become aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. 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 $ 304 , $ 100 , and $ 1  of expense associated with doubtful accounts for the years ended March 31, 2022, 2021, and 2020, respectively.    Inventories 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. We evaluate labor and overhead costs annually unless specific circumstances necessitate a mid-year evaluation for specific items.   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. 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 Property, plant and equipment are stated at cost, except for assets acquired in acquisitions, which are recorded at fair value. Expenditures for major renewals and improvements that extend the life of the asset are capitalized, while expenditures for minor replacements, maintenance, and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the assets’ estimated useful lives. Upon asset retirement or disposal, accounts are relieved of cost and accumulated depreciation, and any related gain or loss is reflected in our results of operations. For certain business consolidation activities, accelerated depreciation may be required for the revised remaining useful lives of assets designated to be abandoned. At least annually, we evaluate and adjust as necessary the estimated lives of property, plant and equipment. Any changes in estimated useful lives are recorded prospectively. Estimated useful lives of significant classes of depreciable assets are as follows:   Category Useful Lives Buildings / Building improvements 40 (years or less) Office equipment 7 (years or less) Manufacturing equipment  7 (years or less) Computer equipment  3 (years or less) 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.    Page 51 Table of Contents   Leases Under ASC 842, we determine whether contractual arrangements contain a lease at the inception of the arrangement. If a lease is identified in an arrangement, we recognize a right-of-use asset ("ROU") and liability on our Consolidated Balance Sheets and determine whether the lease should be classified as a finance or operating lease. We do not have any finance leases. We do  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. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments. 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. 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. We have also entered into lease agreements that have variable payments related to certain indexes. Variable lease payments are recognized in the period in which those payments are incurred. All non-lease components are readily identifiable in our lease contract. We account for non-lease components separately from the lease component to which it is related.    Acquired Intangible Assets Our goodwill and other intangible assets result from acquisitions of existing businesses. 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 (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 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. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and economic factors such as competition or specific market conditions. Definite-lived intangible assets are tested for impairment only if events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group might not be recoverable.   The fair value measurement used in testing intangible asset impairment is typically based on discounted cash flow projection models, using Level 3 inputs. 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. Impairment charges represent the excess carrying amount over estimated fair value. We do not believe our goodwill and other intangible assets are impaired as of March 31, 2022 .   Page 52 Table of Contents   Research & Development Costs 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, 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.   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 8. “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") 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 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. 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. The assumptions used to calculate the fair value of granted options reflect market conditions and our historical experience. We estimate forfeitures using a dynamic forfeiture model based on historical data when determining the amount of stock-based compensation costs to recognize each period.   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'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. Performance goals are determined by the Board of Directors and may include measures such as revenues growth and profitability targets. 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   Per Share 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. Potentially dilutive securities are excluded from the calculation of diluted EPS in the event they are subject to performance conditions that have not yet been achieved. See Note 10. “Earnings per Share” for EPS calculations for the years ended March 31, 2022, 2021 and 2020 .   Page 53 Table of Contents   Income Taxes Income tax expense includes U.S., state, local and international income taxes, plus a provision for U.S. taxes on undistributed earnings of foreign subsidiaries and other prescribed foreign entities not deemed to be indefinitely reinvested. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities. The tax rate used to determine the deferred tax assets and liabilities is based on the enacted tax rate for the year and the manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.   We are involved in various tax matters, some of which have uncertain outcomes. We establish reserves to remove some or all of the tax benefits related to our tax positions at the time we determine one of the following conditions exists: ( 1 ) the tax position is not “more likely than not”  to be sustained, ( 2 ) the tax position is “more likely than not”  to be sustained, but for a lesser amount, or ( 3 ) the tax position is “more likely than not”  to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether a tax position is uncertain, ( 1 ) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; ( 2 ) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and ( 3 ) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. A tax benefit that has been previously reserved because of a failure to meet the “more likely than not”  recognition threshold would be recognized in income tax expense in the first period when the uncertainty disappears under any of the following conditions: ( 1 ) the tax position is “more likely than not”  to be sustained, ( 2 ) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or ( 3 ) the statute of limitations for the tax position has expired (See Note 12. “Income Taxes”).   Acquisition Related Contingent Consideration Liabilit ies 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 We are party to various claims and legal proceedings that arise in the normal course of business. We record an accrual for legal contingencies when we determine it is probable we have incurred a liability and can reasonably estimate the amount of the loss (See Note 13. “Commitments and Contingencies”).   Purchase Accounting for Acquisitions We account for all business combinations in which we obtain control over another entity using the acquisition method of accounting, which requires most assets (both tangible and intangible) and liabilities (including contingent consideration) to be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities is recognized as goodwill. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These types of analyses require us to make and monitor assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. 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 acquisition costs as incurred related to an acquisition in selling, general, and administrative expenses.   Page 54 Table of Contents   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, 2022, 2021 and 2020 , our acquisitions of businesses (net of cash acquired) totaled $ 300,793 , $ 0 , and $ 184,102  respectively.   Business Consolidation Costs We estimate our liabilities for business closure activities by gathering detailed estimates of costs and, if applicable, asset sale proceeds, for each business consolidation initiative. For a typical business consolidation initiative, we estimate costs of employee severance, impairment of property and equipment and other assets including estimating net realizable value, if necessary, accelerated depreciation, termination payments for contracts and leases, and any other qualifying costs related to the exit plan. Such charges represent our best estimates; however, they require assumptions about plans that may change over time. The estimated costs are grouped by specific projects within the overall exit plan and are monitored at each reporting period, and any subsequent change to the original estimate is recorded in current earnings.    Risks and Uncertainties The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. 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" ), 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 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;     ● Estimates regarding recoverability for customer receivables;     ● Estimates of the net realizable value of inventory.   Recently Issued Accounting Pronouncements 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 In  August  2020,  the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update  No.   2020 - 06,   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  2025. ASU  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,  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  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.  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  2020 - 06.   Page 55 Table of Contents   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.    On  October 28, 2021,  the FASB issued Accounting Standard Update  No.   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.      Note 2 . Revenue Recognition   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       Sterilization and Disinfection Control     Biopharmaceutical Development     Calibration Solutions     Clinical Genomics (1)     Corporate and Other     Total   Discrete Revenues                                                 Consumables   $ 50,311     $ 15,551     $ 3,675     $ 22,271     $ -     $ 91,808   Hardware and Software     700       21,651       28,537       6,726       -       57,614   Services     2,225       3,864       11,212       1,796       -       19,097   Contracted Revenues                                                 Services     5,808       4,513       3,448       2,047       -       15,816   Total Revenues   $ 59,044     $ 45,579     $ 46,872     $ 32,840     $ -     $ 184,335     Page 56 Table of Contents       Year Ended March 31, 2021       Sterilization and Disinfection Control     Biopharmaceutical Development     Calibration Solutions     Clinical Genomics (1)     Corporate and Other     Total   Discrete Revenues                                                 Consumables   $ 45,869     $ 13,942     $ 3,198     $ -     $ -     $ 63,009   Hardware and Software     505       13,545       29,969       -       -       44,019   Services     1,848       2,928       10,850       -       -       15,626   Contracted Revenues                                                 Services     4,897       3,477       2,909       -       -       11,283   Total Revenues   $ 53,119     $ 33,892     $ 46,926     $ -     $ -     $ 133,937           Year Ended March 31, 2020       Sterilization and Disinfection Control     Biopharmaceutical Development (2)     Calibration Solutions     Clinical Genomics (1)     Corporate and Other     Total   Discrete Revenues                                                 Consumables   $ 42,654     $ 4,981     $ 3,240     $ -     $ 2,436     $ 53,311   Hardware and Software     551       6,015       33,524       -       -       40,090   Services     1,592       1,761       11,556       -       27       14,936   Contracted Revenues                                                 Services     4,863       1,094       3,393       -       -       9,350   Total Revenues   $ 49,660     $ 13,851     $ 51,713     $ -     $ 2,463     $ 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 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). We do not have any contract assets. Unbilled receivables, which are not classified as contract assets, represent arrangements in which sales have been recorded prior to billing and our right to payment is unconditional.   A summary of contract liabilities is as follows:   Contract liabilities as of March 31, 2021   $ 8,994   Prior year liabilities recognized in revenues during the year ended March 31, 2022     (5,791 ) 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     Page 57 Table of Contents   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. See Note 4. "Significant Transactions."       Note 3. 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 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 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.   We have outstanding $ 172,500 aggregate principal of 1.375 % convertible senior notes due August 15, 2025. We estimate the fair value of the Notes based on the last actively traded price or observable market input preceding the end of the reporting period. The estimated fair value and carrying value of the Notes were as follows:       March 31, 2022     March 31, 2021       Carrying Value     Fair Value (Level 2)     Carrying Value     Fair Value (Level 2)   Notes   $ 169,365     $ 185,438     $ 145,675     $ 188,780     The carrying value of the Notes increased as a result of the adoption of ASU  2020 - 06,  discussed further in Note  1 .  "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. 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  and  March 31, 2021.   Page 58 Table of Contents     Note 4. Significant Transactions   Acquisitions Acquisition of Agena Bioscience, Inc. On  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. See Note 8 .  "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  may  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  included: 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.   Page 59 Table of Contents   The following table summarizes the allocation of the preliminary purchase price as of  October 20, 2021:       Life (in years)     Amount   Cash and cash equivalents           $ 7,544   Accounts receivable (a)             11,100   Other current assets (b)             25,480   Total current assets             44,124   Property, plant and equipment/noncurrent assets             15,832   Deferred tax asset             811   Intangible assets:                 Goodwill (c)     N/A       135,880   Customer relationships (d)     12       103,800   Intellectual property (d)     8       45,400   Tradenames (d)     12       15,700   Total Assets acquired           $ 361,547   Accounts payable             2,174   Unearned revenues             2,713   Other current liabilities             12,295   Total current liabilities             17,182   Deferred tax liability             27,765   Other noncurrent liabilities             8,263   Total liabilities assumed           $ 53,210   Total purchase price, net of cash acquired           $ 300,793       (a) Trade receivables, which is expected to be collected.  (b) Includes $ 7,462  of inventory step-up, which was amortized entirely within fiscal year  2022.  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. (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  until  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  may  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  may  be material.   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.   Page 60 Table of Contents   Unaudited Pro Forma Information 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.       Year Ended March 31,       2022     2021   Pro forma total revenues (1)   $ 222,612     $ 214,206   Pro forma net income (2)     6,193       ( 3,879 )     ( 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  31, 2022. ● 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  26 %).   GPT Acquisition On  October 31, 2019,  we completed the acquisition of  100 % of the outstanding shares of GPT, which comprises our Biopharmaceutical Development segment. 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.    IBP Acquisition 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.   Page 61 Table of Contents   Restructuring Butler, New Jersey We completed the previously announced closure of our Butler, New Jersey facility during the year ended  March 31, 2022.  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. 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 $ 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. As of  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.     Note 5. Leases   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:   Lease Assets and Liabilities Balance Sheet Location   March 31, 2022     March 31, 2021   Operating lease ROU asset Other assets   $ 10,201     $ 1,801   Current operating lease liabilities Other accrued expenses     2,768       1,023   Noncurrent operating lease liabilities Other long-term liabilities     7,436       677     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:       Year Ended March 31,       2022     2021   Operating lease expense   $ 1,973     $ 1,130   Variable lease expense     419       272   Total lease expense   $ 2,392     $ 1,402   Weighted average remaining lease term in years     4.3       1.8   Weighted average discount rate     1.7 %     3.3 %   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:       Year Ended March 31,       2022     2021   Cash paid for amounts included in the measurements of lease liabilities   $ 1,896     $ 1,192   Operating lease assets obtained in exchange for operating lease obligations      10,577       558     Page 62 Table of Contents   Maturities of lease liabilities are as follows as for the years ending March 31:   2023   $ 2,905   2024     2,195   2025     1,999   2026     1,954   2027     1,490   Future value of lease liabilities     10,543   Less: imputed interest     339   Present value of lease liabilities   $ 10,204       Note 6 . 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:       Sterilization and Disinfection Control     Biopharmaceutical Development     Calibration Solutions     Clinical Genomics     Total   March 31, 2020   $ 29,594       74,716     $ 37,226     $ -     $ 141,536   Effect of foreign currency translation     559       10,715       63       -       11,337   Goodwill related to GPT acquisition     -       7,968       -       -       7,968   March 31, 2021   $ 30,153     $ 93,399     $ 37,289     $ -     $ 160,841   Effect of foreign currency translation     ( 403 )     ( 5,134 )     ( 52 )     34       ( 5,555 ) Goodwill related to Agena acquisition     -       -       -       135,880       135,880   March 31, 2022   $ 29,750     $ 88,265     $ 37,237     $ 135,914     $ 291,166     Other intangible assets were as follows:       March 31, 2022     March 31, 2021       Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount     Gross Carrying Amount     Accumulated Amortization     Net Carrying Amount   Customer relationships   $ 244,157     $ ( 67,469 )   $ 176,688     $ 145,754     $ ( 52,206 )   $ 93,548   Intellectual property     65,893       ( 12,620 )     53,273       21,201       ( 8,595 )     12,606   Other Intangibles     25,350       ( 5,194 )     20,156       9,911       ( 4,324 )     5,587   Total   $ 335,400     $ ( 85,283 )   $ 250,117     $ 176,866     $ ( 65,125 )   $ 111,741     Page 63 Table of Contents   The increase in the goodwill and intangible assets balance from  March 31, 2021  to  March 31, 2022  is related to the Agena Acquisition, partially offset by changes in foreign currency rates. See Note 4 .  "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:        Est. Useful   Weighted Avg.       Life   Remaining Life   Description   (Years)   (Years)   Customer Relationships   5 - 15   8.2   Intellectual Property   5 - 15   7.4   Other Intangibles   5 - 15   11.4       The following is estimated amortization expense for the years ending March 31:   2023     29,745   2024     29,229   2025     27,645   2026     26,873   2027     26,364     Amortization expense of intangibles acquired in a business combination for the years ended  March 31, 2022, 2021 and 2020 was $ 21,806 , $ 14,513 , and $ 10,637 respectively.     Note 7. Supplemental Balance Sheets Information   Accrued payroll and benefits consisted of the following:       March 31, 2022     March 31, 2021   Bonus payable   $ 7,468     $ 3,504   Wages and paid-time-off payable     3,677       3,562   Payroll related taxes     2,069       2,043   Other benefits payable     1,503       279   Total accrued payroll and benefits   $ 14,717     $ 9,388     Other accrued expenses consisted of the following:       March 31, 2022     March 31, 2021   Accrued business taxes   $ 4,967     $ 4,749   Current operating lease liabilities     2,768       1,023   Customer deposits     751       514   Income taxes payable     928       1,648   Other     2,197       2,011   Total other accrued expenses   $ 11,611     $ 9,945     Page 64 Table of Contents   Property, plant and equipment consisted of the following:       March 31, 2022     March 31, 2021   Land   $ 889     $ 889   Buildings     21,537       18,857   Manufacturing equipment     17,336       12,163   Computer equipment     4,519       4,350   Construction in progress     487       985   Other     1,578       1,084   Gross total     46,346       38,328   Accumulated depreciation     ( 17,726 )     ( 16,330 ) 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   Raw materials   $ 14,172     $ 5,755   Work in process     4,419       426   Finished goods     6,015       4,997   Inventories, net   $ 24,606     $ 11,178     As of March 31, 2022, $ 11,802  of total inventory on hand is attributable to the new Clinical Genomics division.     Note 8 . Indebtedness   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 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  was  1.5 %. 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  0.15 %. 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  and  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  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 Facility 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, 2022,  we were in compliance with all required covenants.   On  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,  2022.  As of  March 31, 2022,  the outstanding balance under our Credit Facility was $49,000.   Page 65 Table of Contents   Convertible Notes On  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  and  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  may  convert their Notes at their option only in the following circumstances:   (i)  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; 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 note holders. The circumstances necessary for conversion were  not  met during the year ended March 31, 2022. As of  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,  we  no  longer bifurcate the Notes into a liability and an equity component in our Consolidated Balance Sheets (see Note  1.  "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     $ 172,500   Unamortized debt discount attributable to equity     -       ( 23,497 ) Unamortized debt issuance costs     ( 3,135 )     ( 3,328 ) Net carrying value   $ 169,365     $ 145,675       We recognized interest expense on the Notes as follows:       Year Ended March 31,       2022     2021   Coupon interest expense at 1.375%   $ 2,372     $ 2,372   Amortization of debt discounts and issuance costs     890       5,397   Total   $ 3,262     $ 7,769     The effective interest rate of the liability component of the note is approximately 1.9 %. Prior to the adoption of ASU  2020 - 06 ,  the effective interest rate was approximately  5.5 %.    Page 66 Table of Contents     Note 9 . 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. Under the program, shares of common stock may be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. 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, 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. The price paid for repurchased shares is allocated between common stock and retained earnings based on management’s estimate of the original sales price of the underlying shares.   Public Offerings of 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  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. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses we paid, was $ 84,995 .   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. The  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. Our  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 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.   Page 67 Table of Contents   Stock-based compensation expense recognized in the Consolidated Financial Statements was as follows:        Year Ended March 31,       2022     2021     2020   Stock-based compensation expense   $ 11,391     $ 9,268     $ 5,525   Amount of income tax (benefit) recognized in earnings     (4,055 )     (1,816 )     (1,576 ) Stock-based compensation expense, net of tax   $ 7,336     $ 7,452     $ 3,949       Stock Options   The weighted average assumptions utilized in the Black-Scholes option-pricing model to estimate the fair value of stock option awards granted each year were as follows:        2022     2021     2020   Risk-free interest rate     0.46 %     0.27 %     1.80 % Expected life (years)     3.52       3.86       4.33   Expected dividend yield     0.06 %     0.10 %     0.13 % Volatility     38.82 %     38.83 %     36.52 % Weighted-average Black-Scholes fair value per share at date of grant   $ 76.02     $ 67.66     $ 66.02     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 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. The dividend yield assumption is based on our anticipated cash dividend payouts. The amounts shown above for the estimated fair value per option granted are before the estimated effect of forfeitures, which reduces the amount of expense recorded in our Consolidated Statements of Income. We base forfeiture rates on company-specific historical experience of similar awards for similar subsets of our employee population.   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       Shares Subject to Options     Weighted- Average Exercise Price per Share     Weighted-Average Remaining Contractual Life (Years)     Aggregate Intrinsic Value   Outstanding as of March 31, 2021     253     $ 129.55       2.7     $ 28,856   Awards granted     37       268.81                   Awards forfeited or expired     ( 4 )     191.52                   Awards exercised or distributed     ( 84 )     96.68                   Outstanding as of March 31, 2022     202     $ 167.14       2.9     $ 18,261   Exercisable as of March, 31, 2022     100     $ 128.32       1.9     $ 12,636   Exercisable and expected to vest, March 31, 2022     199     $ 174.79       3.0     $ 18,357     The total intrinsic value of stock options exercised during the years ended  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 $ 2,856 , $ 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.   Page 68 Table of Contents   Time-Based Restricted Stock Units (RSUs) 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       Number of Shares     Weighted- Average Grant Date Fair Value per Share     Weighted- average Remaining Contractual Life (Years)     Aggregate Intrinsic Value   Nonvested at March 31, 2021     37     $ 206.56       1.1     $ 8,948   Awards granted     37       274.55                   Awards forfeited or expired     ( 3 )     250.09                   Awards distributed     ( 20 )     208.52                   Nonvested as of March 31, 2022     51     $ 252.86       1.0     $ 13,019     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 $ 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 and 2021 Equity Plans was as follows:       Performance-Based Restricted Stock Units       Number of Shares     Weighted- Average Grant Date Fair Value per Share     Weighted- average Remaining Contractual Life (Years)     Aggregate Intrinsic Value   Nonvested at March 31, 2021 at target     20     $ 207.88       0.8     $ 4,884   Awards granted     48       302.15                   Performance adjustment     16                           Awards distributed     ( 29 )     197.81                   Nonvested as of March 31, 2022 at target     55     $ 288.45       4.3     $ 14,093   Expected to vest     53     $ 283.88       2.8       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  2021.   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.  The quantity of shares that will be issued upon vesting will range from  50 % to  200%;  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.   Page 69 Table of Contents   On  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,  and  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  40;  if financial performance targets are  not  met, then  no  shares will vest.    During the year ended March 31, 2022,  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  2024.  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. 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. 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  2022.  We expect to record $ 129  of expense related to the FY  20  PSUs in the first  quarter of fiscal year  2023.     Note 10 . Earnings  Per Share (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. Diluted earnings per share is computed similarly to basic earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. Potentially dilutive securities include common shares related to stock options and RSUs (collectively “stock awards”) and convertible debt. Stock awards are excluded from the calculation of diluted EPS in the event that they are subject to performance conditions that have not yet been achieved or are antidilutive. 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 years ended March 31, 2022 .    The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share:       Year Ended March 31,       2022     2021     2020   Net income available for shareholders   $ 1,871     $ 3,274     $ 1,778   Weighted average outstanding shares of common stock     5,212       4,975       4,200   Dilutive effect of stock options     100       125       159   Dilutive effect of RSUs     20       10       12   Dilutive effect of PSUs     3       14       -   Fully diluted shares     5,335       5,124       4,371                             Basic earnings per share   $ 0.36     $ 0.66     $ 0.42   Diluted earnings per share   $ 0.35     $ 0.64     $ 0.41     Page 70 Table of Contents    The following stock awards were excluded from the calculation of diluted EPS:       Year Ended March 31,       2022     2021     2020   Assumed conversion of convertible debt     608       608       387   Stock awards that were anti-dilutive     40       44       24   Stock awards subject to performance conditions     26       14       18   Total stock awards excluded from diluted EPS     674       666       429       Note 11 . Employee Benefit Plan s   We adopted the Mesa Laboratories, Inc. 401 (K) Retirement Plan effective January 1, 2000. 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. 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.     Note 12 . Income Taxes   Earnings before income taxes are as follows:       Year Ended March 31,       2022     2021     2020   Domestic   $ 4,579     $ 6,297     $ 16,059   Foreign     ( 1,005 )     ( 3,994 )     ( 12,197 ) Total earnings before income taxes   $ 3,574     $ 2,303     $ 3,862     The components of our provision for income taxes are as follows:       Year Ended March 31,       2022     2021     2020   Current tax provision                         U.S. Federal   $ ( 83 )   $ 1,500     $ 2,348   U.S. State     286       628       814   Foreign     1,372       404       993   Total current tax expense     1,575       2,532       4,155   Deferred tax provision:                         U.S. Federal     1,707       ( 2,410 )     60   U.S. State     337       ( 619 )     599   Foreign     ( 1,916 )     ( 474 )     ( 2,730 ) Total deferred tax expense     128       ( 3,503 )     ( 2,071 ) Total income tax expense (benefit)   $ 1,703     $ ( 971 )   $ 2,084     Page 71 Table of Contents   The components of net deferred tax assets and liabilities are as follows:       March 31, 2022     March 31, 2021   Deferred tax assets:                 Net operating loss   $ 11,274     $ 8,990   Credits     5,321       169   Stock compensation deductible differences     2,137       2,099   Inventories     1,316       838   Allowances and reserves     1,977       1,471   Accrued employee-related expenses     296       209   Debt related     91       --   Other     7       25   Total deferred tax assets     22,419       13,801   Deferred tax liabilities:                 Goodwill and intangible assets     ( 56,145 )     ( 23,029 ) Property, plant and equipment     ( 3,284 )     ( 1,275 ) Debt     --       ( 4,723 ) Currency translation adjustment     ( 185 )     --   Other     ( 3 )     ( 29 ) Total deferred tax liabilities     ( 59,617 )     ( 29,056 ) Valuation allowance     ( 708 )     ( 404 ) Net deferred tax (liability)   $ ( 37,906 )   $ ( 15,659 )   A reconciliation of our income tax provision and the amounts computed by applying statutory rates to income before income taxes is as follows:       Year Ended March 31,       2022     2021     2020   Federal income taxes at statutory rates   $ 751     $ 483     $ 811   State income taxes, net of federal benefit     628       ( 221 )     1,122   Tax benefit of stock option exercises     ( 4,055 )     ( 1,816 )     ( 1,576 ) Foreign-derived intangible income deduction     --       ( 999 )     --   Research and development credit     ( 495 )     ( 165 )     ( 191 ) Interest reserve adjustment     668       --       --   Limitation for 162(m)     4,039       1,113       1,112   Foreign rate differential     152       810       657   Other     15       ( 176 )     149   Total income tax expense (benefit)   $ 1,703     $ ( 971 )   $ 2,084     We or one of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our federal tax returns for all years after 2018, state tax returns after 2017  and foreign tax returns after 2017  are subject to future examination by tax authorities for all our tax jurisdictions. Although the outcome of tax audits, if any, is always uncertain, we believe that we have adequately accrued for all amounts of tax, including interest and penalties and any adjustments that may result. The tax year ended  December 31,  2018  for Gyros US, Inc., and its subsidiary (together "Gyros U.S."), which we acquired as part of the GPT Acquisition, is under examination by the IRS. Additionally, the tax year ended March 31, 2019 for Mesa Laboratories, Inc. is under review by the IRS. 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 , $ 0  and $ 19  as of March 31, 2022, 2021 and 2020 , respectively.   Page 72 Table of Contents   A reconciliation of the changes in the balance of unrecognized tax benefit amounts is as follows:       Year Ended March 31,       2022     2021     2020   Beginning balance   $ 64     $ 653     $ 1,361   Increase (decreases) related to prior period tax positions     1,179       ( 629 )     ( 1,027 ) Increases related to current period tax positions     86       40       319   Ending balance   $ 1,329     $ 64     $ 653     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 income or consolidated balance sheets. At this time, we expect resolution of the uncertain tax position within 12 months.   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. federal and state income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation; however, unrecognized foreign tax credits would be available to reduce a portion of the U.S. tax liability. 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, 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 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.     Note 13.  Commitments and Contingencies   We are party to various legal proceedings arising in the ordinary course of business. As of March 31, 2022, we are not party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations, or cash flows.    Companies are required to collect and remit sales tax from certain customers if the company is determined to have nexus in a particular state. The determination of nexus varies by state and often requires technical knowledge of each jurisdiction's tax case law. During the year ended March 31, 2021,  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. 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. We expect to resolve the liability during the fiscal year ending  March 31, 2023.   Page 73 Table of Contents     Note 14.  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. 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  1 .  "Description of Business and Summary of Significant Accounting Policies."   The following tables set forth our segment information:       Year Ended March 31,       2022     2021     2020   Revenues (a):                         Sterilization and Disinfection Control   $ 59,044     $ 53,119     $ 49,660   Biopharmaceutical Development     45,579       33,892       13,851   Calibration Solutions     46,872       46,926       51,713   Clinical Genomics     32,840       -       -   Reportable segment revenues     184,335       133,937       115,224   Corporate and Other (b)     -       -       2,463   Total revenues   $ 184,335     $ 133,937     $ 117,687                             Gross profit:                         Sterilization and Disinfection Control   $ 43,720     $ 39,870     $ 35,797   Biopharmaceutical Development     28,605       21,035       382   Calibration Solutions     24,989       26,112       28,765   Clinical Genomics     11,941       -       -   Reportable segment gross profit     109,255       87,017       64,944   Corporate and Other (b)     ( 165 )     ( 3 )     418   Gross profit   $ 109,090     $ 87,014     $ 65,362                             Reconciling items:                         Operating expenses     104,388       74,656       57,439   Operating income     4,702       12,358       7,923   Nonoperating expense     1,128       10,055       4,061   Earnings before income taxes   $ 3,574     $ 2,303     $ 3,862       (a) Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.   (b) 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.    Page 74 Table of Contents   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,     March 31,       2022     2021   Sterilization and Disinfection Control   $ 2,176     $ 2,333   Biopharmaceutical Development     4,495       4,162   Calibration Solutions     6,133       4,683   Clinical Genomics     11,802       -   Reportable segment inventory     24,606       11,178   Corporate and Other     -       -   Total inventories, net   $ 24,606     $ 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,       2022     2021   United States   $ 36,475     $ 21,443   Foreign     3,975       3,085   Total   $ 40,450     $ 24,528     Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows:       Year Ended March 31,       2022     2021     2020   United States   $ 99,068     $ 71,387     $ 66,344   Foreign     85,267       62,550       51,343   Total revenues   $ 184,335     $ 133,937     $ 117,687     No customer accounts for 10% or more of our revenues. No foreign country exceeds 10%  of total revenues.     Note 15 . Subsequent Events   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.   Page 75 Table of Contents     Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   None.