See accompanying notes to ~~condensed~~ ~~consolidated financial statements.~~Condensed Consolidated Financial Statements.

~~Note~~ 3~~– Impairment Loss on Goodwill~~ Significant Transactions

~~During the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017,~~ revenues in our Cold Chain Packaging reporting segment decreased significantly as compared to the same period in the prior year primarily due to a significant decrease in revenues from our largest customer and the loss of the business of ~~one~~ ~~of our larger customers.~~ Belyntic GmbH

During the three months ended December 31, ~~2017~~2022, we acquired substantially all of the assets and certain liabilities of Belyntic GmbH’s peptide purification business (“the Belyntic acquisition”) for $6,450, of which $4,950 was paid on the date of acquisition and the remainder will be paid upon approval of patent applications expected in the next 36 months. The business complements our existing peptide synthesis business, part of the Biopharmaceutical Development segment, by adding a new consumables line. During the third quarter of fiscal year 2023, we prepared a preliminary analyses of the valuation of net assets acquired in the Belyntic acquisition. This preliminary purchase price allocation is subject to revision as more detailed analyses are completed

Agena Bioscience, Inc

On October 20, 2021, we completed the acquisition of Agena Bioscience, Inc. (“Agena”) for $300,793, net of cash acquired but inclusive of working capital adjustments (the “Agena Acquisition”). The Agena Acquisition 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 ~~detailed review~~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.

We funded the acquisition and transactions relating thereto with cash on hand and borrowings under the Credit Facility (as defined below). 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 ~~cold chain packaging~~closing date.

Fair Value of Net Assets Acquired

The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the final valuation of Agena. We have made appropriate adjustments to deferred taxes and tax-related balances during the three months ended December 31. 2022.

The following table summarizes the allocation of the purchase price as of October 20, 2021:

Life (in years)

Amount

Cash and cash equivalents
$ 7,544
Accounts receivable
11,100
Other current assets
25,480
Total current assets
44,124
Property, plant and equipment/noncurrent assets
15,832
Deferred tax asset
811
Intangible assets:

Goodwill
N/A 135,728
Customer relationships
12 103,800
Intellectual property
8 45,400
Tradenames
12 15,700
Total Assets acquired
$ 361,395
Accounts payable
2,174
Unearned revenues
2,713
Other current liabilities
11,052
Total current liabilities
15,939
Deferred tax liability
28,856
Other noncurrent liabilities
8,263
Total liabilities assumed
$ 53,058
Total purchase price, net of cash acquired
$ 300,793
Acquired Goodwill
Acquired goodwill of $135,728, all of which is allocated to the Clinical Genomics reportable segment, represents the value expected to arise from 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.
Page 7
Table of Contents
Unaudited Pro Forma Information
The following unaudited pro forma financial information presents the combined results of operations of Mesa and Agena as if the acquisition had occurred on April 1, 2021 after giving effect to certain pro forma adjustments.

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Pro forma total revenues
$ 54,287 $ 56,659 $ 163,489 $ 163,733
Pro forma net income (loss)
558 (8,426 ) 887 (3,989 )
The pro forma financial information includes adjustments that are directly attributable to the business combinations and ~~concluded~~are factually supportable. The pro forma adjustments include incremental amortization of intangible assets, additional stock-based compensation expense for key Agena employees, the removal of interest expense attributable to Agena’s external debt that ~~long~~was paid off as part of the acquisition, and ~~difficult sales-cycles associated~~the pro forma tax impact for such adjustments. Cost savings or operating synergies expected to result from the acquisition are not included in the pro forma results. For the three and nine months ended December 31, 2022, the pro forma financial information excludes $145 and $768 of non-recurring acquisition-related expenses, respectively. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations.
Note 3. Revenue Recognition
We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related software, consumables, and services. We evaluate revenues internally based primarily on operating segment and the nature of goods and services provided.
Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, and data loggers. Hardware sales may be offered with ~~this product set, when coupled with higher than previously contemplated costs~~accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.
Consumables are typically used on a one-time basis and require frequent replacement in our customers' operating cycles. Consumables such as reagents used for molecular and ~~expanding~~genetic analysis or solutions used for protein synthesis are critical to the necessary infrastructure to support revenues growth have resulted in a forecast of lower than expected revenues, gross margin percentages and overall profitability as compared to our original model for this business. Based on these facts, we concluded that we had a triggering event requiring assessment of impairment for certainongoing use of our ~~long-lived assets associated~~instruments. Consumables such as biological indicator test strips are used on a standalone basis.
We offer service and maintenance contracts for our instruments, which may contain performance obligations satisfied: over time, such as an obligation to perform repairs or replace parts as needed over a contractually-specified period of time; upon completion of a discrete service, such as stand-alone maintenance services or discrete services within annual contracts; or, in many cases, both.
Typically, revenue is recognized upon shipment of a product, upon completion of a discrete service, or over a period of time reflective of the performance obligation period in the applicable contract, depending on when our obligation to the customer is satisfied. The significant majority of our revenues and related receivables are generated from contracts with ~~the Cold Chain Packaging reporting segment. As a result, we reviewed the long-lived assets associated with this reporting segment and recorded a~~customers that are ~~$13,819,000~~12 ~~impairment charge related to goodwill, which is included~~months or less in ~~impairment loss on goodwill on the accompanying condensed consolidated statements of operations~~duration.
The following tables present disaggregated revenues for the three and nine months ended December 31, ~~2017.~~ 2022 and 2021, respectively:

Three Months Ended December 31, 2022

Clinical Genomics

Sterilization and Disinfection Control

Biopharmaceutical Development

Calibration Solutions

Total

Consumables
$ 10,885 $ 14,307 $ 3,584 $ 553 $ 29,329
Hardware and Software
3,371 95 5,844 7,023 16,333
Services
1,329 1,881 2,218 3,197 8,625
Total Revenues
$ 15,585 $ 16,283 $ 11,646 $ 10,773 $ 54,287

Three Months Ended December 31, 2021

Clinical Genomics*

Sterilization and Disinfection Control

Biopharmaceutical Development

Calibration Solutions

Total

Consumables
$ 10,221 $ 11,718 $ 4,099 $ 889 $ 26,927
Hardware and Software
4,407 250 6,100 6,978 17,735
Services
1,857 1,863 2,557 3,757 10,034
Total Revenues
$ 16,485 $ 13,831 $ 12,756 $ 11,624 $ 54,696

Nine Months Ended December 31, 2022

Clinical Genomics

Sterilization and Disinfection Control

Biopharmaceutical Development

Calibration Solutions

Total

Consumables
$ 34,815 $ 41,239 $ 11,248 $ 2,272 $ 89,574
Hardware and Software
9,349 619 16,656 18,696 45,320
Services
4,361 6,163 6,853 11,218 28,595
Total Revenues
$ 48,525 $ 48,021 $ 34,757 $ 32,186 $ 163,489
Page 8
Table of Contents

Nine Months Ended December 31, 2021

Clinical Genomics*

Sterilization and Disinfection Control

Biopharmaceutical Development

Calibration Solutions

Total

Consumables
$ 10,221 $ 36,579 $ 11,588 $ 2,701 $ 61,089
Hardware and Software
4,407 495 14,435 20,608 39,945
Services
1,857 5,940 6,165 10,460 24,422
Total Revenues
$ 16,485 $ 43,014 $ 32,188 $ 33,769 $ 125,456
*Revenues in the Clinical Genomics division represent transactions subsequent to the Agena Acquisition on October 20, 2021.
Revenues from external customers are attributed to individual countries based upon the locations to which the products are shipped or exported, or locations where services are performed, as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

United States
$ 28,645 $ 30,414 $ 88,756 $ 68,253
China
7,482 6,243 18,659 9,960
Other
18,160 18,039 56,074 47,243
Total revenues
$ 54,287 $ 54,696 $ 163,489 $ 125,456
Other than China, no foreign country exceeds 10% of total revenues.
Contract Balances
Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in unearned revenues or customer deposits, called contract liabilities. Short-term contract liabilities are included within other accrued expenses and unearned revenues in the accompanying Condensed Consolidated Balance Sheets, and long-term contract liabilities are included within other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.
A summary of contract liabilities is as follows:
Contract liabilities as of March 31, 2022
$ 15,069
Prior year liabilities recognized in revenues during the nine months ended December 31, 2022
(7,927 )
Contract liabilities added during the nine months ended December 31, 2022, net of revenues recognized
9,091
Contract liabilities balance as of December 31, 2022
$ 16,233
Contract liabilities primarily relate to service contracts with original expected service durations of 12 months or less and will be recognized to revenue over time as our performance obligations are satisfied.
Note 4. 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. 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. We reserve an allowance for potential write-offs of accounts receivable using historical collection experience and current and expected future economic and market conditions, but we have not written off any significant accounts to date. 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 have outstanding $172,500 aggregate principal of 1.375% convertible senior notes due August 15, 2025 (the "Notes"). 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 and the fair value is approximately correlated to our stock price. The estimated fair value and carrying value of the Notes were as follows:

December 31, 2022

March 31, 2022

Carrying Value

Fair Value (Level 2)

Carrying Value

Fair Value (Level 2)

Notes
$ 170,044 $ 157,191 $ 169,365 $ 185,438
Assets recognized or disclosed at fair value in the unaudited condensed consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets. These assets are measured at fair value if determined to be impaired. During the three months ended December 31, 2022, in response to the loss of a significant customer, we used Level 3 inputs to test the recoverability of the Clinical Genomics division’s intangible asset group and evaluate the division’s goodwill for impairment in response to the loss ~~was~~of a significant customer. After considering all information available to us as of the date of testing, we concluded that no impairment is indicated. Fair values preliminarily assigned to assets acquired and liabilities assumed in the Belyntic acquisition were measured using ~~a market approach utilizing an EBITA multiple model. The remaining goodwill~~Level 3 inputs, and ~~intangible assets associated with this segment~~ are subject to change. There were ~~$1,434,000~~no transfers between the levels of the fair value hierarchy during the three and ~~$4,340,000,~~nine ~~respectively as of~~months ended December 31, ~~2017.~~2022 or 2021, respectively.
Page 9
Table of Contents

Note 5. Supplemental Balance Sheets Information4 - ~~Inventories~~

Inventories consist of the ~~following (in thousands):~~following:

December 31, 2017

March 31, 2017

December 31, 2022

March 31, 2022

Raw materials
$ 9,886 $ 10,815 $ 20,122 $ 14,172
Work-in-process
411 342
Work in process
1,972 4,419
Finished goods
3,165 3,604 11,645 6,015
Less: reserve
(3,008 ) (888 )
$ 10,454 $ 13,873
Total inventories
$ 33,739 $ 24,606
Prepaid expenses and other consist of the following:

December 31, 2022

March 31, 2022

Prepaid expenses
$ 3,450 $ 2,871
Deposits
1,702 1,410
Prepaid income taxes
3,352 2,536
Other current assets
3,446 2,325
Total prepaid expenses and other
$ 11,950 $ 9,142
Accrued payroll and benefits consist of the following:

December 31, 2022

March 31, 2022

Bonus payable
$ 2,714 $ 7,468
Wages and paid-time-off payable
2,926 3,677
Payroll related taxes
1,773 2,069
Other benefits payable
721 1,503
Total accrued payroll and benefits
$ 8,134 $ 14,717

Note 6. Goodwill and Intangible Assets, Net5 ~~– Facility Relocation~~

InIntangible assets, the significant majority of which are finite-lived, consist of the following:

December 31, 2022

March 31, 2022

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationships
$ 237,412 $ (80,627 ) $ 156,785 $ 244,157 $ (67,469 ) $ 176,688
Intellectual property
65,871 (17,732 ) 48,139 65,893 (12,620 ) 53,273
Other intangibles
24,745 (6,222 ) 18,523 25,350 (5,194 ) 20,156
Total
$ 328,028 $ (104,581 ) $ 223,447 $ 335,400 $ (85,283 ) $ 250,117
Amortization expense for finite-lived intangible assets acquired in a business combination was as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Amortization in cost of revenues
$ 1,695 $ 1,227 $ 5,094 $ 1,877
Amortization in general and administrative
5,452 4,695 16,479 11,618
Total
$ 7,147 $ 5,922 $ 21,573 $ 13,495
For the following fiscal years ending ~~August 2016,~~March 31, ~~we announced~~amortization expense is estimated as follows:
Remainder of 2023

7,250

2024

28,490

2025

26,911

2026

26,149

2027

25,652

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

Clinical Genomics

Sterilization and Disinfection Control

Biopharmaceutical Development

Calibration Solutions

Total

March 31, 2022
$ 135,914 $ 29,750 $ 88,265 $ 37,237 $ 291,166
Effect of foreign currency translation
(244 ) (297 ) (7,871 ) (32 ) (8,444 )
Goodwill related to Belyntic acquisition
- - 2,973 - 2,973
Measurement period adjustment - Agena acquisition
114 - - - 114
December 31, 2022
$ 135,784 $ 29,453 $ 83,367 $ 37,205 $ 285,809
Goodwill acquired in the Biopharmaceutical Development division resulted from the Belyntic acquisition and is tax deductible.
Page 10
Table of Contents
Note 7. Indebtedness
Credit Facility
We maintain a senior credit facility (the “Credit Facility”) that ~~we planned~~includes 1) a revolving credit facility in an aggregate principal amount of up to ~~shut down both our Omaha~~$75,000, 2) a swingline loan in an aggregate principal amount not exceeding $5,000, and ~~Traverse City manufacturing facilities and relocate those operations to the new Bozeman building.~~3) letters of credit in an aggregate stated amount not exceeding $2,500. The ~~move of those~~ ~~two~~ ~~facilities, along with the current Bozeman operations, began~~Credit Facility matures in March ~~2017~~2025. The Credit Facility also provides for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $25,000 and at a maximum $75,000, subject to the satisfaction of certain conditions and lender considerations. As of December 31, 2022, we had $19,000 outstanding under the Credit Facility.
On December 22, 2022, Mesa and the financial institutions amended the Credit Facility to replace references to the Eurodollar Rate with references to the Secured Overnight Financing Rate ("SOFR").
Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate, plus an applicable spread. 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.
The financial covenants in the Credit Facility include a maximum leverage ratio of 5.0 to 1.0 for the period ended December 31, 2022, 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 December 31, 2022, we were in compliance with all covenants.
Convertible Notes
On August 12, 2019, we issued an aggregate principal amount of $172,500 of Notes. The net proceeds from the Notes, after deducting underwriting discounts and commissions and other related offering expenses payable by us, were approximately $167,056. 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.
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 ~~estimated~~ to ~~be completed by~~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 ~~June 30, 2018.~~ not~~We estimate that~~ met during the ~~total costs~~three months ended December 31, 2022. As of December 31, 2022, the Notes are classified as a long-term liability on our Condensed Consolidated Balance Sheets as the circumstances necessary for conversion were not satisfied as of the ~~relocation will be~~end of the period. The if-converted value of the Notes did ~~$2,100,000~~not ~~(which~~exceed the principal balance as of December 31, 2022.
The net carrying amount of the Notes was as follows:

December 31, 2022

March 31, 2022

Principal outstanding
$ 172,500 $ 172,500
Unamortized debt issuance costs
(2,456 ) (3,135 )
Net carrying value
$ 170,044 $ 169,365
We recognized interest expense on the Notes as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Coupon interest expense at 1.375%
$ 593 $ 593 $ 1,779 $ 1,779
Amortization of debt discounts and issuance costs
227 223 679 666
Total interest and amortization of debt issuance costs
$ 820 $ 816 $ 2,458 $ 2,445
The effective interest rate on the notes is ~~comprised primarily of facility moving expenses, retention bonuses for existing personnel and payroll costs for duplicative personnel during the transition period) of which~~approximately 1.9%.
Note ~~$725,000~~8 ~~was incurred during the year ended~~ ~~March 31, 2017.~~ ~~We incurred~~ ~~$772,000~~ ~~in relocation costs for~~. Stockholders' Equity
Stock-Based Compensation
During the nine months ended December 31, ~~2017,~~ 2022, we issued stock options, restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Mesa Laboratories, Inc. 2021 Equity Incentive Plan (the "2021 Equity Plan"), which authorizes the issuance of ~~which~~ ~~$503,000~~ ~~and~~ ~~$269,000~~ ~~are reflected in cost~~330 shares of revenues and general and administrative expense, respectively, in the accompanying condensed consolidated statements of operations. Facility relocation costs, which are associated with our Sterilization and Disinfection reporting segment, are as follows for the ~~nine~~ ~~months ended~~ ~~December 31, 2017:~~
● ~~Retention bonuses for existing personnel of~~ ~~$305,000~~
●
~~Duplicative employment costs of~~ ~~$97,000~~
●
~~Moving costs of $~~~~370,000~~
~~Facility relocation amounts accrued and paid for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017~~ ~~are as follows (in thousands):~~
Balance at March 31, 2017
$ 673
Facility relocation expense
772
Cash payments
(1,082 )
Balance at December 31, 2017
$ 363
~~Page 6~~
In ~~July~~ ~~2017,~~ ~~we completed the move from the Omaha facility and subsequently sold that building for~~ ~~$1,116,000~~ ~~(net of commission costs) which resulted in a gain of~~ ~~$116,000~~ ~~which is included in other expense, net in the accompanying condensed consolidated statements of operations for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017.~~common stock to eligible participants.

In ~~July 2017,~~ ~~we put our old Bozeman facility up for sale. The assets associated with this facility are presented on the accompanying condensed consolidated balance sheets as of~~ ~~December 31, 2017~~ ~~as assets held for sale.~~
~~Note~~ 6 - ~~Long-T~~~~erm Debt~~
~~Long-term debt consists of the following (in thousands):~~

December 31,
2017

March 31,
2017

Line of credit (3.44% at December 31, 2017)
$ 37,500 $ 35,500
Term loan (3.63% at December 31, 2017)
19,000 19,750
Less: discount
(392 ) (450 )
Less: current portion
(1,500 ) (1,125 )
Long-term portion
$ 54,608 $ 53,675
On ~~March 1, 2017,~~ ~~we entered into a~~ ~~five~~~~-year agreement (the “Credit Facility”) for an~~ ~~$80,000,000~~ ~~revolving line of credit (“Line of Credit”), a~~ ~~$20,000,000~~ ~~term loan (“Term Loan”) and up to~~ ~~$2,500,000~~ ~~of letters of credit with a banking syndicate of~~ ~~four~~ ~~banks. In addition, the Credit Facility provides a post-closing accordion feature which allows for the Company to request to increase the Line of Credit or Term Loan up to an additional~~ ~~$100,000,000.~~ ~~Funds from the Credit Facility~~ ~~may~~ be used to pay down the previous credit facility, finance working capital needs and for general corporate purposes in the ordinary course of business (including, without limitation, permitted acquisitions).
~~Line of Credit and Term Loan indebtedness bears interest at either: (~~1~~) LIBOR, as defined~~ ~~in the agreement, plus an applicable margin ranging from~~ ~~1.50%~~ to ~~2.50%;~~ ~~or (~~2~~) the alternate base rate (“ABR”), which is the greater of JPMorgan’s prime rate or the federal funds effective rate or the overnight bank funding rate plus~~ ~~0.5%.~~ ~~We elect the interest rate with each borrowing under the line of credit. In addition, there is an unused line fee of~~ ~~0.15%~~ to ~~0.35%.~~ ~~Letter of credit fees are based on the applicable LIBOR rate.~~
~~The Term Loan requires~~ 20 ~~quarterly principal payments (the~~ ~~first~~ ~~due date was~~ ~~March 31, 2017)~~ ~~in the amount of~~ ~~$250,000~~ ~~(increasing by~~ ~~$125,000~~ ~~each year up to~~ ~~$750,000~~ ~~in the~~ ~~fifth~~ ~~year). The remaining balance of principal and accrued interest are due on~~ ~~March 1, 2022.~~
~~The Credit Facility is secured by all of our assets and requires us to maintain a ratio of funded debt to our trailing~~ ~~four~~ ~~quarters of EBIDTA (the “Leverage Ratio”), as defined~~ ~~in the agreement, of less than~~ ~~3.0~~ to ~~1.0,~~ ~~provided that, we~~ ~~may~~ ~~once during the term of the Credit Facility, in connection with a Permitted Acquisition for which the aggregate consideration paid or to be paid in respect thereof equals or exceeds~~ ~~$20,000,000,~~ ~~elect to increase the maximum Leverage Ratio permitted hereunder to (i)~~ ~~3.50~~ to ~~1.00~~ ~~for a period of~~ ~~four~~ ~~consecutive fiscal quarters commencing with the fiscal quarter in which such Permitted Acquisition occurs (the “Initial Holiday Period”) and (ii)~~ ~~3.25~~ to ~~1.00~~ ~~for the period of~~ ~~four~~ ~~consecutive fiscal quarters immediately following the Initial Holiday Period. The Credit Facility also requires us to maintain a minimum fixed charge coverage ratio of less than~~ ~~1.25~~ to ~~1.0.~~ ~~We were compliant with the required covenants at~~ ~~December 31, 2017.~~
~~We incurred origination and debt issuance costs of~~ ~~$460,000~~ ~~which are treated as a debt discount and are netted against amounts outstanding on the~~ ~~condensed consolidated balance sheets.~~
~~As of~~ ~~December 31~~, ~~2017,~~ ~~future contractual maturities of debt are as follows (in thousands):~~
Year Ending March 31,

2018
$ 375
2019
1,625
2020
2,125
2021
2,625
2022
49,750
$ 56,500
In ~~January 2018,~~ ~~we made a~~ ~~$3,500,000~~ ~~payment under our Line of Credit.~~
~~Page 7~~
~~Note~~ 7 - ~~Stock-B~~~~ased Compensation~~
~~Amounts~~Expense recognized ~~in the~~ ~~condensed consolidated financial statements~~ related to stock-based compensation ~~are~~is as ~~follows (in thousands, except per share data):~~follows:

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017

2016

2017

2016

Total cost of stock-based compensation charged against (loss) income before income taxes
$ 438 $ 380 $ 1,423 $ 1,221
Amount of income tax (expense) benefit recognized in earnings
(99 ) 328 893 1,027
Amount charged against net (loss) income
$ 537 $ 52 $ 530 $ 194
Impact on net (loss) income per common share:

Basic
$ 0.14 $ 0.01 $ 0.14 $ 0.05
Diluted
0.14 0.01 $ 0.14 0.05

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Stock-based compensation expense
$ 2,056 $ 3,703 $ 9,859 $ 7,939
Amount of income tax (benefit) recognized in earnings
226 (743 ) (1,855 ) (4,247 )
Stock-based compensation expense, net of tax
$ 2,282 $ 2,960 $ 8,004 $ 3,692

Stock-based compensation expense is included in cost of revenues, selling, ~~and~~ general and administrative, and research and development expense in the accompanying ~~condensed consolidated statements~~unaudited Condensed Consolidated Statements of ~~operations.~~Operations.

~~The fair value~~
Page 11
Table of ~~each~~ stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model (“Black-Scholes”). We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest 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 is calculated based upon the dividend payments made during the prior ~~four~~ ~~quarters as a percent of the average stock price for that period.~~
Contents
The following is a summary of stock option award activity for the nine months ended December 31, ~~2017:~~2022:

Number of
Shares

Weighted-
Average Exercise
Price per Share

Weighted-
Average
Remaining
Contractual
Term

Aggregate
Intrinsic Value
(000s)

Outstanding at March 31, 2017
510,361 $ 75.78 5.0 $ 23,956
Stock options granted
95,605 123.09 5.3
Stock options forfeited
(52,833 ) 95.29 4.8
Stock options expired
(964 ) 79.87 3.1
Stock options exercised
(51,496 ) 61.27 --
Outstanding at December 31, 2017
500,673 84.24 4.5 $ 20,092

Exercisable at December 31, 2017
164,475 60.13 3.8 $ 10,554

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, 2022
202 $ 167.14 2.9 $ 18,261
Awards granted
43 185.61
Awards forfeited or expired
(7 ) 225.12
Awards exercised
(45 ) 100.19
Outstanding as of December 31, 2022
193 $ 184.70 3.1 $ 3,406

The ~~total intrinsic value of~~stock options ~~exercised was~~granted during the ~~$4,243,000~~nine months ended December 31, 2022 vest in equal installments on the first, second, and ~~$4,701,000~~third anniversary of the grant date.
The following is a summary of RSU award activity for the nine months ended December 31, ~~2017~~ 2022:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Number of Shares

Weighted- Average Grant Date Fair Value per Share

Number of Shares

Weighted- Average Grant Date Fair Value per Share

Outstanding as of March 31, 2022⁽¹⁾
51 $ 252.86 55 $ 288.45
Awards granted⁽¹⁾
42 187.45 19 179.63
Performance adjustment⁽²⁾
- - 2 202.00
Awards forfeited
(8 ) 232.20 - -
Awards distributed⁽²⁾
(26 ) 250.81 (10 ) 202.00
Outstanding as of December 31, 2022⁽¹⁾
59 $ 210.44 66 $ 267.97
⁽¹⁾
Balances for PSUs are reflected at target.
⁽²⁾
During the nine months ended December 31, 2022, the fiscal year 2020 PSUs vested and were distributed at 126% of target, based on actual performance results and completion of service conditions.
The outstanding time-based RSUs vest and settle in shares of our common stock on a one-for-one basis. Substantially all of the RSUs granted during the nine months ended December 31, 2022 vest in equal installments on the first, second, and ~~2016,~~third ~~respectively.~~anniversary of the grant date. We recognize the expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period.

A ~~summary~~PSUs vest upon completion of the ~~status~~service period described in the award agreement and based on achievement of the performance 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 performance targets on a straight-line basis over the service period.
During the nine months ended December 31, 2022, the Compensation Committee of the Board of Directors created a plan to award 19 PSUs at target (the "FY23 PSUs") that are subject to both service and performance conditions to eligible employees. The performance period for the FY23 PSUs is from April 1, 2022 until March 31, 2023 and the service period is from April 1, 2022 until March 31, 2025. Of the total FY23 PSUs granted, 13 vest based on our achievement of specific performance criteria during fiscal year 2023 and they have a grant date fair value of $185.57. Based on actual performance through the nine months ended December 31, 2022, we reduced the number of awards expected to vest. The remaining 6 awards will be settled in shares of our ~~unvested~~common stock, ~~option shares~~but they are subject to performance criteria that are subjective and as such do not have a grant date. The awards will be marked-to-market each reporting period during the performance period and have a fair value of $166.21 per share as of December 31, ~~2017,~~2022. ~~is as follows:~~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.

Number of
Shares

Weighted-
Average
Grant-Date
Fair Value

Unvested at March 31, 2017
373,766 $ 22.49
Stock options granted
95,605 39.00
Stock options forfeited
(52,833 ) 27.42
Stock options vested
(80,340 ) 20.85
Unvested at December 31, 2017
336,198 28.47
AsDuring fiscal year 2022, we awarded 7 PSUs to key employees of Agena that are subject to both service and performance conditions. Based on actual performance through the period ended December 31, ~~2017,~~2022, ~~we have issued~~the awards are 8,~~400~~not expected to vest.
During fiscal year 2022, the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of PSUs covering a target of 40 shares ~~of restricted stock, with vesting periods ranging from~~ ~~five~~that is subject to ~~seven~~ ~~years.~~ No ~~shares have vested as of~~both performance and service conditions to our Chief Executive Officer. Based on actual performance through the period ended December 31, ~~2017.~~2022, the award is estimated to vest at 93%.
During the three months ended December 31, 2022, we adjusted our estimate of PSUs expected to vest under all outstanding plans based on actual results achieved through the performance period. We recorded a cumulative effect release of ($1,427) during the period ($1,127 net of tax as well as $0.21 per basic and diluted share for both the three and nine months ended December 31, 2022), which is recorded in general and administrative and selling expense on our Condensed Consolidated Statements of Operations.
In the future, we expect non-cash stock based compensation expense to decrease approximately $392 per quarter as a result of our new estimate of performance share units expected to vest.

Page 812
Table of Contents
~~As of~~ ~~December 31, 2017,~~ ~~there was~~ ~~$7,513,000~~ ~~of total unrecognized compensation expense related to unvested stock options and shares of restricted stock. As of~~ ~~December 31, 2017,~~ ~~we have~~ ~~749,608~~ ~~shares available for future grants.~~

Note 89 -. ~~Net~~ ~~(Loss)~~ Earnings~~Income~~ (Loss) Per Share

Basic ~~net~~ earnings (loss) ~~income~~ per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted ~~net~~earnings (loss) ~~income~~ per share (“diluted EPS”) is computed similarly to basic ~~net~~earnings (loss) ~~income~~ per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. Potentially dilutive securities include stock options and both time and performance based RSUs (collectively “stock awards”), as well as common shares underlying the Notes. Stock awards are excluded from the calculation of diluted EPS if 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 then have an antidilutive effect.
The impact of the assumed conversion of the Notes calculated under the if-converted method was antidilutive, and as such, shares underlying the Notes were excluded from the diluted EPS calculation for the three and nine months ended December 31, 2022 and December 31, 2021.

The following table presents a reconciliation of the denominators used in the ~~computation~~computation of ~~net (loss) income per share -~~ basic and diluted ~~(in thousands, except~~earnings (loss) per ~~share data):~~share:

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017

2016

2017

2016

Net (loss) income available for shareholders
$ (11,086 ) $ 3,252 $ (7,216 ) $ 7,540
Weighted average outstanding shares of common stock
3,781 3,688 3,765 3,668
Dilutive effect of stock options
-- 180 -- 167
Common stock and equivalents
3,781 3,868 3,765 3,835

Net (loss) income per share:

Basic
$ (2.93 ) $ 0.88 $ (1.92 ) $ 2.06
Diluted
(2.93 ) 0.84 (1.92 ) 1.97

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Net income (loss) available for shareholders
$ 451 $ (2,060 ) $ 319 $ 3,655
Weighted average outstanding shares of common stock
5,339 5,233 5,312 5,199
Dilutive effect of stock options
17 - 28 107
Dilutive effect of RSUs
4 - 14 27
Fully diluted shares
5,360 5,233 5,354 5,333

Basic earnings (loss) per share
$ 0.08 $ (0.39 ) $ 0.06 $ 0.70
Diluted earnings (loss) per share
$ 0.08 $ (0.39 ) $ 0.06 $ 0.69

~~For~~ ~~both the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017,~~ ~~501,000~~ ~~outstanding~~The following stock ~~options~~awards were excluded from the calculation of diluted ~~net (loss) income per share because their inclusion would have been anti-dilutive.~~EPS:

~~For the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016,~~ ~~3,000~~ ~~and~~ ~~110,000~~ ~~outstanding stock options, respectively, were excluded from the calculation of diluted net (loss) income per share because their inclusion would have been anti-dilutive.~~

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Assumed conversion of the Notes
608 608 608 608
Stock awards that were anti-dilutive
176 285 159 38
Stock awards subject to performance conditions
49 40 51 18
Total stock awards excluded from diluted EPS
833 933 818 664

~~Note~~ 9-~~Commitments and~~ ~~Contingencies~~
~~Under the~~ ~~terms of the PCD Agreement, we were required to pay contingent consideration if the cumulative revenues for our process challenge device business for the~~ ~~three~~ ~~years subsequent to the acquisition met certain levels. The potential consideration payable ranged from~~ $0 to ~~$1,500,000~~ ~~and was based upon a sliding scale of~~ ~~three~~~~-year cumulative revenues between~~ ~~$9,900,000~~ ~~and~~ ~~$12,600,000,~~ ~~with payments made annually. Based upon both historical and projected growth rates, we initially recorded~~ ~~$300,000~~ ~~of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid~~ ~~$150,000~~ ~~of the contingent consideration during the year ended~~ ~~March 31, 2016 (~~~~based upon the then current run rate projected over the entire~~ ~~three~~~~-year contingent consideration period).~~
~~Since the initial payment, the revenues~~ ~~for these products significantly increased and as a result, during the year ended~~ ~~March 31, 2017~~ ~~we recorded an additional~~ ~~$450,000~~ ~~accrual (which was paid in our~~ ~~third~~ ~~quarter ending~~ ~~December 31, 2016).~~ ~~During the~~ ~~three~~ ~~months ended~~ ~~June 30, 2017~~ ~~revenues continued to increase and after revising our forecast for the process challenge device (“PCD”) product revenues through the end of the earn-out period, we recorded an additional~~ ~~$300,000~~ ~~accrual, which is included in other income, net in the accompanying condensed consolidated statement of operations for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017.~~ ~~We paid the remaining contingent consideration due of~~ ~~$450,000~~ in ~~November 2017.~~
~~Page 9~~
~~Note~~ 10– ~~Accumulated Other Comprehensive Income~~ ~~(Loss)~~
~~The following table summarizes the changes in each component of accumulated other comprehensive income~~ ~~(loss) (“AOCI”), net of tax (in thousands):~~

Foreign Currency
Translation

AOCI

Balance at September 30, 2017
$ (61 ) $ (61 )
Quarter ended December 31, 2017:

Unrealized gain arising during the period
181 181
Balance at December 31, 2017
$ 120 $ 120

Foreign Currency
Translation

AOCI

Balance at September 30, 2016
$ (1,286 ) $ (1,286 )
Quarter ended December 31, 2016:

Unrealized loss arising during the period
(634 ) (634 )
Balance at December 31, 2016
$ (1,920 ) $ (1,920 )

Foreign Currency
Translation

AOCI

Balance at March 31, 2017
$ (1,760 ) $ (1,760 )
Nine months ended December 31, 2017:

Unrealized gain arising during the period
1,880 1,880
Balance at December 31, 2017
$ 120 $ 120

Foreign Currency
Translation

AOCI

Balance at March 31, 2016
$ (1,151 ) $ (1,151 )
Nine months ended December 31, 2016:

Unrealized loss arising during the period
(769 ) (769 )
Balance at December 31, 2016
$ (1,920 ) $ (1,920 )
~~Note~~ 11 -S~~egment Information~~
~~We have~~ ~~four~~ ~~reporting segments:~~ Sterilization and Disinfection Control (formerly named Biological Indicators), Instruments, Cold Chain Monitoring and Cold Chain Packaging. The following tables set forth our segment information (in thousands):

Three Months Ended December 31, 2017

Sterilization
and
Disinfection
Control

Instruments

Cold Chain
Monitoring

Cold Chain
Packaging

Total

Revenues
$ 10,630 $ 8,182 $ 3,267 $ 1,592 $ 23,671

Gross profit (loss)
$ 7,134 $ 5,150 $ (43 ) $ 440 12,681
Reconciling items ⁽¹⁾
(23,207 )
Loss before income taxes
$ (10,526 )
~~Page 10~~

Three Months Ended December 31, 2016

Sterilization
and
Disinfection
Control

Instruments

Cold Chain
Monitoring

Cold Chain
Packaging

Total

Revenues
$ 9,248 $ 9,013 $ 3,102 $ 2,480 $ 23,843

Gross profit
$ 6,066 $ 5,706 $ 1,254 $ 511 13,537
Reconciling items ⁽¹⁾
(9,657 )
Earnings before income taxes
$ 3,880

Nine Months Ended December 31, 2017

Sterilization
and
Disinfection
Control

Instruments

Cold Chain
Monitoring

Cold Chain
Packaging

Total

Revenues
$ 30,798 $ 24,768 $ 9,335 $ 4,397 $ 69,298

Gross profit
$ 20,676 $ 15,021 $ 2,044 $ 844 38,585
Reconciling items ⁽¹⁾
(44,702 )
Loss before income taxes
$ (6,117 )

Nine Months Ended December 31, 2016

Sterilization
and
Disinfection
Control

Instruments

Cold Chain
Monitoring

Cold Chain
Packaging

Total

Revenues
$ 27,612 $ 25,928 $ 8,964 $ 6,862 $ 69,366

Gross profit
$ 17,986 $ 15,881 $ 3,578 $ 1,830 39,275
Reconciling items ⁽¹⁾
(30,014 )
Earnings before income taxes
$ 9,261
(1)
~~Reconciling items include~~ ~~selling, general and administrative, research and development, impairment and other expenses~~

December 31, 2017

March 31, 2017

Total assets (in thousands):

Sterilization and Disinfection Control
$ 83,101 $ 67,233
Instruments
33,819 40,805
Cold Chain Monitoring
31,198 35,789
Cold Chain Packaging
7,381 20,313
Corporate and administrative
12,278 7,593
$ 167,777 $ 171,733
~~All long-lived assets are located in the United States except for~~ ~~$5,823,000,~~~~$7,484,000~~ ~~and~~ ~~$16,807,000~~ ~~which are associated with our French, Canadian and German subsidiaries, respectively.~~
~~Page 11~~
R~~evenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows (in thousands):~~

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017

2016

2017

2016

Net revenues from unaffiliated customers:

United States
$ 14,221 $ 13,844 $ 41,664 $ 44,758
Foreign
9,450 9,999 27,634 24,608
$ 23,671 $ 23,843 $ 69,298 $ 69,366
No~~foreign country exceeds~~ 10 ~~percent of total revenues.~~
Note 1210 –. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our ~~year to date~~year-to-date pre-tax~~(loss)~~ income. Each quarter, ~~the~~our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, impairments of non-deductible goodwill, excess benefits from stock-based compensation, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs. There is a potential for volatility ofin the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

On ~~December 22, 2017,~~ ~~the Tax Cuts and Jobs Act ("TCJA") was enacted in the U.S., making significant changes to U.S. tax law. The TCJA reduces the U.S. federal corporate~~Our effective income tax rate ~~from~~ 34 ~~percent to~~ 21 ~~percent, requires companies to pay a~~ ~~one~~-time transition tax on certain un-remitted earnings of foreign subsidiaries that were previously tax deferred, generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, creates new taxes on certain foreign-sourced earnings, repeals the Section ~~199~~ ~~deduction,~~was 76.5% and ~~imposes limitations on executive compensation under Section~~ ~~162~~~~(m). During the quarter ended~~ ~~December 31, 2017,~~ ~~we revised our estimated annual effective tax rate to reflect the change in the federal statutory rate. The rate change results in the Company using a blended statutory rate for the annual period of~~ ~~30.9~~ ~~percent.~~
~~Shortly thereafter, the SEC staff issued SAB~~ ~~118,~~ ~~which provides guidance on accounting for the tax effects of the TCJA for which the accounting under ASC~~ ~~740~~ is incomplete. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC ~~740~~ ~~on the basis of the provisions of the tax laws that were in effect immediately before enactment of the TCJA.~~
~~Accordingly, as of~~ ~~December 31, 2017,~~ ~~we have~~ ~~not~~ ~~completed our accounting for the tax effects of the TCJA. However, we made a reasonable estimate of the~~ ~~one~~~~-time transition tax and recognized a provisional tax liability of $~~~~285,000.~~ We also re-measured the applicable deferred tax assets and liabilities based on the rates at which they are expected to reverse. However, we are still analyzing certain aspects of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of our deferred tax balance was a benefit of ~~$722,000.~~ ~~Overall, the TCJA resulted in a net tax benefit of~~ ~~$437,000.~~ ~~Such amount was recorded as a discrete tax benefit and is included as a component of income tax expense in the accompanying condensed consolidated statements of operations~~384.8% for the three and nine months ~~ending~~ended December 31, ~~2017.~~2022
~~Our effective income tax rate was (~~~~5.3~~~~) percent~~, respectively, compared to 12.0% and ~~16.2~~ ~~percent~~(1.0%) for the three ~~months ended~~ ~~December 31, 2017~~ and~~2016,~~ ~~respectively, and (~~~~18.0~~~~) percent and~~ ~~18.6~~ ~~percent for the~~ nine months ended December 31, ~~2017~~2021. The effective tax rate for both the threeand ~~2016,~~nine ~~respectively.~~months ended December 31, 2022 differed from the statutory federal rate of 21% primarily due to the share-based payment awards for employees and the effect of income generated in foreign jurisdictions. The effective tax rate for the three and nine months ended December 31, ~~2017~~2022 ~~differed from~~was higher than the ~~statutory federal rate of~~ ~~30.9~~ p~~ercent~~comparable prior year periods primarily due to lower windfall benefits on stock option exercises and the ~~impact~~vesting of restricted stock units and the effect of income in foreign jurisdictions.
Note 11.Commitments and Contingencies
We review the adequacy of our legal reserves on a quarterly basis and establish reserves for loss contingencies that are both probable and reasonably estimable. As of December 31, 2022, there were no material legal reserves recorded on the accompanying unaudited Condensed Consolidated Balance Sheets.
As part of the ~~impairment of non-deductible goodwill,~~Belyntic acquisition, we have agreed to pay an additional $1,500 to the ~~TCJA, share-based payment awards for employees (which was significant for~~sellers if contractually specified patents related to the ~~nine~~ ~~months ended~~ ~~December 31, 2017),~~ ~~state income taxes, domestic manufacturing deductions and foreign rate differential.~~
~~Since we~~technology purchased are ~~subject to audit by various taxing authorities,~~issued. We believe that it is ~~reasonably possible~~probable that the ~~amount of unrecognized tax benefits~~patents will ~~change during~~be issued and we will pay the ~~next~~ 12 ~~months. However, we do~~ ~~not~~ ~~expect the change, if any, to have a material effect on our financial condition or results of operations~~sellers in full within the next 1236 months. The liability is recorded in other long-term liabilities on the accompanying Condensed Consolidated Balance Sheets.

Page 13
Table of Contents
Note 1123. - S~~Subsequent Event~~egment Information

In ~~January 2018,~~ The following tables set forth our ~~Board of Directors declared a quarterly cash dividend of~~segment information:

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Revenues:

Clinical Genomics
$ 15,585 $ 16,485 $ 48,525 $ 16,485
Sterilization and Disinfection Control
16,283 13,831 48,021 43,014
Biopharmaceutical Development
11,646 12,756 34,757 32,188
Calibration Solutions
10,773 11,624 32,186 33,769
Total revenues (a)
$ 54,287 $ 54,696 $ 163,489 $ 125,456

Gross profit

Clinical Genomics
$ 8,045 $ 3,924 $ 26,535 $ 3,924
Sterilization and Disinfection Control
11,614 9,945 34,581 31,859
Biopharmaceutical Development
7,359 8,768 21,993 20,061
Calibration Solutions
5,740 6,090 17,411 18,330
Reportable segment gross profit
32,758 28,727 100,520 74,174
Corporate and Other (b)
7 (100 ) (28 ) (196 )
Gross profit
$ 32,765 $ 28,627 $ 100,492 $ 73,978
Reconciling Items:

Operating expenses
29,363 31,139 97,689 69,166
Operating income (loss)
3,402 (2,512 ) 2,803 4,812
Nonoperating expense (income), net
1,486 (171 ) 2,915 1,192
Earnings (loss) before income taxes
$ 1,916 $ (2,341 ) $ (112 ) $ 3,620
^(a)
Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.
^(b)
Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.
The following table sets forth inventories by reportable segment. Our chief operating decision maker is ~~$0.16~~not ~~per share of common stock, payable on~~ ~~March 15, 2018,~~ ~~to shareholders of record at the close of business on~~ ~~February 28, 2018.~~provided with any other segment asset information.

December 31,

March 31,

2022

2022

Clinical Genomics
$ 14,591 $ 11,802
Sterilization and Disinfection Control
3,022 2,176
Biopharmaceutical Development
7,797 4,495
Calibration Solutions
8,329 6,133
Total inventories
$ 33,739 $ 24,606

Page 1214
Table of Contents

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)

Forward Looking Statements

This ~~report~~ QuarterlyReport on Form 10-Qcontains ~~information~~forward-looking statements which are made pursuant to the safe harbor provisions of Section27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form 10-Qdo not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Qwhich are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position; potential impairment of future earnings; anticipated effects of, and future actions to be taken in response to, the COVID-19 pandemic; results of acquisitions; management’s strategy, plans and objectives for future operations or acquisitions, product development and sales; product research and development; regulatory approvals; selling, general and administrative expenditures; intellectual property; development and manufacturing plans; availability of materials and components; and adequacy of capital resources and financing plans constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. In addition, other written and oral statements that constitute forward-looking statements may ~~constitute "forward-looking statements.~~be made by the Company or on the Company’s behalf. Words such as“seek,” ~~Generally, the~~“believe,” “may,” “intend,” “could,” “expect,” “anticipate,” “plan,” “target,” “estimate,” “project,” or variations of such words ~~"believe,"~~ ~~“estimate,” "expect," "project,"~~ ~~"ant~~~~icipate," "intend,"~~ ~~"will"~~ and similar expressions are intended to identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to revenues growth and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. ~~In addition,~~Such forward-looking statements are subject to ~~certain~~a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including risks associated with:our ability to successfully grow our business, including as a result of acquisitions; the results that acquisitions have on our operations; our ability to consummate acquisitions at our historical ~~experience~~rate and at appropriate prices, and our ~~present expectations~~ability toeffectively integrate acquired businesses and achieve desired results; the market acceptance of our products; technological or ~~projections.~~ market viability of our products; reduced demand for our products, including as a result of competitive factors; conditions in the global economy and the particular markets we serve;~~These~~significant developments or uncertainties stemming from governmental actions, including changes intrade policies and medical device regulations; the timely development and commercialization, and customer acceptance, of enhanced and new products and services; retirement of old products and customer migration to new products; projections of revenues, growth, operating results, profit margins, earnings, expenses,margins, tax rates, tax provisions, liquidity, cash flows,demand, and competition; the effects of additional actions taken to become more efficient or lower costs; supply chain challenges; cost pressures and the overall effects of the current high inflation environment on customers’ purchasing patterns;laws regulating fraud and abuse in the health care industry and the privacy and security of health and personal information; product liability; information security; outstanding claims, legal and regulatory proceedings; international business challenges including anti-corruption and sanctions laws; tax audits and assessments and other contingent liabilities;foreign currency exchange rates and fluctuations in those rates; general economic, industry, and capital markets conditions, including rising interest rates and potential recessionary conditions; the timing of any of the foregoing; and assumptions underlying any of the foregoing.Such risks and uncertainties also include ~~but are not limited t~~o those ~~described~~listed in ~~Part II, "Item~~Item 1A. “Risk ~~Factors" and elsewhere in this report and~~Factors” in our Annual Report on Form 10-K for the year ended March 31, ~~201~~7,2022 and ~~those~~in this report.The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described ~~from time~~in any forward-looking statements.We disclaim any obligation to ~~time in our subsequent reports filed with the Securities and Exchange Commission.~~publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

~~General Discussion~~Overview

We ~~pursue~~are a ~~strategy~~multinational manufacturer, developer, and seller of ~~focusing primarily on~~life science tools and quality control products and services, many of which are sold into niche markets that are 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 ~~where~~in which we can establish a strong presence and achieve high gross profit margins. ~~We are organized~~ ~~into~~
As of December 31, 2022, we managed our operations in four divisions across ten physical locations. Our Instruments Division designs, manufactures and markets quality control instruments and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene and environmental air sampling industries. Ourreportable segments, or divisions: Clinical Genomics, Sterilization and Disinfection Control, ~~Division (formerly named~~Biopharmaceutical Development, and Calibration Solutions. Each of our divisions are described further in "Results of Operations" below.
Corporate Strategy
We strive to create shareholder value and further our purpose of Protecting the ~~Biological Indicators Division) provides testing~~Vulnerable^® by growing our business both organically and through acquisitions, by improving our operating efficiency, and by continuing to hire, develop and retain top talent. As a business, we commit to our purpose of Protecting the Vulnerable^® every day by taking a customer-focused approach to developing, building, and delivering our products. We serve a broad set of industries, in particular the pharmaceutical, healthcare services, along with the manufacturing and marketing of both biological and cleaning indicators, and the marketing of chemical indicators used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device and pharmaceutical industries. Our Cold Chain Monitoring Division designs, develops and markets systems which are used to monitor various environmental parameters such as temperature, humidity and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device ~~manufacturers, blood banks, pharmacies~~verticals, in which the safety, quality, and ~~other laboratory~~efficacy of products is critical. By delivering the highest quality products possible, we are committed to protecting people, the environment, and industrial environments. Our Cold Chain Packaging Division provides packaging development consulting services and thermal packaging products such as coolers, boxes, insulation materials and phase-change products to control temperature during transport.end products.

Organic Revenues Growth
Organic revenues growth is driven by the expansion of our customer base, increases in sales volumes, new product offerings, and price increases, and may be affected positively or negatively by changes in foreign currency rates. Our ability to increase organic revenues ~~come from two main sources~~ ~~– product sales and services. Product sales are dependent on several factors, including~~is affected by general economic conditions, both domestic and international, customer capital spending trends, competition, and the introduction of new products and acquisitions. Sterilization and Disinfection Control products and many of the packaging products of our Cold Chain Packaging Division are disposable and are used on a routine basis, thus product sales are less sensitive to general economic conditions. Instrument products and cold chain monitoring systems and products have a longer life, and their purchase by our customers is somewhat discretionary, so sales are more sensitive to general economic conditions. Service demand is driven by our customers’ quality control and regulatory environments, which require periodic repair and recalibration or certification of our instrument products and cold chain monitoring systems. We typically evaluate costs and pricing annually.products. Our policy is to price our products competitively and, where possible, we pass along cost increases to our customers in order to maintain our margins. We typically evaluate costs and pricing annually with price increases effective January 1; however, as a result of high inflation in recent quarters, we implemented an additional mid-year price increase late in the second quarter of fiscal year 2023.
Page 15
Table of Contents
Inorganic Growth - Acquisitions
During the third quarter of fiscal year 2023, we completed the Belyntic acquisition for an aggregate purchase price of $6,450. The acquisition provided a natural complement to our peptide synthesis business by adding a consumables product line.
During the third quarter of fiscal year 2022, we completed the acquisition of Agena for an aggregate net purchase price of $300,793. Agena is a leading clinical genomics tools company that develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical testing in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics and oncology related applications. The acquisition of Agena accelerated our strategic trajectory towards higher growth applications within the regulated segments of the life sciences tools market.
Over the past decade, we have consummated a number of acquisitions as part of our growth strategy. These acquisitions have allowed us to expand our product offerings, globalize our company, and increase the scale at which we operate, which in turn affords us the ability to improve our operating efficiency, extend our customer base, and further the pursuit of our purpose: Protecting the Vulnerable®.
Improving Our Operating Efficiency
We maximize value in both our existing businesses and those we acquire by implementing efficiencies in our manufacturing, commercial, engineering, and administrative operations. We achieve efficiencies using the four pillars that make up The Mesa Way, which is our customer-centric, lean-based system for continuously improving and operating a set of high-margin, niche businesses. The Mesa Way is focused on: Measuring What Matters using our customers' perspective and setting high standards for performance; Empowering Teams to improve operationally and exceed customer expectations; Steadily Improving using lean-based tools designed to help us identify the root cause of opportunities and prioritize the biggest opportunities; and Always Learning so that performance continuously improves.

Gross profit is affected by many factors including our product mix, manufacturing efficiencies, costs of products and labor, foreign currency rates, and price competition. Historically, as we have integrated our acquisitions and taken advantage of manufacturing efficiencies, our gross ~~margin~~profit percentages for some products have improved. There are, however,, differences in gross ~~margin~~profit percentages between product lines, and ultimately the mix of sales will continue to impact our overall gross ~~margin.~~profit.

~~Selling expense~~Hire, Develop, and Retain Top Talent
At the center of our organization are talented people who are capable of taking on new challenges using a team approach. It is ~~driven primarily by labor costs, including salaries~~our exceptionally talented workforce that works together and ~~commissions. Accordingly, it may vary with sales levels. Labor costs~~uses our lean-based tool set to find ways to continuously improve our products, our services, and ~~amortization of intangible assets drive~~ ~~the substantial majority of general and administrative expense. Research and development expense is predominantly comprised of labor costs and third-party consultants.~~ourselves, resulting in long-term value creation for our shareholders.

~~Year Ending March 31, 2018 Acquisitions~~
~~During the year ending March 31, 2018, we completed the following~~ ~~three acquisitions (the “2018 Acquisitions”):~~
~~In November 2017,~~ we completed a business combination (the “BAG Acquisition”) whereby we acquired substantially all of the assets and certain liabilities of BAG Health Care GmbH’s (“BAG”) Hygiene Monitoring business which is comprised of the distribution of biological, chemical and cleaning indicator products;
~~Page 13~~
~~In October 2017, we completed a business combination (the “Simicon Acquisition”) whereby we acquired the common stock of SIMICON GmbH (“Simicon”), a company whose business manufactures~~ ~~both biological and cleaning indicators; and~~
~~In May 2017~~, we completed a business combination (the “Hucker Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Hucker & Hucker GmbH’s (“Hucker”) business segment associated with the distribution of our biological indicator products.
~~Year Ended March 31, 2017 Acquisitions~~
~~During the year ended March 31, 2017, we completed the following six acquisitions~~ ~~(the “2017 Acquisitions”):~~
In November 2016, we completed a business combination (the “Mydent Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Mydent International Corp~~’s business segment associated with biological indicator mail-in testing services to the dental market in the United States;~~
In November 2016, we completed a business combination (the “FreshLoc Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of the cold chain monitoring business of FreshLoc Technologies, Inc.;
In August 2016, we completed a business combination (the “Rapid Aid Acquisition”) whereby we acquired certain assets (consisting primarily of fixed assets) and certain liabilities of Rapid Aid Corp~~’s (“Rapid Aid”) business segment associated with the manufacture and sale of cold chain packaging gel products;~~
In July 2016, we completed a business combination (the “HANSAmed Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of HANSAmed Limited~~’s (“HANSAmed”) business segment associated with the distribution of our biological indicator products and mail-in testing services to the dental market in Canada;~~
In April 2016, we completed a business combination (the “ATS Acquisition”) whereby we acquired substantially all the assets (other than cash and certain inventories and fixed assets) and certain liabilities of Autoclave Testing Services, Inc. and Autoclave Testing Supplies, Inc., (collectively, “ATS”). ATS was in the business of supplying products and services for dental sterilizer testing in both the U.S. and Canada; and
In April 2016, we completed a business combination (the “Pulse Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Pulse Scientific, Inc.~~’s (“Pulse”) business segment associated with the distribution of our biological indicator products.~~
General Trends ~~and Outlook~~
~~Our strategic objectives include growth both organically and through further acquisitions. During the year end~~ing March 31, 2018, we continue to build our infrastructure to prepare for future growth, including the relocation of our Omaha, Traverse City and old Bozeman manufacturing facilities into the new Bozeman building, the addition of key personnel to our operations, sales and marketing, and research and development teams and the rollout of phase three of our ERP implementation project (European operations).
~~The markets for sterilization and disinfection control products~~ remain strong, as the disposable nature of these products makes them less sensitive to general economic conditions. The worldwide market for sterilization and disinfection control products is growing as more countries focus on verifying the effectiveness of sterilization and disinfection processes.
~~In gen~~eral, our instruments products and cold chain services and monitoring systems are more impacted by general economic conditions than our sterilization and disinfection control and cold chain packaging products. As a result, uncertainty about global economic conditions may cause businesses to postpone spending in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values. Worldwide and regional economic conditions could also reduce the demand for our products and services, as our customers reduce or delay capital equipment and other types of purchases. However, demand for our instruments products, and cold chain services and monitoring systems remains solid and we strive to continue to grow revenues going forward.

We are ~~working on several research~~a global company, and ~~development projects that, if completed, may result~~a significant portion of our revenues and expenses are denominated in ~~new products for both existing customers~~currencies other than the U.S. dollar (“USD”). Exchanges rates have been volatile throughout our fiscal year 2023 and ~~new markets. We are hopeful that we will have new products available for sale in~~a weakening or strengthening of foreign currencies against the ~~coming year~~.
~~Overall~~ USD increases or decreases our revenues ~~declined one percent, while organic~~and gross profit margins as well as impacting the comparability of our results between periods. Currency exchange rates negatively impacted our reported revenues declined four percent, for the three months ended December 31, 2017, resulting from organic decreases of nine and 36 percent from the Instruments and Cold Chain Packaging Divisions, respectively, partially offset by increases of seven and three percent for the Sterilization and Disinfection Control and Cold Chain Monitoring Divisions, respectively. Overall revenues were flat, while organic revenues declined two percent, for the nine months ended December 31, 2017 resulting from organic decreases of four, four and 36 percent from the Instruments, Cold Chain Monitoring and Cold Chain Packaging Divisions, respectively, partially offset by an increase of nine percent for the Sterilization and Disinfection Control Division.
~~Page 14~~
During the three months ended June 30, 2017, we elected to discontinue for sale certain products in our Instruments, Cold Chain Monitoring and Sterilization and Disinfection Control Divisions due to the recent introduction of new or modified products and the consolidation of other product sets. As part of this process, we analyzed the remaining inventories associated with these products to determine future usability and reserved against what we believed to be excess or obsolete, resulting in an increase in our inventory reserve of $406,000 (of which $216,000 related to the Cold Chain Monitoring Division). At this time, we also established a plan to liquidate certain Cold Chain Monitoring raw material components related to the above-mentioned discontinued products. During both the three months ended September 30, 2017 and December 31, 2017, we subjected additional inventories to our liquidation program due to the discontinuance or winding-down of additional older product sets resulting from the release of our new ViewPoint operating platform. During the three months ended December 31, 2017, it became evident that our liquidation program was ineffective, and we determined that a significant amount of these inventories was not recoverable as previously planned. As such, we increased our Cold Chain Monitoring inventory reserve by $1,700,000. Company-wide gross margin percentage for the three and nine months ended December 31, 2017 was 54 and 56 percent, respectively but would have been 61 and 59 percent, respectively without the impact of these additional inventory reserves.
~~During the~~ ~~nine months ended December 31, 2017, revenues in our Cold Chain Packaging Division decreased significantly~~2022 as compared to the same period in the ~~prior year primarily due~~previous fiscal year. Any further strengthening of the USD against major currencies would adversely impact our reported revenues, but would, to a ~~significant decrease~~lesser extent, positively impact our reported expenses for the remainder of the fiscal year; conversely, any weakening of the U.S. dollar against major currencies would positively impact our reported revenues but would negatively impact our expenses for the remainder of the fiscal year.
We have experienced, and expect to continue to experience, inflation impacting the cost of raw materials, labor, and freight, as a result of global macroeconomic trends, including government mandated actions in ~~revenues from our largest customer~~response to the Coronavirus pandemic (“COVID-19”) and the ~~loss~~conflict between Russia and Ukraine. Our actions to mitigate the impact of the business of one of our larger customers. Due to these two events, we believe that revenues for this segment will now be approximately $2,250,000 to $2,750,000 lower for the year ending March 31, 2018 as compared to the year ended March 31, 2017. During the three months ended December 31, 2017 we completed a detailed review of the coldsupply chain ~~packaging business~~disruptions and ~~concluded that long and difficult sales-cycles associated with this product set, when coupled with~~inflation, including pre-ordering components in higher than ~~previously contemplated costs for operating~~usual quantities, sourcing new vendors and ~~expanding the necessary infrastructure to support revenues growth,~~increasing prices have ~~resulted~~been somewhat successful; however, raw materials shortages have at times impacted our Calibrations Solutions division, in ~~a forecast of lower than expected revenues, gross margin percentages and overall profitability as compared~~particular.
We experienced disruptions to our ~~original model for this business. Based on~~business in China resulting from government mandated shut-downs and restrictions during our fiscal year 2023. Additionally, the Chinese government recently revoked many COVID-19 related restrictions and while these ~~facts, we concluded that we had a triggering event requiring assessment of impairment for certain of~~policy changes did not significantly impact our long-lived assets associated with the Cold Chain Packaging Division. As a result, we reviewed the long-lived assets associated with this reporting segment and recorded a $13,819,000 impairment charge related to goodwill, which is included in impairment charge of goodwill on the accompanying condensed consolidated statementsresults of operations for our third fiscal quarter, it is possible that future quarters may be impacted. The impact of COVID-19 has negatively impacted commercial execution in different ways throughout fiscal year 2023, and in some cases, has limited sales of Clinical Genomics consumables to existing customers and instruments to new customers. Even after the ~~three~~COVID-19 pandemic has largely subsided as a public health matter, we may experience material adverse impacts to our business as a result of the pandemic's adverse impact on the global economy, in-person collaboration and ~~nine months ended December 31, 2017.~~sales efforts, and our customers’ changed purchasing behaviors and confidence.

~~We will continue to monitor~~During the ~~operational results~~third quarter of fiscal year 2023, we were notified by Sema4 Holdings Corp. ("Sema4"), a customer of our ~~Cold Chain Packaging Division~~Clinical Genomics division, that they are exiting the reproductive health screening business and ~~if revenues, gross margin percentages~~as a result, they intend to significantly reduce the quantity of orders they place with us in the future. Revenue from sales to Sema4 were approximately $8,200 during the first twelve months of our ownership of Agena. Following the notice, we evaluated our business operations and ~~overall profitability fail~~enacted several cost-cutting measures in the Clinical Genomics division, including a reduction-in-force, to ~~meet~~preserve our ~~revised projections,~~ ~~the remaining long-lived assets (including $1,434,000~~financial model. These actions are expected to generate more than $4,000 in future annualized savings.
Page 16
Table of ~~Goodwill and $4,340,000 of intangible assets as of December 31, 2017, respectively) could be subject to further impairment losses.~~Contents
Results of Operations

~~The following table sets forth, for the periods indicated, condensed~~ ~~consolidated statements~~Our results of operations ~~data.~~and period-over-period changes are discussed in the following section. The ~~table~~tables and ~~the~~ discussion below should be read in conjunction with the accompanying ~~condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements and the notes thereto appearing ~~elsewhere~~ in ~~this report (in~~Item 1. Financial Statements (in thousands, except percent data):

Three Months Ended December 31,

Percent

2017

2016

Change

Change

Revenues
$ 23,671 $ 23,843 $ (172 ) (1 )%
Cost of revenues
10,990 10,306 684 (7 )%
Gross profit
$ 12,681 $ 13,537 $ (856 ) (6 )%
Gross profit margin
54 % 57 % (3 )%

Operating expenses

Selling
$ 1,942 $ 2,409 $ (467 ) (19 )%
General and administrative
6,256 5,881 375 6 %
Research and development
752 861 (109 ) (13 )%
Impairment loss on goodwill
13,819 -- 13,819 -- %
$ 22,769 $ 9,151 $ 13,618 149 %

Operating (loss) income
$ (10,088 ) $ 4,386 $ (14,474 ) (330 )%
Net (loss) income
(11,086 ) 3,252 (14,338 ) (441 )%
Net (loss) income margin
(47 )% 14 % (61 )%
~~Page 15~~

Nine Months Ended December 31,

Percent

2017

2016

Change

Change

Revenues
$ 69,298 $ 69,366 $ (68 ) -- %
Cost of revenues
30,713 30,091 622 2 %
Gross profit
$ 38,585 $ 39,275 $ (690 ) (2 )%
Gross profit margin
56 % 57 % (1 )%

Operating expenses

Selling
$ 6,909 $ 7,527 $ (618 ) (8 )%
General and administrative
19,525 17,834 1,691 9 %
Research and development
2,790 2,941 (151 ) (5 )%
Impairment loss on goodwill
13,819 -- 13,819 -- %
$ 43,043 $ 28,302 $ 14,741 52 %

Operating (loss) income
$ (4,458 ) $ 10,973 $ (15,431 ) (141 )%
Net (loss) income
(7,216 ) 7,540 (14,756 ) (196 )%
Net (loss) income margin
(10 )% 11 % (21 )%
~~Revenues~~.

~~The following table summarizes~~Revenues from our ~~revenues by source~~ ~~(in thousands, except percent data):~~

Three Months Ended December 31,

Percent

2017

2016

Change

Change

Sterilization and Disinfection Control
$ 10,630 $ 9,248 $ 1,382 15 %
Instruments
8,182 9,013 (831 ) (9 )%
Cold Chain Monitoring
3,267 3,102 165 5 %
Cold Chain Packaging
1,592 2,480 (888 ) (36 )%
Total
$ 23,671 $ 23,843 $ (172 ) (1 )%

Nine Months Ended December 31,

Percent

2017

2016

Change

Change

Sterilization and Disinfection Control
$ 30,798 $ 27,612 $ 3,186 12 %
Instruments
24,768 25,928 (1,160 ) (4 )%
Cold Chain Monitoring
9,335 8,964 371 4 %
Cold Chain Packaging
4,397 6,862 (2,465 ) (36 )%
Total
$ 69,298 $ 69,366 $ (68 ) -- %
~~Three~~ reportable segments decreased 1% and ~~nine~~ ~~months ended~~ ~~December~~ 31~~, 201~~7 ~~versus~~ ~~December~~ 31~~, 201~~6
~~Sterilization and Disinfection Control~~ ~~revenues~~increased 30% for the three and nine months ended December 31, ~~2017 increased primarily due~~2022, respectively, as compared to the ~~2018 Acquisitions and organic growth of seven and nine percent, respectively which was achieved through existing customers, expansion into new markets, price increases and~~same periods in the ~~continued strengthening of the Euro.~~
~~Instruments revenues for~~ ~~the three and nine months ended December 31, 2017 decreased due to organic decreases of nine and four percent, respectively.~~prior year. The decrease for both the three and nine months ended December 31, 2017 was primarily due to the slower than expected adoption of an updated medical product. We realized a normalization of the adoption rate of this product towards the end of the quarter and as such we ramped up production to meet anticipated future demand.
~~Cold Chain Monitoring~~in revenues for the three months ended December 31, ~~2017 increased primarily due~~2022 was attributable to a 2.1% decline in organic ~~growth~~revenues which resulted from both unfavorable changes in foreign currency rates and $1,500 of COVID-19 related revenues for the three ~~percent and the FreshLoc Acquisition. Cold Chain Monitoring revenues~~months ended December 31, 2021. Revenues growth for the nine months ended December 31, ~~2017 increased~~2022 was primarily ~~due~~attributable to the ~~FreshLoc Acquisition, partially offset by organic decreases~~acquisition of ~~four percent. Revenues in this division fluctuate quarter over quarter due to the timing of customer acceptance of certain installations~~Agena, and ~~the nature and timing of orders within any given quarter.~~
~~Page 16~~
~~Cold Chain Packaging revenues~~ ~~decreased organically by 36 percent for both the three and nine months ended December 31, 2017. The decreases were primarily due~~ to a ~~lower order rate based on timing issues with our largest customer (which accounted for approximately half~~lesser extent, organic revenues growth of division revenues for the year ended March 31, 2017), the loss of a major customer, and longer than expected sales cycles. We anticipate that the order rate from our largest customer will begin to normalize during the three months ending March 31, 2018 and throughout our next fiscal year. See ~~General Trends and Outlook~~~~above for additional discussion.~~
~~Gross Profit (Loss)~~3.5%.

~~The following summarizes our gross~~Gross profit ~~(loss) by segment (in thousands, except percent data):~~

Three Months Ended December 31,

Percent

2017

2016

Change

Change

Sterilization and Disinfection Control
$ 7,134 $ 6,066 $ 1,068 18 %
Gross profit margin
67 % 66 % 1 %

Instruments
5,150 5,706 (556 ) (10 )%
Gross profit margin
63 % 63 % -- %

Cold Chain Monitoring
(43 ) 1,254 (1,297 ) (103 )%
Gross profit margin
(1 )% 40 % (42 )%

Cold Chain Packaging
440 511 (71 ) (14 )%
Gross profit margin
28 % 21 % 7 %

Total gross profit
$ 12,681 $ 13,537 $ (856 ) (6 )%
Gross profit margin
54 % 57 % (3 )%

Nine Months Ended December 31,

Percent

2017

2016

Change

Change

Sterilization and Disinfection Control
$ 20,676 $ 17,986 $ 2,690 15 %
Gross profit margin
67 % 65 % 2 %

Instruments
15,021 15,881 (860 ) (5 )%
Gross profit margin
61 % 61 % -- %

Cold Chain Monitoring
2,044 3,578 (1,534 ) (43 )%
Gross profit margin
22 % 40 % (18 )%

Cold Chain Packaging
844 1,830 (986 ) (54 )%
Gross profit margin
19 % 27 % (8 )%

Total gross profit
$ 38,585 $ 39,275 $ (690 ) (2 )%
Gross profit margin
56 % 57 % (1 )%
~~Three~~ as a percentage of revenues increased seven and ~~nine~~~~months ended~~ ~~December~~ 31~~, 201~~7 ~~versus~~~~December~~ 31~~, 201~~6
~~Sterilization~~ ~~and Disinfection Control gross profit margin~~two percentage ~~increased~~points for the three and nine months ended December 31, ~~2017~~2022, respectively, primarily ~~due to volume based efficiencies associated with increased revenues and~~as a result of the ~~impact~~recognition of ~~using internally manufactured biological indicators~~a $6,062 non-cash inventory step-up charge, as part of purchase accounting for ~~our dental sterilizer testing business~~the Agena acquisition during the three months ended December 31, 2021.
Results by reportable segment are as ~~opposed~~follows:

Revenues

Organic Revenues Growth

Gross Profit as a % of Revenues

Three Months Ended December 31, 2022

Three Months Ended December 31, 2021

Three Months Ended December 31, 2022

Three Months Ended December 31, 2021

Three Months Ended December 31, 2022

Three Months Ended December 31, 2021

Clinical Genomics (*)
$ 15,585 $ 16,485 (10.0 %) N/A 52 % 24 %
Sterilization and Disinfection Control
16,283 13,831 17.7 % 5.8 % 71 % 72 %
Biopharmaceutical Development
11,646 12,756 (8.7 %) 46.4 % 63 % 69 %
Calibration Solutions
10,773 11,624 (7.3 %) (6.1 %) 53 % 52 %
Mesa's reportable segments
$ 54,287 $ 54,696 (2.1 %) 11.8 % 60 % 53 %

Revenues

Organic Revenues Growth

Gross Profit as a % of Revenues

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Clinical Genomics (*)
$ 48,525 $ 16,485 (10.0 %) N/A 55 % 24 %
Sterilization and Disinfection Control
48,021 43,014 11.6 % 14.1 % 72 % 74 %
Biopharmaceutical Development
34,757 32,188 8.0 % 35.3 % 63 % 62 %
Calibration Solutions
32,186 33,769 (4.7 %) (2.1 %) 54 % 54 %
Mesa's reportable segments
$ 163,489 $ 125,456 3.5 % 13.5 % 61 % 59 %
(*) Revenues in the Clinical Genomics division represent transactions subsequent to the ~~prior year where we were contractually committed to purchase a significant portion of those biological indicators from an outside supplier at a significantly higher price.~~Agena Acquisition on October 20, 2021.

~~Instruments gross margin percentage~~ ~~was flat~~Our unaudited condensed consolidated results of operations are as follows:

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 54,287 $ 54,696 (1 %) $ 163,489 $ 125,456 30 %
Gross profit
32,765 28,627 14 % 100,492 73,978 36 %
Operating expenses
29,363 31,139 (6 %) 97,689 69,166 41 %
Operating income (loss)
3,402 (2,512 ) (¤) 2,803 4,812 (42 %)
Net income (loss)
$ 451 $ (2,060 ) (¤) $ 319 $ 3,655 (91 %)
(¤) Not a meaningful comparison
Page 17
Table of Contents
Reportable Segments
Clinical Genomics
The Clinical Genomics division develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical testing in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics and oncology related applications.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 15,585 $ 16,485 (5 %) $ 48,525 $ 16,485 194 %
Gross profit
8,045 3,924 105 % 26,535 3,924 576 %
Gross profit as a % of revenues
52 % 24 % 28 % 55 % 24 % 31 %
Clinical Genomics revenues decreased 5% for the three months ended December 31, ~~2017~~2022 compared to the relevant prior year period, primarily ~~due to product~~as a result of a reduction in COVID-related revenues of $1,374 and ~~service mix,~~adverse changes in foreign currency exchange rates, partially offset by a longer period of ownership of Agena in the ~~loss~~third quarter of ~~certain volume-based efficiencies associated with a decrease in revenues. Instruments gross margin percentage was flat~~fiscal year 2023. Clinical Genomics revenues increased 194% for the nine months ended December 31, ~~2017 primarily~~2022 compared to the relevant prior year period due to ~~product~~a significantly shorter period of ownership of Agena for the nine months ended December 31, 2021. The loss of Sema4 is expected to result in a significant reduction of anticipated revenues for this division in future quarters. However, our distribution partner Guangzhou Darui Biotechnology Co., Ltd. recently received China's National Medical Products Administration approval for a Class III in vitro diagnostics ("IVD") panel covering hereditary deafness. This is the first approved Class III IVD panel in China from our distribution partner program.
Gross profit percentage for the Clinical Genomics division increased 28% and ~~service mix, partially~~31% for the three and nine months ended December 31, 2022, respectively, compared to the relevant prior year periods due to the amortization of a $6,062 inventory step-up required by purchase accounting in the third quarter of fiscal year 2022. We have taken actions to reduce our costs in this division which will help offset by the loss of ~~certain volume-based efficiencies associated with a decrease in~~ revenues from Sema4.
Sterilization and ~~a $163,000 increase~~Disinfection Control
Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the ~~related inventory reserve due~~hospital, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the ~~decision~~dental industry. Sterilization and disinfection control products are disposable and are used on a routine basis.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 16,283 $ 13,831 18 % $ 48,021 $ 43,014 12 %
Gross profit
11,614 9,945 17 % 34,581 31,859 9 %
Gross profit as a % of revenues
71 % 72 % (1 %) 72 % 74 % (2 %)
Sterilization and Disinfection Control revenues increased 18% and 12% for the three and nine months ended December 31, 2022, respectively, compared to ~~discontinue for sale certain instruments products.~~the relevant prior year periods, despite the USD strengthening against the euro. During the second and third quarters of fiscal year 2023, we added temporary and permanent manufacturing headcount at our Bozeman Montana facility, which enabled us to fulfill a higher volume of customer orders compared to the first quarter of fiscal year 2023. The three and nine months ended December 31, 2022 also benefited from favorable product mix and to a lesser extent, price increases.

~~Cold Chain Monitoring~~Sterilization and Disinfection Control's gross profit ~~margin~~ percentage decreased one and two percentage points for the three and nine months ended December 31, 2022, respectively, compared to the relevant prior year periods as a result of foreign currency fluctuations negatively impacting our reported revenues, increased labor and benefit costs, including the cost of temporary headcount, and increased freight costs.
Biopharmaceutical Development
Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacture of biotherapeutic drugs.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 11,646 $ 12,756 (9 %) $ 34,757 $ 32,188 8 %
Gross profit
7,359 8,768 (16 %) 21,993 20,061 10 %
Gross profit as a % of revenues
63 % 69 % (6 %) 63 % 62 % 1 %
Biopharmaceutical Development revenues decreased 9% for the three months ended December 31, ~~2017~~2022 compared to the relevant prior year period, primarily due to unfavorable changes in foreign currency exchange rates. Additionally, the division faced a ~~$1,700,000~~ ~~increase in~~difficult compare versus the ~~related inventory reserve (see~~ ~~General Trends and Outlook~~~~above for additional discussion),~~prior year, which reported an anomalous 46% revenues growth, partially offset by ~~product and service mix. Cold Chain Monitoring gross profit margin percentage decreased~~price increases. Biopharmaceutical Development revenues increased 8% for the nine months ended December 31, ~~2017~~2022 compared to the relevant prior year period primarily due to ~~a $1,916,000 increase in the related inventory reserve (see~~ ~~General Trends~~increased product adoption and ~~Outlook~~~~above for additional discussion),~~price increases, partially offset by ~~product and service mix. Excluding the impact~~unfavorable changes in foreign currency exchange rates.
Page 18
Table of ~~these additional reserves for inventory,~~Contents
Biopharmaceutical Development's gross profit percentage ~~would have been 51 and 42 percent, respectively for the three and nine months December 31, 2017.~~
~~Page 17~~
~~Cold Chain Packaging gross profit margin~~decreased six percentage points for the three months ended December 31, ~~2017 increased primarily due~~2022 compared to ~~customer mix. Cold Chain Packaging~~relevant prior year period as a result of foreign currency fluctuations negatively impacting our reported revenues and higher sales of peptide synthesis hardware at a lower gross profit percentage compared to the overall division margin percentages. Biopharmaceutical Development's gross profit percentage increased one percentage point for the nine months ended December 31, ~~2017 decreased primarily due~~2022 compared to ~~lower revenues. A certain portion of~~ the ~~cost of revenues are personnel and warehousing costs which are primarily fixed and~~relevant prior year period as a result of higher revenues on a partially-fixed cost base, partially offset by unfavorable product mix and foreign currency fluctuations ~~in revenues significantly impact the gross profit margin percentage for this division. See~~ ~~General Trends and Outlook~~~~above for additional discussion.~~negatively impacting our reported revenues.

Calibration Solutions
The Calibration Solutions division designs, manufactures, and markets quality control and calibration products used to measure or calibrate temperature, pressure, pH, humidity, and other chemical or physical parameters for health and safety purposes, primarily in hospital, medical device manufacturing, pharmaceutical, and laboratory environments.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 10,773 $ 11,624 (7 %) $ 32,186 $ 33,769 (5 %)
Gross profit
5,740 6,090 (6 %) 17,411 18,330 (5 %)
Gross profit as a % of revenues
53 % 52 % 1 % 54 % 54 % - %
Calibration Solutions revenues decreased 7% and 5% for the three and nine months ended December 31, 2022, respectively, compared to the relevant prior year periods, primarily as a result of supply constraints limiting our ability to manufacture ordered quantities of certain products. Production difficulties continue to result in longer lead times for customer orders, which have negatively impacted the timing of new orders; however, we anticipate that such difficulties will begin to abate in the fourth quarter of fiscal year 2023.
Calibration Solutions' gross profit percentage was essentially flat for the three and nine months ended December 31, 2022 compared to the three and nine months ended December 31, 2021.
Operating Expenses
Operating expenses ~~for the three~~ decreased 6% and ~~nine months ended December 31, 2017~~ increased ~~as compared to the prior year as follows (in thousands):~~

Increase (Decrease)

Three Months Ended
December 31, 2017

Nine Months Ended
December 31, 2017

Selling
$ (467 ) $ (618 )

General and administrative

Personnel
(322 ) 217
Employee moving
-- 525
Acquisition related
290 557
Amortization
219 412
Depreciation
(17 ) 121
Property taxes
76 211
Professional services
(13 ) (179 )
Other, net
142 (173 )
375 1,691

Research and development
(109 ) (151 )

Impairment loss on goodwill
13,819 13,819

Operating expenses
$ 13,618 $ 14,741
~~Selling~~
~~Three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December~~ 31~~, 201~~7 ~~versus~~ ~~December~~ 31~~, 201~~6
~~Selling expense for the three~~ and nine months ended December 31, 2017 decreased primarily due to reductions of selling personnel, trade show activities and outside commissions. As a percentage of revenues, selling expense was eight and 10 percent41% for the three and nine months ended December 31, ~~2017,~~2022, respectively, as compared to 10the relevant prior year periods, primarily as a result of lower personnel costs and ~~11 percent~~the Agena acquisition. Operating expenses were favorably impacted by the strengthening of the USD during the three and nine months ended December 31, 2022.
Selling
Selling expense is driven primarily by labor costs, including salaries and commissions; accordingly, it may vary with sales levels.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Selling expense
$ 8,437 $ 8,958 (6 %) $ 27,660 $ 18,459 50 %
As a percentage of revenues
16 % 16 % - % 17 % 15 % 2 %
Selling expense for the three months ended December 31, 2022 decreased 6% compared to the relevant prior year period, primarily as a result of lower personnel costs. Selling expense for the nine months ended December 31, 2022 increased 50% compared to the relevant prior year period, primarily as a result of the Agena acquisition. Excluding Agena, selling expense increased 7% for the nine months ended December 31, 2022 primarily as a result of increased travel and tradeshow costs as we continued to resume in-person meetings and events, higher stock-based compensation expense, and higher professional services costs as we made improvements to our corporate website.
General and Administrative
Labor costs, including non-cash stock-based compensation, and amortization of intangible assets drive the substantial majority of our general and administrative expense.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

General and administrative expense
$ 16,129 $ 17,017 (5 %) $ 54,543 $ 40,119 36 %
As a percentage of revenues
30 % 31 % (1 %) 33 % 32 % 1 %
General and administrative expenses decreased 5% for the three months ended December 31, 2022 compared to the relevant prior year period, primarily as a result of reduced stock-based compensation expense as we reduced the number of PSUs expected to vest. General and administrative expenses increased 36% for the nine months ended December 31, 2022 compared to the relevant prior year period, primarily as a result of the Agena acquisition, including intangible amortization expense of $7,321. Excluding Agena, general and administrative expense increased 8% for the nine months ended December 31, 2022, primarily as a result of higher stock-based compensation expense, partially offset by lower intangible amortization expense as a result of the strengthening of the USD.
Page 19
Table of Contents
Research and Development
Research and development expense is predominantly comprised of labor costs and costs of third-party consultants.

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Research and development expense
$ 4,797 $ 5,164 (7 %) $ 15,486 $ 10,588 46 %
As a percentage of revenues
9 % 9 % - % 9 % 8 % 1 %
Research and development expenses decreased 7% for the three months ended December 31, 2022 compared to the relevant prior year period, primarily as a result of lower personnel costs and the benefit of a strong USD on research and development costs in Europe. Research and development expenses increased 46% for the nine months ended December 31, 2022 compared to the relevant prior year period, primarily due to the Agena acquisition. Excluding the impact of Agena, research and development costs for the nine months ended December 31, 2022 increased relative to the prior year period primarily due our purchase of in process research and development technology that we are further developing in order to enhance a product offering in our Sterilization and Disinfection Control division.
Nonoperating Expense

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Nonoperating expense (income)
$ 1,486 (171 ) (¤) $ 2,915 $ 1,192 145 %
(¤) Not a meaningful comparison
Nonoperating expense for the three and nine months ended December 31, ~~2016.~~
~~Historically~~ ~~selling~~2022 is composed primarily of interest expense ~~approximates 10 percent to 12 percent of revenues.~~
~~General and~~ A~~dministrative~~
~~Three~~ and ~~nine~~ ~~months ended~~ ~~December~~31, ~~201~~7 ~~versus~~ ~~December~~31~~, 201~~6
~~General and administrative expenses for the three months ended December 31, 2017 increased primarily due to acquisition related~~ and amortization ~~expenses, partially offset by a decrease in personnel expenses.~~
~~General~~of the debt discount associated with the Notes and ~~administrative expenses for~~ the ~~nine months ended December 31, 2017 increased primarily due to increased personnel, employee moving, acquisition related~~Credit Facility as well as gains and ~~amortization expenses, partially offset by decreases in professional services expenses.~~
~~Page 18~~
~~Research and Development~~
~~Three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December~~ 31~~, 201~~7 ~~versus~~ ~~December~~31~~, 201~~6
~~Research and development expenses~~losses on foreign currency transactions. Nonoperating expense was higher for the three and nine months ended December 31, ~~2017 decreased~~2022 compared to the relevant prior year periods due to interest expense on the Credit Facility, which had a ~~streamlining~~weighted average balance of $36,839 during the ~~necessary engineers and materials and supplies required to support existing businesses during~~nine months ended December 31, 2022 compared with a weighted average balance of $17,993 for the nine months ended December 31, 2021, partially offset by net foreign currency gains in the three and nine months ended December 31, ~~2017.~~2021.

~~Impairment Loss on Goodwill~~Income Taxes

~~Three and~~ ~~nine~~ ~~months ended~~ ~~December~~ 31~~, 201~~7 ~~versus~~ ~~December~~ 31~~, 201~~6

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Income tax provision (benefit)
$ 1,465 $ (281 ) (621 %) $ (431 ) $ (35 ) 1,131 %
Effective tax rate
76.5 % 12.0 % 64 % 384.8 % (1.0 %) 386 %

~~Impairment loss on goodwill~~Our effective income tax rate was 76.5% and 384.8% for the three and nine months ended December 31, ~~2017 is associated with our Packaging Division. See~~ ~~General Trends~~2022, respectively, and ~~Outlook~~ ~~above for additional discussion.~~
~~Other Expense~~
~~Other expense~~12.0% and (1.0%) for the three ~~months ended~~ ~~December 31, 2017 is comprised primarily of interest expense associated with our Credit Facility.~~
~~Other expense for the~~ and nine months ended December 31, 2017 is comprised primarily of interest expense associated with our Credit Facility and $300,000 related to an additional accrual for the PCD earn-out (see Liquidity and Capital Resources for additional discussion), partially offset by a $116,000 gain from the sale of our Omaha facility.
~~Net Income~~
~~Our income~~2021, respectively. The effective tax rate ~~varies based upon many factors (please see Note 12, Item 1.~~ ~~Financial Statements~~ ~~for additional discussion).~~ ~~Net income~~ for the nine months ended December 31, ~~2017 was also significantly impacted by a $13,819,000 impairment loss on goodwill~~ ~~(see~~ ~~General Trends and Outlook~~ ~~above for additional discussion), $772,000~~2022 differed from the statutory federal rate of ~~facility relocation costs (see Liquidity and Capital Resources), $300,000 in PCD earn-out accruals, $256,000 of employee moving expenses not related~~21% primarily due to the ~~Bozeman facility relocation~~share-based payment awards for employees and ~~a $2,106,000 expense related to a reserve for inventory due to operational decisions to end~~the effect of ~~life certain products and other slow moving inventory. Otherwise, net~~ income generated in foreign jurisdictions. The effective tax rate for the nine months ended December 31, ~~2017 varied~~2022 was higher than the same period in fiscal year 2022 primarily due to the share-based compensation and the effect of income in foreign jurisdictions.
Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly.
Net Income (Loss)
Net income (loss) varies with ~~the~~ changes in revenues, gross profit, and operating expenses ~~(which includes $5,062,000~~(and included $21,573 and $9,859 of non-cash amortization of intangible ~~assets)~~assets acquired in business combinations and stock-based compensation expense, respectively, for the nine months ended December 31, 2022).

Liquidity and Capital Resources

Our sources of liquidity include cash generated from operations, ~~working capital, capacity under~~cash and cash equivalents on hand, cash available from our Credit Facility and the Open Market Sale Agreement^SM, described below, working capital, and potential additional equity and debt offerings. We believe that cash ~~generated~~flows from ~~these sources~~operating activities and potential cash provided by borrowings from our Credit Facility or funds from our Open Market Sale Agreement^SM, when necessary, will be sufficient to meet our ~~short-term~~ongoing operating requirements, scheduled interest payments on debt, dividend payments, and ~~long-term needs.~~ anticipated capital expenditures. We currently expect to settle the Notes in shares of our common stock, but we may re-finance the debt, depending on conditions in the market and the share price of our common stock.
Our more significant uses of resources ~~include~~have historically included acquisitions, payments of debt and interest obligations, long-term capital expenditures, and quarterly dividends to ~~shareholders, payment of debt obligations, long-term capital equipment expenditures and potential acquisitions.~~
~~Due to continued organic and acquisition~~ related growth, we outgrew the capacity of our current building in Bozeman, Montana and as a result, we built a new facility in the same general area. Construction began in July 2015 and was completed in September 2017. We spent $17,650,000 on the development of the building and the related land, which is included in property, plant and equipment, net on the accompanying condensed consolidated balance sheets.
In August 2016, we announced that we plan to shut down both our Omaha and Traverse City manufacturing facilities and relocate those operations to the new Bozeman building. The move of these two facilities, along with the current Bozeman operations, began in March 2017 and is estimated to be completed by June 30, 2018. We estimate that the total costs of the relocation will be $2,100,000 (which is comprised primarily of facility moving expenses, retention bonuses for existing personnel and payroll costs for duplicative personnel during the transition period) of which $725,000 was incurred during the year ended March 31, 2017 and $772,000 was incurred during the nine months ended December 31, 2017, which is reflected in cost of revenues in the accompanying condensed consolidated statements of operations (other than $269,000 which is included in general and administrative).
~~In July 2017, we completed the move from the Omaha facility and subsequently sold that building for $1,116,000 (net of commission costs). After completing the move of the old Bozeman facility, we expect to be able to sell that building for approximately $2,500,000.~~
shareholders. Working capital is the amount by which current assets exceed current liabilities. We had working capital of ~~$19,692,000~~$72,568 and ~~$19,218,000 respectively, at~~$76,263 as of December 31, ~~2017~~2022 and March 31, ~~2017.~~
~~Page 19~~
~~On March 1, 2017, we entered into a five-year agreement (the “Credit Facility”) for a $80,000,000 revolving line~~2022, respectively. As of ~~credit (“Line of Credit”), a $20,000,000 term loan (“Term Loan”)~~December 31, 2022, and up to $2,500,000 of letters of credit with a banking syndicate comprised of four banks. In addition, the Credit Facility provides a post-closing accordion feature which allows the Company to request to increase the Line of Credit or Term Loan up to an additional $100,000,000.
~~Line of Credit and Term Loan indebtedness bears interest at either: (1) LIBOR, as defined~~ in the agreement, plus an applicable margin ranging from 1.5% to 2.50%; or (2) the alternate base rate (“ABR”), which is the greater of JPMorgan’s prime rate or the federal funds effective rate or the overnight bank funding rate plus 0.5%. We elect the interest rate with each borrowing under the line of credit. In addition, there is an unused line fee of 0.15% to 0.35%. Letter of credit fees are based on the applicable LIBOR rate.
~~The Term Loan requires 20 quarterly principal payments (the first due date was~~ March 31, ~~2017) in the amount~~2022, we had $26,101 and $49,346, respectively, of ~~$250,000 (increasing by $125,000 each year up to $750,000 in the fifth year). The remaining balance~~cash and cash equivalents. We consider all highly liquid investments with an original maturity of ~~principal and accrued interest are due on March 1, 2022.~~
~~The Credit Facility is secured by all of our assets and requires us to maintain a ratio of funded debt to our trailing four quarters of EBIDTA (the “Leverage Ratio”), as defined~~ ~~in the agreement, of~~three months or less ~~than 3.0 to 1.0, provided that, we may once during the term of the Credit Facility, in connection with a Permitted Acquisition for which the aggregate consideration paid or~~when purchased to be paid in respect thereof equals or exceeds $20,000,000, elect to increase the maximum Leverage Ratio permitted hereunder to (i) 3.50 to 1.00 for a period of four consecutive fiscal quarters commencing with the fiscal quarter in which such Permitted Acquisition occurs (the “Initial Holiday Period”) and (ii) 3.25 to 1.00 for the period of four consecutive fiscal quarters immediately following the Initial Holiday Period. The Credit Facility also requires us to maintain a minimum fixed charge coverage ratio of less than 1.25 to 1.0.cash equivalents.

As of ~~January~~December 31, ~~2018, we had $53,000,000~~2022, $172,500 in aggregate principal Notes was outstanding ~~indebtedness~~ and ~~unused capacity~~$19,000 was outstanding under ~~our~~the Credit ~~Facility of $46,000,000 (subject to covenant restrictions).~~Facility.

In April ~~2015, the SEC declared effective~~2022, we entered into an Open Market Sale Agreement^SM pursuant to which we may issue and sell, from time to time, shares of our ~~Universal Shelf Registration Statement which allows us to sell, in one or more public offerings,~~ common stock ~~or warrants, or any combination of such securities for proceeds in~~with an aggregate ~~amount~~value of up to ~~$130,000,000. The terms of any offering, including the type of securities involved, would be established at the time of sale.~~$150,000.

We routinely evaluate opportunities for strategic acquisitions. Future material acquisitions may require that we obtain additional capital, assume ~~third party~~additional third-party debt or incur other long-term obligations. We believe that we have the ~~option~~ability to ~~utilize both~~issue more equity or debt in the future in order to finance our acquisition and investment activities; however, additional equity or debt ~~instruments as vehicles for the long-term~~ financing, ~~of our investment activities and acquisitions.~~or other transactions, may not be available on acceptable terms, if at all.

~~On November 7, 2005,~~We may from time to time repurchase or take other steps to reduce our debt. These actions may include retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise. The amount of debt that may be retired, if any, could be material and would be decided at the sole discretion of our Board of Directors ~~authorized a program to repurchase up to 300,000 shares~~and would depend on market conditions, our cash position, and other considerations.
Page 20
Table of our outstanding common stock. Under the plan, the shares may be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares purchased will be canceled and repurchases will be made with existing cash reserves. We do not maintain a set policy or schedule for our buyback program. ~~We have purchased 162,486 shares of common stock under this program from inception through December 31, 2017.~~Contents
Dividends
We have ~~been paying~~paid regular quarterly dividends since 2003. ~~Dividends~~We declared and paid dividends of $0.16 per share ~~paid by~~during each of the quarters ended June 30, 2022, September 30, 2022, and December 31, 2022, as well as each quarter ~~were as follows:~~of fiscal year 2022.

Year Ending March 31,

2018

2017

First quarter
$ 0.16 $ 0.16
Second quarter
0.16 0.16
Third quarter
0.16 0.16
Fourth quarter
- 0.16

In January ~~2018,~~2023, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on March 15, ~~2018,~~2023, to shareholders of record at the close of business on February 28, ~~2018.~~2023.
~~Page 20~~

Cash Flows

Our cash flows from o~~perating,~~operating, investing, and financing activities were as follows (in thousands):

Nine Months Ended December 31,

2017

2016

Net cash provided by operating activities
$ 15,173 $ 6,771
Net cash used in investing activities
(16,840 ) (15,985 )
Net cash provided by financing activities
1,789 8,805

Nine Months Ended December 31,

2022

2021

Net cash provided by operating activities
$ 15,464 $ 29,921
Net cash (used in) investing activities
(8,468 ) (304,443 )
Net cash (used in) provided by financing activities
(28,936 ) 62,623

~~Net cash provided by~~Cash flows from operating activities for the nine months ended December 31, ~~2017 increased primarily due to a $1,414,000 decrease of inventories (net of the impact of increases in the reserve for inventory)~~2022 provided $15,464. Net income and ~~in the previous period, the payment of~~ ~~$5,076,000 of contingent consideration and an increase of $4,401,000 in accrued liabilities and taxes payable, partially offset by an increase in prepaid expenses and other.~~
~~Net cash used in~~ ~~investing activities~~non-cash adjustments totaled $34,588 for the nine months ended December 31, 2017 resulted from $15,433,000 associated with the 2018 Acquisitions and the purchase of $2,540,000 of property, plant and equipment, partially offset by $1,133,000 of proceeds associated with the sale of the Omaha facility. Net cash used in investing activities2022 compared to $32,838 for the nine months ended December 31, ~~2016 resulted from $6,618,000 associated with~~2021. Adjustments to working capital accounts used $16,207 more cash in the ~~2017 Acquisitions~~nine months ended December 31, 2022 as compared to the nine months ended December 31, 2021, primarily due to lower collections on trade receivables and ~~the purchase of $9,367,000 of property, plant and equipment.~~
~~Net cash~~ ~~provided by financing~~higher spend on inventory as we built supplies to mitigate supply chain risk. Cash used in investing activities was lower for the nine months ended December 31, 2017 resulted from borrowings under our Credit Facility of $11,000,000 and proceeds from the exercise of stock options of $2,346,000, partially offset by the repayment of debt of $9,750,000 and the payment of dividends of $1,807,000. Net cash provided by financing activities for2022 compared to the nine months ended December 31, ~~2017 resulted from borrowings under our Credit Facility of $11,500,000 and proceeds from~~2021, due to the ~~exercise of stock options of $2,815,000,~~Agena acquisition during fiscal year 2022, partially offset by the ~~repayment of debt of $3,750,000 and~~Belyntic acquisition in fiscal year 2023. Cash used by financing activities primarily resulted from $30,000 repaid on our Credit Facility during the ~~payment of dividends of $1,760,000.~~nine months ended December 31, 2022.

At Contractual Obligations and Other Commercial Commitments
We are party to many contractual obligations that involve commitments to make payments to third parties in the ordinary course of business. For a description of our contractual obligations and other commercial commitments as of March 31, 2022, see our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the Securities and Exchange Commission on May 31, 2022.
On a consolidated basis, as of December 31, ~~2017,~~2022, we had contractual obligations for open purchase orders of approximately ~~$3,200,000~~$19,441 for routine purchases of supplies and inventory, which are payable in less than one year. Open purchase orders have decreased, in part, due to our previously taken steps to mitigate risks in supply by increasing our stock of certain critical raw materials.

~~Under the~~ ~~terms~~As part of the ~~PCD Agreement,~~Belyntic acquisition, we ~~were required~~have agreed to pay ~~contingent consideration if the cumulative revenues for our process challenge device business for the three years subsequent~~$1,500 to the ~~acquisition met certain levels.~~sellers if contractually specified patents related to the technology purchased are issued. We believe that it is probable that the patents will be issued and we will pay the sellers in full within the next 36 months. The potential consideration payable ranged from $0 to $1,500,000 and was based upon a sliding scale of three-year cumulative revenues between $9,900,000 and $12,600,000, with payments made annually. Based upon both historical and projected growth rates, we initiallyliability is recorded $300,000 of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid $150,000 of the contingent consideration during the year ended March 31, 2016 (based upon the then current run rate projected over the entire three-year contingent consideration period).
~~Since the initial payment, the revenues~~ for these products significantly increased and as a result, during the year ended March 31, 2017 we recorded an additional $450,000 accrual (which was paid in our third quarter ending December 31, 2016). During the three months ended June 30, 2017 revenues continued to increase and after revising our forecast for the process challenge device (“PCD”) product revenues through the end of the earn-out period, we recorded an additional $300,000 accrual, which is included in other ~~income, net in~~long-term liabilities on the accompanying ~~condensed consolidated statement of operations for the nine months ended December 31, 2017. We paid the remaining contingent consideration due of $450,000 in November 2017.~~Condensed Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

~~Our condensed~~ ~~consolidated financial statements~~Critical accounting estimates are those that we believe are both significant and ~~accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management~~require us to make ~~estimates,~~difficult, subjective, or complex judgments, ~~and assumptions that affect reported amounts~~often because we need to estimate the effect of ~~assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed consolidated financial statements. The~~inherently uncertain matters. These estimates are based on historical experience and ~~assumptions believed~~various other factors that we believe to be ~~reasonable~~appropriate under ~~current facts and~~the circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended March 31, ~~2017~~2022, in the Critical Accounting Policies and Estimates section of ~~“Item~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.”~~Operations. Although we believe that our estimates, assumptions, and judgements are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Acquired Intangible Assets
During the three months ended December 31, 2022, in response to the loss of a significant customer, we used Level 3 inputs to test the recoverability of the Clinical Genomics division’s intangible asset group and evaluate the division’s goodwill response to the loss of a significant customer. After considering all information available to us as of the date of testing, we concluded that no impairment is indicated.
Fair values assigned to intangible assets acquired in the Belyntic acquisition were measured using Level 3 inputs.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our reporting currency is U.S. dollars, and the functional currency of each of our material foreign subsidiaries is its respective local currency. Our operations include activities outside of the U.S. and we have currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar. We face currency exposures in our global operations as a result of various factors including intercompany currency denominated loans, selling our products in various currencies, purchasing raw materials and equipment in various currencies, and tax exposures not denominated in the functional currency. These exposures have increased as we have continued to expand internationally, including the acquisition of Gyros Protein Technologies Holding AB, which incurs a substantial portion of its business expenses in Swedish Krona, and the acquisition of Agena, which conducts a portion of its business in euros and a portion in Chinese Yuan Renminbi. Fluctuations in exchange rates have and may continue to adversely affect our results of operations, financial position, and cash flows. We do not hedge exposure to exchange rates.
Our Credit Facility bears interest at either a base rate or a SOFR rate, plus an applicable spread. Based on the balance currently outstanding against our line of credit, if interest rates increased by 75 basis points, we would incur approximately $143 of additional interest expense per year.

We have no derivative ~~instruments and~~instruments. We have minimal exposure to commodity market risks. ~~Approximately 15 percent of our revenues are exposed to foreign currency risk, of which all is within stable markets, minimizing our exposure to foreign currency fluctuations.~~

Page 21
Table of Contents

Item 4. Controls and Procedures
~~Evaluation of Disclosure Controls and Procedures~~

We maintain disclosure controls and procedures (as defined in ~~Rules~~Rule 13a-15(e) ~~and 15d-15(e)~~promulgated under the ~~Securities~~ Exchange ~~Act of 1934, as amended)~~Act) that are designed to ~~reasonably~~ ensure that information required to be disclosed ~~by us~~ in ~~the reports we file or submit under the Securities~~ Exchange Act ~~of 1934, as amended,~~reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our ~~principal executive~~Chief Executive Officer and ~~principal financial officers, or persons performing similar functions,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. ~~Our management evaluated,~~
Evaluation of Disclosure Controls and Procedures
As of December 31, 2022, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective at December 31, 2017.
~~Our~~ management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Our 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 in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Management evaluated the effectiveness of the design and operation of our ~~internal control over financial reporting based~~disclosure controls and procedures. Based on the ~~framework in “Internal Control~~ ~~– Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.~~
~~Our management evaluated, with the participation of~~foregoing, our Chief Executive Officer and Chief Financial Officer ~~the effectiveness of our internal control over financial reporting as of~~ ~~December 31, 2017. Based on that evaluation, our management~~ concluded that our ~~internal control over financial reporting was~~disclosure controls and procedures were effective ~~at December 31, 2017.~~as of the end of the period covered by this report.

Changes in Internal Control ~~Over~~over Financial Reporting

~~There were no significant changes~~The Agena Acquisition was completed on October 20, 2021, and the financial results of Agena are included in our Condensed Consolidated Financial Statements as of March 31, 2022 and for the period then ended, and as of December 31, 2022 and for the nine months then ended. During the time since acquisition, we have assessed the control environment of Agena and made certain changes to Agena's internal ~~control~~controls over financial reporting, including design changes that ~~occurred during~~ were required as we brought Agena onto our enterprise resource planning tool. We now consider Agena to be included in the ~~nine months ended December 31, 2017, that have materially affected, or are reasonably likely to materially affect~~scope of our assessment of internal ~~control~~controls over financial reporting.

Page 22
Table of Contents
Part II. Other Information

Item 1. Legal Proceedings

See Note ~~9 – Commitments~~ 11. “Commitments and ~~Contingencies of the Notes to Condensed Consolidated~~ Contingencies” within Item 1. Financial Statements ~~(Part I, Item 1 of this Form 10-Q)~~ for information regarding any legal proceedings in which we may be involved.

Item 1A.Risk factors

~~We are affected by risks specific to us as well as~~During the nine months ended December 31, 2022, there were no material changes from the risk factors ~~that affect all businesses operating~~described in ~~a global market.~~ ~~The significant factors known to us that could materially adversely affect our business, financial condition or operating results are described in~~Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended March 31, ~~2017, under the heading “Part I – Item 1A. Risk Factors.” There have been no material changes to those risk factors other than the following:~~2022.

~~Changes in applicable tax regulations could negatively affect our financial results.~~
We are subject to taxation in the United States as well as a number of foreign jurisdictions. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The changes included in the TCJA are both broad and complex. The final transitional impacts of the TCJA may differ from the estimates provided elsewhere in this report, due to, among other things, changes in interpretations of the TCJA, any legislative action to address questions that arise because of the TCJA, any changes in accounting standards for income taxes or related interpretations in response to the TCJA, or any updates or changes to estimates the company has utilized to calculate the transitional impacts, including impacts related to changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries.
~~Page 22~~
As these and other tax laws and related regulations change, our financial results could be materially impacted. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results
A significant disruption in, or breach in security of, our information technology systems or violation of data privacy laws could adversely affect our business, reputation and consolidated financial statements.
We rely on information technology systems, some of which are managed by third parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers and other business partners), and to manage or support a variety of critical business processes and activities. These systems may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. In addition, security breaches of our systems (or the systems of our customers, suppliers or other business partners) could result in the misappropriation, destruction or unauthorized disclosure of confidential information or personal data belonging to us or to our employees, partners, customers or suppliers. Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyber-attacks and we expect the sophistication and frequency of such attacks to continue to increase. Any of the attacks, breaches or other disruptions or damage described above could interrupt our operations, delay production and shipments, result in theft of our and our customers’ intellectual property and trade secrets, damage customer and business partner relationships and our reputation or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws and increased costs for security and remediation, each of which could adversely affect our business and consolidated financial statements.
~~While we select our third-party vendors carefully (including the provider of our ERP system), we don~~’t control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes or cyber-attacks and security breaches at a vendor could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~On November 7, 2005,~~ ~~our Board~~Issuer Purchases of ~~Directors adopted a share repurchase plan which allows~~Equity Securities
The following table provides information about the Company's purchases of equity securities for the repurchase of up to 300,000 of our common shares. This plan will continue until the maximum is reached or the plan is terminated by further action of the Board of Directors. We made the following repurchases of our common stock, including settlement of loans to employees for the exercise of stock options:periods indicated:

Shares Purchased

Average Price
Paid

Total Shares
Purchased as Part
of Publicly
Announced Plan

Remaining Shares to
Purchase Under Plan

October 2017
-- $ -- 162,486 137,514
November 2017
-- -- 162,486 137,514
December 2017
-- -- 162,486 137,514
Total
-- --

Total Number of Shares Purchased(1)

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)

Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs

October 2022
- - - 162,486
November 2022
(1,757 ) 188.96 - 162,486
December 2022
- - - 162,486
Total
(1,757 ) 188.84 - 162,486
⁽¹⁾
Shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.
⁽²⁾
On November 7, 2005, our Board of Directors adopted a share repurchase plan which allows for the repurchase of up to 300,000 of our common shares; however, no shares have been purchased under the plan in the last three fiscal years. This plan will continue until the maximum is reached or the plan is terminated by further action of the Board of Directors.
Page 23
Table of Contents

I~~tem~~Item 6. 6. Exhibits

~~31.1~~Exhibit No.
Description of Exhibit
3.1 Articles of Incorporation and Amendments to Articles of Incorporation (incorporated by reference from exhibit 3.1 to Mesa Laboratories, Inc.’s report on Form 10-Q filed on July 31, 2018 (Commission File Number: 000-11740)).
3.2 Amended and Restated Bylaws of Mesa Laboratories, Inc. (incorporated by reference from exhibit 3.1 to the Current Report on Form 8-K filed on May 10, 2019 (Commission File Number: 000-11740)).
10.1+ Amendment No. 1 to Credit Agreement dated as of December 22, 2022 among the Company, the lenders party thereto, and JPMorgan Chase Bank, NA., as administrative agent.
31.1+
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.2~~31.2+
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.1~~32.1*
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~32.2*
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+ XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+ Inline XBRL Taxonomy Extension Schema Document.
101.CAL+ Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+ Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB+ Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+ Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~101~~104+
~~The following financial~~Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information ~~from the quarterly report on Form~~ ~~10-Q of Mesa Laboratories, Inc. for the quarter ended December 31, 2017, formatted~~contained in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.Exhibits 101.*).
+ Filed herewith
* Furnished herewith

Page 2324
Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MESA LABORATORIES, INC.
(Registrant)

~~DATED~~: DATED: February 6,, ~~201~~8 2023 BY:
/s/ Gary M. ~~Owens~~.
Owens.
Gary M. Owens
Chief Executive Officer

DATED: February 6,~~, 201~~8 2023 BY:
/s/ John V. Sakys
John V. Sakys
Chief Financial Officer

Page 24
25

	Colorado		84-0872291
	(State or other jurisdiction of		(I.R.S. Employer
	i~~ncorporation~~incorporation or organization)		Identification number)

	12100 West Sixth Avenue
	Lakewood,, Colorado		80228
	(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol	Name on each exchange on which registered
Common Stock, no par value	MLAB	The Nasdaq Stock Market LLC

	Nine Months Ended December 31,
	2017			2016
Cash flows from operating activities:
Net (loss) income	$	(7,216	)	$	7,540
Depreciation and amortization		6,981			6,609
Stock-based compensation		1,423			1,221
Amortization of debt issuance costs		83			--
Impairment loss on goodwill		13,819			--
Change in inventory reserve		2,120			(507	)
Deferred income taxes		(1,077	)		418
Foreign currency adjustments		(255	)		(17	)
Gain on disposition of assets		(116	)		--
Adjustment to contingent consideration		300			--
Change in assets and liabilities, net of effects of acquisitions
Accounts receivable, net		2,621			2,369
Inventories		1,414			97
Prepaid expenses and other		(1,687	)		(1,094	)
Accounts payable		(139	)		96
Accrued liabilities and taxes payable		(1,751	)		(4,401	)
Unearned revenues		(442	)		(484	)
Contingent consideration		(905	)		(5,076	)
Net cash provided by operating activities		15,173			6,771


Cash flows from investing activities:
Acquisitions		(15,433	)		(6,618	)
Proceeds from sale of assets		1,133			--
Purchases of property, plant and equipment		(2,540	)		(9,367	)
Net cash used in investing activities		(16,840	)		(15,985	)

Cash flows from financing activities:
Proceeds from the issuance of debt		11,000			11,500
Payments on debt		(9,750	)		(3,750	)
Dividends		(1,807	)		(1,760	)
Proceeds from the exercise of stock options		2,346			2,815
Net cash provided by financing activities		1,789			8,805

Effect of exchange rate changes on cash and cash equivalents		(99	)		119

Net increase (decrease) in cash and cash equivalents		23			(290	)
Cash and cash equivalents at beginning of period		5,820			5,695

Cash and cash equivalents at end of period	$	5,843		$	5,405

Cash paid for:
Income taxes	$	4,191		$	4,188
Interest		1,477			913

Supplemental non-cash activity:
Contingent consideration as part of an acquisition		--			1,822

	*Nine Months Ended December 31,*
	*2022*			*2021*
Cash flows from operating activities:
Net income	$	319		$	3,655
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,769			15,686
Stock-based compensation expense		9,859			7,939
Amortization of step-up in inventory basis		-			6,062
Other		(359	)		(504	)
Cash (used in) provided by changes in operating assets and liabilities:
Accounts receivable, net		(1,979	)		(2,258	)
Inventories		(9,191	)		351
Prepaid expenses and other assets		(2,312	)		(1,933	)
Accounts payable		(1,339	)		1,270
Accrued liabilities and taxes payable		(5,221	)		(1,403	)
Unearned revenues		918			1,056
Net cash provided by operating activities		15,464			29,921
Cash flows from investing activities:
Acquisitions, net of cash acquired		(4,950	)		(300,793	)
Purchases of property, plant and equipment		(3,518	)		(3,650	)
Net cash (used in) investing activities		(8,468	)		(304,443	)
Cash flows from financing activities:
Proceeds from the issuance of debt		-			70,000
Payments of debt		(30,000	)		(10,000	)
Dividends		(2,550	)		(2,495	)
Proceeds from the exercise of stock options		4,523			6,171
Payment of tax withholding obligation on vesting of restricted stock		(909	)		(819	)
Payments of contingent consideration		-			(234	)
Net cash (used in) provided by financing activities		(28,936	)		62,623
Effect of exchange rate changes on cash and cash equivalents		(1,305	)		(260	)
Net (decrease) in cash and cash equivalents		(23,245	)		(212,159	)
Cash and cash equivalents at beginning of period		49,346			263,865
Cash and cash equivalents at end of period	$	26,101		$	51,706

	*Common Stock*
	*Number of Shares*			*Amount*			*Retained Earnings*			AOCI*			*Total*
March 31, 2022		5,265,627		$	313,460		$	76,675		$	3,666		$	393,801
Exercise of stock options and vesting of restricted stock units		31,690			1,438			-			-			1,438
Tax withholding on vesting of restricted stock units		(9	)		(2	)		-			-			(2	)
Dividends paid, $0.16 per share		-			-			(843	)		-			(843	)
Stock-based compensation expense		-			3,432			-			-			3,432
Foreign currency translation		-			-			-			(15,957	)		(15,957	)
Net (loss)		-			-			(1,438	)		-			(1,438	)
June 30, 2022		5,297,308		$	318,328		$	74,394		$	(12,291	)	$	380,431
Exercise of stock options and vesting of restricted stock units		42,014			2,778			-			-			2,778
Tax withholding on vesting of restricted stock units		(3,051	)		(572	)		-			-			(572	)
Dividends paid, $0.16 per share		-			-			(852	)		-			(852	)
Stock-based compensation expense		-			4,371			-			-			4,371
Foreign currency translation		-			-			-			(13,226	)		(13,226	)
Net income		-			-			1,306			-			1,306
September 30, 2022		5,336,271		$	324,905		$	74,848		$	(25,517	)	$	374,236
Exercise of stock options and vesting of restricted stock units		7,376			307			-			-			307
Tax withholding on vesting of restricted stock units		(1,757	)		(335	)		-			-			(335	)
Dividends paid, $0.16 per share		-			-			(855	)		-			(855	)
Stock-based compensation expense		-			2,056			-			-			2,056
Foreign currency translation		-			-			-			11,345			11,345
Net income		-			-			451			-			451
December 31, 2022		5,341,890		$	326,933		$	74,444		$	(14,172	)	$	387,205

Part I
1.	Financial Statements		1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Comprehensive (Loss) Income	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	5
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
3.	Quantitative and Qualitative Disclosures About Market Risk		21
4.	Controls and Procedures		22

Part II
1	Legal Proceedings		22
1A.	Risk Factors		22
2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
6.	Exhibits		23

	Signatures

	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
	Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
	Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350

Part I. Financial Information		1

	Item 1. Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Notes to Condensed Consolidated Financial Statements	6
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	21
	Item 4. Controls and Procedures	22

Part II. Other Information		23

	Item 1. Legal Proceedings	23
	Item 1A. Risk factors	23
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
	Item 6. Exhibits	24
	Signatures	25
	Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350
	Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

	Three Months Ended December 31,					Nine Months Ended December 31,					*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	2017			2016		2017			2016		*2022*		*2021*			*2022*			*2021*

Revenues	$	23,671		$	23,843	$	69,298		$	69,366	$	54,287	$	54,696		$	163,489		$	125,456
Cost of revenues		10,990			10,306		30,713			30,091		21,522		26,069			62,997			51,478
Gross profit		12,681			13,537		38,585			39,275		32,765		28,627			100,492			73,978

Operating expenses
Operating expenses:
Selling		1,942			2,409		6,909			7,527		8,437		8,958			27,660			18,459
General and administrative		6,256			5,881		19,525			17,834		16,129		17,017			54,543			40,119
Research and development		752			861		2,790			2,941		4,797		5,164			15,486			10,588
Impairment loss on goodwill		13,819			--		13,819			--
Total operating expenses		22,769			9,151		43,043			28,302		29,363		31,139			97,689			69,166
Operating income (loss)												3,402		(2,512	)		2,803			4,812
Nonoperating expense (income):
Interest expense and amortization of debt discount												1,162		1,018			3,390			2,647
Other expense (income), net												324		(1,189	)		(475	)		(1,455	)
Total nonoperating expense (income)												1,486		(171	)		2,915			1,192
Earnings (loss) before income taxes												1,916		(2,341	)		(112	)		3,620
Income tax provision (benefit)												1,465		(281	)		(431	)		(35	)
Net income (loss)											$	451	$	(2,060	)	$	319		$	3,655

Operating (loss) income		(10,088	)		4,386		(4,458	)		10,973
Other expense, net		438			506		1,659			1,712

(Loss) earnings before income taxes		(10,526	)		3,880		(6,117	)		9,261

Income taxes		560			628		1,099			1,721

Net (loss) income	$	(11,086	)	$	3,252	$	(7,216	)	$	7,540

Net (loss) income per share:
Earnings (loss) per share:
Basic	$	(2.93	)	$	0.88	$	(1.92	)	$	2.06	$	0.08	$	(0.39	)	$	0.06		$	0.70
Diluted		(2.93	)		0.84		(1.92	)		1.97	$	0.08	$	(0.39	)	$	0.06		$	0.69

Weighted average common shares outstanding:
Weighted-average common shares outstanding:
Basic		3,781			3,688		3,765			3,668		5,339		5,233			5,312			5,199
Diluted		3,781			3,868		3,765			3,835		5,360		5,233			5,354			5,333

Supplemental non-cash activity:
Contingent consideration as part of an acquisition		$	1,500			$	-

	●	Clinical Genomics - develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical testing in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics and oncology related applications.
	●	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, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry.

	*Life (in years)*		*Amount*
Cash and cash equivalents			$	7,544
Accounts receivable				11,100
Other current assets				25,480
Total current assets				44,124
Property, plant and equipment/noncurrent assets				15,832
Deferred tax asset				811
Intangible assets:
Goodwill		N/A		135,728
Customer relationships		12		103,800
Intellectual property		8		45,400
Tradenames		12		15,700
Total Assets acquired			$	361,395
Accounts payable				2,174
Unearned revenues				2,713
Other current liabilities				11,052
Total current liabilities				15,939
Deferred tax liability				28,856
Other noncurrent liabilities				8,263
Total liabilities assumed			$	53,058
Total purchase price, net of cash acquired			$	300,793

	*Three Months Ended December 31, 2022*
	*Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Consumables	$	10,885	$	14,307	$	3,584	$	553	$	29,329
Hardware and Software		3,371		95		5,844		7,023		16,333
Services		1,329		1,881		2,218		3,197		8,625
Total Revenues	$	15,585	$	16,283	$	11,646	$	10,773	$	54,287

	*Three Months Ended December 31, 2021*
	Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Consumables	$	10,221	$	11,718	$	4,099	$	889	$	26,927
Hardware and Software		4,407		250		6,100		6,978		17,735
Services		1,857		1,863		2,557		3,757		10,034
Total Revenues	$	16,485	$	13,831	$	12,756	$	11,624	$	54,696

	*Nine Months Ended December 31, 2022*
	*Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Consumables	$	34,815	$	41,239	$	11,248	$	2,272	$	89,574
Hardware and Software		9,349		619		16,656		18,696		45,320
Services		4,361		6,163		6,853		11,218		28,595
Total Revenues	$	48,525	$	48,021	$	34,757	$	32,186	$	163,489

	*Nine Months Ended December 31, 2021*
	Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Consumables	$	10,221	$	36,579	$	11,588	$	2,701	$	61,089
Hardware and Software		4,407		495		14,435		20,608		39,945
Services		1,857		5,940		6,165		10,460		24,422
Total Revenues	$	16,485	$	43,014	$	32,188	$	33,769	$	125,456

Contract liabilities as of March 31, 2022	$	15,069
Prior year liabilities recognized in revenues during the nine months ended December 31, 2022		(7,927	)
Contract liabilities added during the nine months ended December 31, 2022, net of revenues recognized		9,091
Contract liabilities balance as of December 31, 2022	$	16,233

	*December 31, 2022*				*March 31, 2022*
	*Carrying Value*		*Fair Value (Level 2)*		*Carrying Value*		*Fair Value (Level 2)*
Notes	$	170,044	$	157,191	$	169,365	$	185,438

	December 31, 2017			March 31, 2017			*December 31, 2022*		*March 31, 2022*
Raw materials	$	9,886		$	10,815		$	20,122	$	14,172
Work-in-process		411			342
Work in process								1,972		4,419
Finished goods		3,165			3,604			11,645		6,015
Less: reserve		(3,008	)		(888	)
	$	10,454		$	13,873
Total inventories							$	33,739	$	24,606

	*December 31, 2022*		*March 31, 2022*
Prepaid expenses	$	3,450	$	2,871
Deposits		1,702		1,410
Prepaid income taxes		3,352		2,536
Other current assets		3,446		2,325
Total prepaid expenses and other	$	11,950	$	9,142

	*December 31, 2022*		*March 31, 2022*
Bonus payable	$	2,714	$	7,468
Wages and paid-time-off payable		2,926		3,677
Payroll related taxes		1,773		2,069
Other benefits payable		721		1,503
Total accrued payroll and benefits	$	8,134	$	14,717

	*December 31, 2022*							*March 31, 2022*
	*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*
Customer relationships	$	237,412	$	(80,627	)	$	156,785	$	244,157	$	(67,469	)	$	176,688
Intellectual property		65,871		(17,732	)		48,139		65,893		(12,620	)		53,273
Other intangibles		24,745		(6,222	)		18,523		25,350		(5,194	)		20,156
Total	$	328,028	$	(104,581	)	$	223,447	$	335,400	$	(85,283	)	$	250,117

Remainder of 2023		7,250
2024		28,490
2025		26,911
2026		26,149
2027		25,652

	*December 31, 2022*			*March 31, 2022*
Principal outstanding	$	172,500		$	172,500
Unamortized debt issuance costs		(2,456	)		(3,135	)
Net carrying value	$	170,044		$	169,365

	●	~~Retention bonuses for existing personnel of~~ ~~$305,000~~
	●	~~Duplicative employment costs of~~ ~~$97,000~~

Balance at March 31, 2017	$	673
Facility relocation expense		772
Cash payments		(1,082	)
Balance at December 31, 2017	$	363

	December 31, 2017			March 31, 2017
Line of credit (3.44% at December 31, 2017)	$	37,500		$	35,500
Term loan (3.63% at December 31, 2017)		19,000			19,750
Less: discount		(392	)		(450	)
Less: current portion		(1,500	)		(1,125	)
Long-term portion	$	54,608		$	53,675

Year Ending March 31,
2018	$	375
2019		1,625
2020		2,125
2021		2,625
2022		49,750
	$	56,500

	*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, 2022		202		$	167.14		2.9	$	18,261
Awards granted		43			185.61
Awards forfeited or expired		(7	)		225.12
Awards exercised		(45	)		100.19
Outstanding as of December 31, 2022		193		$	184.70		3.1	$	3,406

	*Time-Based Restricted Stock Units*					*Performance-Based Restricted Stock Units*
	*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*		*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*
Outstanding as of March 31, 2022⁽¹⁾		51		$	252.86		55		$	288.45
Awards granted⁽¹⁾		42			187.45		19			179.63
Performance adjustment⁽²⁾		-			-		2			202.00
Awards forfeited		(8	)		232.20		-			-
Awards distributed⁽²⁾		(26	)		250.81		(10	)		202.00
Outstanding as of December 31, 2022⁽¹⁾		59		$	210.44		66		$	267.97

	Number of Shares			Weighted- Average Grant-Date Fair Value
Unvested at March 31, 2017		373,766		$	22.49
Stock options granted		95,605			39.00
Stock options forfeited		(52,833	)		27.42
Stock options vested		(80,340	)		20.85
Unvested at December 31, 2017		336,198			28.47

	Foreign Currency Translation			AOCI
Balance at September 30, 2017	$	(61	)	$	(61	)
Quarter ended December 31, 2017:
Unrealized gain arising during the period		181			181
Balance at December 31, 2017	$	120		$	120

	Foreign Currency Translation			AOCI
Balance at September 30, 2016	$	(1,286	)	$	(1,286	)
Quarter ended December 31, 2016:
Unrealized loss arising during the period		(634	)		(634	)
Balance at December 31, 2016	$	(1,920	)	$	(1,920	)

	Foreign Currency Translation			AOCI
Balance at March 31, 2016	$	(1,151	)	$	(1,151	)
Nine months ended December 31, 2016:
Unrealized loss arising during the period		(769	)		(769	)
Balance at December 31, 2016	$	(1,920	)	$	(1,920	)

	December 31, 2017		March 31, 2017
Total assets (in thousands):
Sterilization and Disinfection Control	$	83,101	$	67,233
Instruments		33,819		40,805
Cold Chain Monitoring		31,198		35,789
Cold Chain Packaging		7,381		20,313
Corporate and administrative		12,278		7,593
	$	167,777	$	171,733

	*December 31,*		*March 31,*
	*2022*		*2022*
Clinical Genomics	$	14,591	$	11,802
Sterilization and Disinfection Control		3,022		2,176
Biopharmaceutical Development		7,797		4,495
Calibration Solutions		8,329		6,133
Total inventories	$	33,739	$	24,606