UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022 or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-36117

inTEST Corporation
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or other jurisdiction of incorporation or organization)

22-2370659
(I.R.S. Employer Identification Number)

804 East Gate Drive, Suite 200
Mt. Laurel, New Jersey 08054
(Address of principal executive offices, including zip code)

(856) 505-8800
(Registrant's Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, par value $0.01 per share

Trading Symbol

INTT

Name of Each Exchange on Which Registered
NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒

Number of shares of Common Stock, $0.01 par value, outstanding as of the close of business on ~~November 3, 2021: 10,873,392~~May 2, 2022: 11,005,180

inTEST CORPORATION

~~INDEX~~

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION

*Item 1.*	*Financial Statements*

	Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 (Unaudited) and December 31, ~~2020~~2021	1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~	2
	Unaudited Consolidated Statements of Comprehensive Earnings ~~(Loss)~~ for the three months ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~	3
	Unaudited Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~	4
	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	5
	Notes to Consolidated Financial Statements	6

*Item 2.*	*Management's Discussion and Analysis of Financial Condition and Results of Operations*	2124

*Item 3.*	*Quantitative and Qualitative Disclosures About Market Risk*	3031

*Item 4.*	*Controls and Procedures*	3031

PART II.	OTHER INFORMATION	31

*Item 1.*	*Legal Proceedings*	3132

*Item 1A.*	*Risk Factors*	3132

*Item 2.*	*Unregistered Sales of Equity Securities and Use of Proceeds*	3132

*Item 3.*	*Defaults Upon Senior Securities*	3132

*Item 4.*	*Mine Safety Disclosures*	3132

*Item 5.*	*Other Information*	3132

*Item 6.*	*Exhibits*	3233

*SIGNATURES*		3334

inTEST CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

	September 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,743		$	10,277		$	17,211		$	21,195
Trade accounts receivable, net of allowance for doubtful accounts of $211 and $212, respectively		12,232			8,435
Trade accounts receivable, net of allowance for doubtful accounts of $212 and $213, respectively								17,292			16,536
Inventories		9,359			7,476			14,913			12,863
Prepaid expenses and other current assets		798			776			1,853			1,483
Total current assets		41,132			26,964			51,269			52,077
Property and equipment:
Machinery and equipment		5,414			5,356			5,801			5,733
Leasehold improvements		2,908			2,636			3,193			3,001
Gross property and equipment		8,322			7,992			8,994			8,734
Less: accumulated depreciation		(5,925	)		(5,642	)		(6,190	)		(6,046	)
Net property and equipment		2,397			2,350			2,804			2,688
Right-of-use assets, net		5,819			6,387			5,657			5,919
Goodwill		13,738			13,738			21,863			21,448
Intangible assets, net		11,503			12,421			20,905			21,634
Restricted certificates of deposit		100			140			100			100
Other assets		40			30			336			39
Total assets	$	74,729		$	62,030		$	102,934		$	103,905

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of Term Note							$	4,100		$	4,100
Current portion of operating lease liabilities								1,444			1,371
Accounts payable	$	3,849		$	2,424			5,896			4,281
Accrued wages and benefits		2,881			1,944			2,898			4,080
Accrued professional fees		827			776			527			1,048
Customer deposits and deferred revenue		2,082			396			5,425			6,038
Accrued sales commissions		836			472			842			863
Current portion of operating lease liabilities		1,207			1,215
Domestic and foreign income taxes payable		1,121			825			1,625			2,024
Other current liabilities		741			804			1,390			1,267
Total current liabilities		13,544			8,856			24,147			25,072
Operating lease liabilities, net of current portion		5,332			6,050			4,876			5,248
Term Note, net of current portion								15,117			16,000
Deferred tax liabilities		1,701			1,922			941			1,379
Contingent consideration								1,369			930
Other liabilities		436			450			483			453
Total liabilities		21,013			17,278			46,933			49,082

Commitments and Contingencies

Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding		0			0			0			0
Common stock, $0.01 par value; 20,000,000 shares authorized; 10,819,294 and 10,562,200 shares issued, respectively		108			106
Common stock, $0.01 par value; 20,000,000 shares authorized; 10,995,194 and 10,910,460 shares issued, respectively								110			109
Additional paid-in capital		28,962			26,851			30,358			29,931
Retained earnings		24,106			17,110			24,970			24,393
Accumulated other comprehensive earnings		744			889			767			594
Treasury stock, at cost; 33,077 shares		(204	)		(204	)		(204	)		(204	)
Total stockholders' equity		53,716			44,752			56,001			54,823
Total liabilities and stockholders' equity	$	74,729		$	62,030		$	102,934		$	103,905

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net revenues
$ 21,144 $ 14,443 $ 62,520 $ 38,948
Cost of revenues
10,749 7,993 31,642 21,564
Gross margin
10,395 6,450 30,878 17,384
Operating expenses:

Selling expense
2,841 1,747 7,849 5,560
Engineering and product development expense
1,334 1,316 4,012 3,825
General and administrative expense
3,620 2,799 10,550 8,525
Restructuring and other charges
51 161 303 207

Total operating expenses
7,846 6,023 22,714 18,117

Operating income (loss)
2,549 427 8,164 (733
)
Other income (loss)
(17
)
6 2 (44
)
Earnings (loss) before income tax expense (benefit)
2,532 433 8,166 (777
)
Income tax expense (benefit)
357 (25
)
1,170 (262
)

Net earnings (loss)
$ 2,175 $ 458 $ 6,996 $ (515
)

Net earnings (loss) per common share - basic
$ 0.21 $ 0.04 $ 0.67 $ (0.05
)

Weighted average common shares outstanding - basic
10,496,188 10,269,995 10,422,851 10,247,779

Net earnings (loss) per common share - diluted
$ 0.20 $ 0.04 $ 0.65 $ (0.05
)

Weighted average common shares and common share equivalents outstanding - diluted
10,792,290 10,287,562 10,694,351 10,247,779

	Three Months Ended March 31,
	2022			2021

Revenue	$	24,081		$	19,556
Cost of revenue		13,068			10,035
Gross profit		11,013			9,521

Operating expenses:
Selling expense		3,456			2,403
Engineering and product development expense		1,924			1,322
General and administrative expense		4,831			3,161
Restructuring and other charges		0			55
Total operating expenses		10,211			6,941

Operating income		802			2,580
Other expense		(147	)		(2	)

Earnings before income tax expense		655			2,578
Income tax expense		78			366

Net earnings	$	577		$	2,212

Earnings per common share – basic	$	0.05		$	0.21

Weighted average common shares outstanding – basic		10,617,271			10,329,449

Earnings per common share – diluted	$	0.05		$	0.21

Weighted average common shares and common share equivalents outstanding – diluted		10,842,592			10,525,826

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS ~~(LOSS)~~
(In thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net earnings (loss)
$ 2,175 $ 458 $ 6,996 $ (515
)

Foreign currency translation adjustments
(68
)
101 (145
)
98

Comprehensive earnings (loss)
$ 2,107 $ 559 $ 6,851 $ (417
)

	Three Months Ended March 31,
	2022			2021

Net earnings	$	577		$	2,212

Unrealized gain on interest rate swap agreement		289			0
Foreign currency translation adjustments		(116	)		(101	)

Comprehensive earnings	$	750		$	2,111

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)

	Three Months Ended March 31, 2022

										*Accumulated*
					*Additional*					*Other*					*Total*
	*Common Stock*				*Paid-in*			*Retained*		*Comprehensive*		*Treasury*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*Earnings*		*Earnings*		*Stock*			*Equity*

Balance, January 1, 2022		10,910,460	$	109	$	29,931		$	24,393	$	594	$	(204	)	$	54,823

Net earnings		-		0		0			577		0		0			577
Other comprehensive earnings		-		0		0			0		173		0			173
Amortization of deferred compensation related to stock-based awards		-		0		372			0		0		0			372
Issuance of unvested shares of restricted stock		79,489		1		(1	)		0		0		0			0
Shares issued under Employee Stock Purchase Plan		5,245		0		56			0		0		0			56

Balance, March 31, 2022		10,995,194	$	110	$	30,358		$	24,970	$	767	$	(204	)	$	56,001

	Three Months Ended March 31, 2021

										*Accumulated*
					*Additional*					*Other*						*Total*
	*Common Stock*				*Paid-in*			*Retained*		*Comprehensive*			*Treasury*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*Earnings*		*Earnings*			*Stock*			*Equity*

Balance, January 1, 2021		10,562,200	$	106	$	26,851		$	17,110	$	889		$	(204	)	$	44,752

Net earnings		-		0		0			2,212		0			0			2,212
Other comprehensive loss		-		0		0			0		(101	)		0			(101	)
Amortization of deferred compensation related to stock-based awards		-		0		269			0		0			0			269
Issuance of unvested shares of restricted stock		81,468		1		(1	)		0		0			0			0
Stock options exercised		99,740		1		716			0		0			0			717

Balance, March 31, 2021		10,743,408	$	108	$	27,835		$	19,322	$	788		$	(204	)	$	47,849

	Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	577		$	2,212
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		1,279			740
Provision for excess and obsolete inventory		123			39
Foreign exchange loss		40			8
Amortization of deferred compensation related to stock-based awards		372			269
Loss on disposal of property and equipment		0			22
Proceeds from sale of demonstration equipment, net of gain		19			7
Deferred income tax benefit		(438	)		(9	)
Changes in assets and liabilities:
Trade accounts receivable		(832	)		(5,082	)
Inventories		(2,177	)		(783	)
Prepaid expenses and other current assets		(374	)		212
Other assets		(8	)		(8	)
Accounts payable		1,592			1,235
Accrued wages and benefits		(1,179	)		103
Accrued professional fees		(520	)		(261	)
Customer deposits and deferred revenue		(608	)		799
Accrued sales commissions		(20	)		232
Operating lease liabilities		(346	)		(343	)
Domestic and foreign income taxes payable		(395	)		335
Other current liabilities		40			(57	)
Other liabilities		60			(7	)
Net cash used in operating activities		(2,795	)		(337	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(335	)		(388	)
Net cash used in investing activities		(335	)		(388	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of Term Note		(883	)		0
Proceeds from shares sold under Employee Stock Purchase Plan		56			0
Proceeds from stock options exercised		0			717
Net cash provided by (used in) financing activities		(827	)		717

Effects of exchange rates on cash		(27	)		(74	)

Net cash used in all activities		(3,984	)		(82	)
Cash and cash equivalents at beginning of period		21,195			10,277
Cash and cash equivalents at end of period	$	17,211		$	10,195

Cash payments for:
Domestic and foreign income taxes	$	966		$	41

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

Adjustments to preliminary purchase accounting for Acculogic (Note 3)
Increase in liability for contingent consideration	$	500			0
Increase in fair value of intangible assets	$	(49	)		0
Increase in goodwill	$	(451	)		0

~~inTEST CORPORATION~~
~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~
(In thousands, except share data)
(Unaudited)

Nine Months Ended September 30, 2021

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Treasury

Stockholders'

Shares

Amount

Capital

Earnings

Earnings

Stock

Equity

Balance, January 1, 2021
10,562,200 $ 106 $ 26,851 $ 17,110 $ 889 $ (204
)
$ 44,752

Net earnings
- 0 0 2,212 0 0 2,212
Other comprehensive loss
- 0 0 0 (101
)
0 (101
)
Amortization of deferred compensation related to stock-based awards
- 0 269 0 0 0 269
Issuance of unvested shares of restricted stock
81,468 1 (1
)
0 0 0 0
Stock options exercised
99,740 1 716 0 0 0 717

Balance, March 31, 2021
10,743,408 108 27,835 19,322 788 (204
)
47,849

Net earnings
- 0 0 2,609 0 0 2,609
Other comprehensive earnings
- 0 0 0 24 0 24
Amortization of deferred compensation related to stock-based awards
- 0 454 0 0 0 454
Issuance of unvested shares of restricted stock
44,741 0 0 0 0 0 0
Forfeiture of unvested shares of restricted stock
(18,125
)
0 0 0 0 0 0
Stock options exercised
45,835 0 285 0 0 0 285

Balance, June 30, 2021
10,815,859 108 28,574 21,931 812 (204
)
51,221

Net earnings
- 0 0 2,175 0 0 2,175
Other comprehensive loss
- 0 0 0 (68
)
0 (68
)
Amortization of deferred compensation related to stock-based awards
- 0 371 0 0 0 371
Stock options exercised
3,435 0 17 0 0 0 17

Balance, September 30, 2021
10,819,294 $ 108 $ 28,962 $ 24,106 $ 744 $ (204
)
$ 53,716

Nine Months Ended September 30, 2020

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Treasury

Stockholders'

Shares
��
Amount

Capital

Earnings

Earnings

Stock

Equity

Balance, January 1, 2020
10,413,982 $ 104 $ 26,256 $ 18,005 $ 673 $ (204
)
$ 44,834

Net loss
- 0 0 (1,143
)
0 0 (1,143
)
Other comprehensive loss
- 0 0 0 (38
)
0 (38
)
Amortization of deferred compensation related to stock-based awards
- 0 187 0 0 0 187
Issuance of unvested shares of restricted stock
58,160 1 (1
)
0 0 0 0
Forfeiture of unvested shares of restricted stock
(8,315
)
0 0 0 0 0 0
Repurchase and retirement of common stock
(13,767
)
0 (74
)
0 0 0 (74
)

Balance, March 31, 2020
10,450,060 105 26,368 16,862 635 (204
)
43,766

Net earnings
- 0 0 170 0 0 170
Other comprehensive earnings
- 0 0 0 35 0 35
Amortization of deferred compensation related to stock-based awards
- 0 208 0 0 0 208
Issuance of unvested shares of restricted stock
15,840 0 0 0 0 0 0
Forfeiture of unvested shares of restricted stock
(6,750
)
0 0 0 0 0 0

Balance, June 30, 2020
10,459,150 105 26,576 17,032 670 (204
)
44,179

Net earnings
- 0 0 458 0 0 458
Other comprehensive earnings
- 0 0 0 101 0 101
Amortization of deferred compensation related to stock-based awards
- 0 85 0 0 0 85
Issuance of unvested shares of restricted stock
155,110 2 (2
)
0 0 0 0
Forfeiture of unvested shares of restricted stock
(52,060
)
(1
)
1 0 0 0 0

Balance, September 30, 2020
10,562,200 $ 106 $ 26,660 $ 17,490 $ 771 $ (204
)
$ 44,823

~~inTEST CORPORATION~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
(In thousands)
(Unaudited)

Nine Months Ended
September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net earnings (loss)
$ 6,996 $ (515
)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization
2,166 2,378
Provision for excess and obsolete inventory
154 410
Foreign exchange loss
36 33
Amortization of deferred compensation related to stock-based awards
1,094 480
Loss on disposal of property and equipment
20 56
Deferred income tax benefit
(221
)
(81
)
Changes in assets and liabilities:

Trade accounts receivable
(3,874
)
(237
)
Inventories
(2,051
)
(146
)
Prepaid expenses and other current assets
(26
)
95
Restricted certificates of deposit
40 0
Other assets
(10
)
(5
)
Accounts payable
1,425 215
Accrued wages and benefits
942 18
Accrued professional fees
52 47
Customer deposits and deferred revenue
1,697 936
Accrued sales commissions
366 (2
)
Operating lease liabilities
(918
)
(977
)
Domestic and foreign income taxes payable
302 (240
)
Other current liabilities
(60
)
(60
)
Other liabilities
(7
)
(5
)
Net cash provided by operating activities
8,123 2,400

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment
(577
)
(520
)
Net cash used in investing activities
(577
)
(520
)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from stock options exercised
1,019 0
Repurchases of common stock
0 (74
)
Proceeds from Paycheck Protection Program loans
0 2,829
Repayments of Paycheck Protection Program loans
0 (2,829
)
Proceeds from revolving credit facility
0 2,800
Repayments of revolving credit facility
0 (2,800
)
Net cash provided by (used in) financing activities
1,019 (74
)

Effects of exchange rates on cash
(99
)
55

Net cash provided by all activities
8,466 1,861
Cash and cash equivalents at beginning of period
10,277 7,612
Cash and cash equivalents at end of period
$ 18,743 $ 9,473

Cash payments for:

Domestic and foreign income taxes
$ 1,053 $ 58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
~~(Unaudited)~~
(In thousands, except share and per share data)

The consolidated entity is comprised of inTEST Corporation and our ~~thermal test and thermal process products while our EMS segment designs, manufactures and sells our semiconductor test products.~~wholly-owned subsidiaries. We manufacture our products in the ~~U.S.~~U.S, Canada and the Netherlands. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Germany, Singapore, the Netherlands and the U.K. ~~The consolidated entity is comprised of inTEST Corporation~~We operate our business worldwide and sell our ~~wholly-owned subsidiaries.~~products both domestically and internationally.

~~Our EMS segment sells its products to semiconductor manufacturers and~~ ~~third~~-party test and assembly houses (end user sales) and to automated test equipment (“ATE”) manufacturers (original equipment manufacturer (“OEM”) sales), who ultimately resell our equipment with theirs to both semiconductor manufacturers and ~~third~~-party test and assembly houses. These sales all fall within the ATE sector of the broader semiconductor market. Our Thermal segment sells its products to many of these same types of customers; however, it also sells to customers in the wafer processing sector within the broader semiconductor market and to customers in a variety of other markets outside the semiconductor market, including the automotive, defense/aerospace, industrial (including consumer products packaging, fiber optics and other sectors within the broader industrial market), medical and telecommunications markets.

~~Both~~All of our operating segments have multiple products that we design, manufacture and market to our customers. Due to a number of factors, our products have varying levels of gross margin. The mix of products we sell in any period is ultimately determined by our customers' needs. Therefore, the mix of products sold in any given period can change significantly from the prior period. In addition, we sell our products to a variety of different types of customers with varying levels of discounts and commission expense. As a result of changes in both the mix of products sold as well as customer mix in any given period, our consolidated gross margin can bevary significantly ~~impacted in any given~~from period ~~by a change in the mix of products sold in that~~to period.

~~We refer to~~The semiconductor market (“semi” or the “semi market”) which includes both the broader semiconductor market, ~~including~~as well as the more specialized ~~ATE~~automated test equipment (“ATE”) and wafer processing sectors within ~~that~~the broader semiconductor market, ashas historically been the ~~“Semi Market.” All other markets are designated as “Multimarket.” The Semi Market, which is the principal~~largest single market in which we ~~operate,~~operate. The semi market is characterized by rapid technological change, competitive pricing pressures and cyclical as well as seasonal market patterns. ~~This~~The semi market is also subject to periods of significant ~~economic downturns at various times.~~expansion or contraction in demand. In addition to the semi market, we sell into a variety of other markets. Our intention is to continue diversifying our markets, our product offerings within the markets we serve and our customer base across all of our markets with the goal of reducing our dependence on any one market, product or customer. In particular, we are seeking to reduce the impact of volatility in the semi market on our results of operations.

Our Electronic Test segment sells its products to semiconductor manufacturers and third-party test and assembly houses (end user sales) and to ATE manufacturers (original equipment manufacturer (“OEM”) sales), who ultimately resell our equipment with theirs to both semiconductor manufacturers and third-party test and assembly houses. These sales all fall within the ATE sector of the semi market. With the acquisition of Acculogic in December 2021, our Electronic Test segment also sells its products to customers in markets outside the semi market including the automotive, defense/aerospace, industrial and life sciences markets. Our Environmental Technologies segment sells its products to end users and OEMs within the ATE sector of the semi market. It also sells its products to customers in a variety of other markets other than the semi market, including the automotive, defense/aerospace, industrial and life sciences markets. Our Process Technologies segment sells its products to customers in the wafer processing sector within the semi market. It also sells its products to customers in a variety of other markets other than the semi market, including the automotive, defense/aerospace, industrial, life sciences and security markets.

Our financial results are affected by a wide variety of factors, including, but not limited to, general economic conditions worldwide and in the markets in which we operate, economic conditions specific to the ~~Semi Market~~semi market and the other markets we serve, ~~our ability to safeguard patented technology and intellectual property in a rapidly evolving market,~~ downward pricing pressures from customers, ~~and~~ our reliance on a relatively few number of customers for a significant portion of our ~~sales.~~sales and our ability to safeguard patented technology and intellectual property in a rapidly evolving market. In addition, we are exposed to the risk of obsolescence of our inventory depending on the mix of future business and technological changes within the markets that we serve. Part of our strategy for growth includes potential acquisitions that may cause us to incur substantial expense in ~~the review~~reviewing and ~~evaluation of~~evaluating potential transactions. We may or may not be successful in locating suitable businesses to acquire orand in closing acquisitions of businesses we pursue. In addition, we may not be able to successfully integrate any business we do acquire with our existing business and we may not be able to operate the acquired business profitably. As a result of these or other factors, we may experience significant period-to-period fluctuations in ~~our~~ future operating results.

~~As of~~With respect to the ~~date of this Quarterly Report on Form~~ COVID-1019~~-Q (this “Report”), our U.S. offices remain open. We~~ pandemic, we are following the guidance of the Centers for Disease Control and Prevention ~~(“CDC”)~~ and ~~accordingly,~~the local regulatory authorities in regions outside the U.S. While in most cases we are no longer requiring ~~all~~ employees ~~working in our offices~~ to wear masks indoors in our domestic locations, in certain of our facilities, where we have experienced a recent increase in the number of employees contracting the virus, we have re-instituted a mask requirement. We are encouraging all employees to receive COVID-19 vaccinations and boosters, if possible. We are continuing to conduct temperature screenings and encouraging all employees to maintain ~~appropriate~~ social ~~distancing.~~distancing when appropriate. We are also continuing to allow employees to work remotely either part-time or full-time in circumstances when possible. AsWe are still assessing the impact of the ~~date~~recent increase in cases in certain of our facilities and exploring alternatives to address the lost production time. With regard to the recent shutdowns in China, we are working with our customers to identify alternate plans for delivery of our products to this ~~Report, our offices in Europe have also reopened to varying degrees, while our employees in Asia remain under more significant restrictions. Our employees outside of~~region. If the U.S. continue to follow the guidance of their local regulatory authorities, which in most cases includes wearing masks, observing social distancing, limiting travel and quarantining after travel, as required.

~~While the negative impact~~spread of COVID-19 ~~on our business was reduced significantly in the~~ ~~second~~ ~~half of~~ ~~2020~~ ~~and the~~ ~~first~~~~nine~~ ~~months of~~ ~~2021,~~ ~~the spread of the virus~~ or its variants ~~of the virus could continue~~continues to worsen, ~~and~~we may experience additional lost production time or further interruption in our ability to ship our products to our customers. In addition, if one or more of our significant customers or suppliers ~~could be~~is impacted, or significant additional governmental regulations and restrictions ~~could be~~are imposed, ~~thus negatively impacting~~ our business in the ~~future.~~future could be negatively impacted. We continue to monitor the situation closely ~~in the regions in which we operate in the U.S. and abroad~~ and will adjust our operations as necessary to protect the health and well-being of our employees. To the extent that further governmental mandates or restrictions are implemented in the future, we currently expect to be able to continue to operate our business in a manner similar to how we have operated over the past year.

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements include our accounts and those of our ~~wholly-owned~~wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("U.S. GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of ~~revenues~~revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain of our accounts, including contingent consideration, inventories, long-lived assets, goodwill, identifiable intangibles and deferred tax assets and liabilities, including related valuation allowances, ~~and performance-based stock compensation~~ are particularly impacted by estimates.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, results of operations, and changes in cash flows for the interim periods presented. Certain footnote information has been condensed or omitted from these consolidated financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Form 10-K for the year ended December 31, ~~2020~~2021 (the “~~2020~~2021 Form 10-K”) filed on March 23, ~~2021~~2022 with the Securities and Exchange ~~Commission (the “SEC”).~~Commission.

Reclassification

Certain prior period amounts have been reclassified to be comparable with the current period's presentation.

Subsequent Events

We have made an assessment of our operations and determined that there were no material subsequent events requiring adjustment to, or disclosure in, our consolidated financial statements for the ~~nine~~three months ended ~~September 30, 2021~~ ~~other than those described in Note~~ ~~15.~~March 31, 2022.

Business Combinations

Acquired businesses are accounted for using the purchase method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Fair values of intangible assets are estimated by valuation models prepared by our management and third-party advisors. The assets purchased and liabilities assumed have been reflected in our consolidated balance sheets, and the operating results are included in the consolidated statements of operations and consolidated statements of cash flows from the date of acquisition. Any change in the fair value of acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, will be recognized in the consolidated statement of operations in the period of the estimated fair value change. Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred in general and administrative expense in the consolidated statements of operations.

InOur financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, our credit facility, interest rate swaps and our liabilities for contingent consideration. Our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at cost which approximates fair value, due to the short maturities of the accounts. Our credit facility and our interest rate swap are discussed further below and in Note 11. Our liabilities for contingent consideration are accounted for in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic ~~420~~820 ~~(Exit or Disposal Cost Obligations), we recognize~~(Fair Value Measurement). ASC Topic 820 establishes a ~~liability~~fair value hierarchy for ~~restructuring costs~~instruments measured at fair value ~~only when~~that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). Our contingent consideration liabilities are measured at fair value on a recurring basis using Level 3 inputs which are inputs that are unobservable and significant to the overall fair value measurement. These unobservable inputs reflect our assumptions about the inputs that market participants would use in pricing the asset or liability ~~is incurred. Workforce-related charges~~and are ~~accrued when it is determined that a liability has been incurred, which is generally after individuals have been notified of their termination dates and expected severance benefits. Depending~~developed based on the ~~timing of~~best information available in the ~~termination dates, these charges~~circumstances. See Note ~~may~~ 4~~be recognized upon notification or ratably over the remaining required service period of the employees. Plans to consolidate excess facilities~~ ~~may~~ ~~result in lease termination fees and impairment charges related to our right-of-use (“ROU”) assets that are associated with the leases~~ for ~~these facilities. Other long-lived assets that~~ ~~may~~ be impaired as a result of restructuring consist of property and equipment, goodwill and intangible assets. Asset impairment charges included in restructuring and other charges are based on an estimate of the amounts and timing of future cash flowsfurther disclosures related to the ~~expected future remaining use and ultimate sale or disposal of the asset, and, in the case~~fair value of our ~~ROU assets, would include expected future sublease rental income, if applicable. These estimates are derived using the guidance in ASC Topic~~ ~~842~~ ~~(Leases), ASC Topic~~ ~~360~~ ~~(Property, Plant and Equipment) and ASC Topic~~ ~~350~~ ~~(Intangibles - Goodwill and Other).~~
liabilities for contingent consideration.

Goodwill, Intangible and Long-Lived Assets

As discussed in Notes 1 and 15, during the year ended December 31, 2021, we managed our business as 2 operating segments which were also our reportable segments and reporting units: Thermal and EMS. Effective January 1, 2022, we reorganized our operating segments. Accordingly, for 2022, we have 3 reportable segments which are also our reporting units: Electronic Test, Environmental Technologies and Process Technologies.

We account for goodwill and intangible assets in accordance with ASC Topic 350 (Intangibles - Goodwill and Other). Finite-lived intangible assets are amortized over their estimated useful economic life and are carried at cost less accumulated amortization. Goodwill is assessed for impairment annually inat the beginning of the fourth quarter on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. Goodwill is considered to be impaired if the fair value of a reporting unit is less than its carrying amount. As a part of the goodwill impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amount, a quantitative goodwill impairment test is not required. However, if, as a result of our qualitative assessment, we determine it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or, if we choose not to perform a qualitative assessment, we are required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized.

The quantitative goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.

Indefinite-lived intangible assets are assessed for impairment annually inat the beginning of the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. As a part of the impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required; otherwise, no further testing is required. The quantitative impairment test consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Long-lived assets, which consist of finite-lived intangible assets, property and equipment and ~~ROU~~right-of-use (“ROU”) assets, are assessed for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. The cash flow estimates used to determine the impairment, if any, contain management's best estimates using appropriate assumptions and projections at that time.

Revenue Recognition

We recognize revenue in accordance with the guidance in ASC Topic 606 (Revenue from Contracts with Customers). We recognize revenue for the sale of products or services when our performance obligations under the terms of a contract with a customer are satisfied and control of the product or service has been transferred to the customer. Generally, this occurs when we ship a product or perform a service. In certain cases, recognition of revenue is deferred until the product is received by the customer or at some other point in the future when we have determined that we have satisfied our performance obligations under the contract. Our contracts with customers may include a combination of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In addition to the sale of products and services, we also lease certain of our equipment to customers under short-term lease agreements. We recognize revenue from equipment leases on a straight-line basis over the lease term.

Revenue is recorded in an amount that reflects the consideration we expect to receive in exchange for those products or services. We do not have any material variable consideration arrangements, or any material payment terms with our customers other than standard payment terms which generally range from net 30 to net 90 days. We generally do not provide a right of return to our customers. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

We are a global supplier of innovative test and process solutions for use in manufacturing and testing ~~across a wide range of~~in targeted markets including automotive, defense/aerospace, industrial, ~~medical, semiconductor~~life sciences, security and ~~telecommunications~~.semiconductor. We sell thermal management products including ThermoStreams, ThermoChambers, ~~and~~ process chillers, refrigerators and freezers, which we sell under our Temptronic, Sigma, Thermonics and ~~Thermonics~~North Sciences (formerly Z-Sciences) product lines, and Ambrell Corporation’s (“Ambrell”) precision induction heating systems, including EKOHEAT and EASYHEAT products. As a result of the acquisition of Videology, we sell industrial-grade circuit board mounted video digital cameras and related devices, systems and software. We sell semiconductor ATE interface solutions which include manipulators, docking hardware and electrical interface products. As a result of the acquisition of Acculogic, we sell robotics-based electronic production test equipment. We provide post-warranty service and support for the equipment we sell. We sell semiconductor ATE interface solutions and certain thermal management products to the ~~Semi Market.~~semi market. We also sell many of our ~~thermal management~~ products to various other markets including the automotive, defense/aerospace, industrial, ~~medical~~life sciences and ~~telecommunications~~security markets.

We lease certain of our equipment under short-term leasing agreements with original lease terms of six months or less. Our lease agreements do not contain purchase options.

Our contracts with customers are generally structured as individual purchase orders which specify the exact products or services being sold or equipment being leased along with the selling price, service fee or monthly lease amount for each individual item on the purchase order. Payment terms and any other customer-specific acceptance criteria are also specified on the purchase order. We generally do not have any customer-specific acceptance criteria, other than that the product performs within the agreed upon specifications. We test substantially all products manufactured as part of our quality assurance process to determine that they comply with specifications prior to shipment to a customer.

We record accounts receivable at the time of invoicing. Accounts receivable, net of the allowance for doubtful accounts, is included in current assets on our balance sheet. To the extent that we do not recognize revenue at the same time as we invoice, we record a liability for deferred revenue. In certain instances, we also receive customer deposits in advance of invoicing and recording of accounts receivable. Deferred revenue and customer deposits are included in current liabilities on our consolidated balance sheets.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, if any, historical experience, and other currently available evidence.

The only costs we incur associated with obtaining contracts with customers are sales commissions that we pay to our internal sales personnel or third-party sales representatives. These costs are calculated based on set percentages of the selling price of each product or service sold. Commissions are considered earned by our internal sales personnel at the time we recognize revenue for a particular transaction. Commissions are considered earned by third-party sales representatives at the time that revenue is recognized for a particular transaction. We record commission expense in our consolidated statements of operations at the time the commission is earned. Commissions earned but not yet paid are included in current liabilities on our balance sheets.

In connection with the sale of our products, we generally provide standard one- or two-year product warranties which are detailed in our terms and conditions and communicated to our customers. Our standard warranties are not offered for sale separately from our products; therefore, there is not a separate performance obligation related to our standard warranties. We record estimated warranty expense for our standard warranties at the time of sale based upon historical claims experience. We offer customers an option to separately purchase an extended warranty on certain products. In the case of extended warranties, we recognize revenue in the amount of the sale price for the extended warranty on a straight-line basis over the extended warranty period. We record costs incurred to provide service under an extended warranty at the time the service is provided. Warranty expense is included in selling expense in our consolidated statements of operations.

See Notes 57 and 1415 for further information about our revenue from contracts with customers.

Inventories are valued at cost on a first-in, first-out basis, not in excess of market value. Cash flows from the sale of inventories are recorded in operating cash flows. On a quarterly basis, we review our inventories and record excess and obsolete inventory charges based upon our established objective excess and obsolete inventory criteria. Our criteria identify excess material as the quantity of material on hand that is greater than the average annual usage of that material over the prior three years. ~~Effective~~ ~~January 1, 2021,~~ ~~our~~Our criteria identify obsolete material as material that has not been used in a work order during the prior twenty-four ~~months. Prior to~~ ~~January 1, 2021,~~ ~~these criteria identified obsolete material as material that had~~ ~~not~~ ~~been used in a work order during the prior~~ ~~twelve~~ months. In certain cases, additional excess and obsolete inventory charges are recorded based upon current market conditions, anticipated product life cycles, new product introductions and expected future use of the inventory. The excess and obsolete inventory charges we record establish a new cost basis for the related inventories. We incurred excess and obsolete inventory charges of $123 and $39 for the three months ended March 31, 2022 and 2021, respectively.

We account for leases in accordance with ASC Topic 842 (Leases) ~~which was effective for us as of~~ ~~January 1, 2019.~~ ~~Upon adoption of ASC Topic~~ ~~842,~~ ~~we elected the package of practical expedients which included the grandfathering of the lease classification that had been made under prior guidance and, accordingly, we did~~ ~~not~~ ~~re-evaluate any of our leases for classification purposes in connection with the implementation of ASC Topic~~ ~~842.~~ ~~All our lease contracts are still being treated as operating leases. We do~~ ~~not~~ ~~currently have any lease contracts that meet the criteria to be categorized as finance leases. We did~~ ~~not~~ ~~elect the hindsight practical expedient and therefore did~~ ~~not~~ ~~reevaluate the lease terms that we used under prior guidance. The implementation of ASC Topic~~ ~~842~~ ~~had a significant impact on our consolidated balance sheet as a result of recording ROU assets and lease liabilities for all our multi-year leases. Under prior guidance,~~ ~~none~~ of these leases had any related asset recorded on our balance sheets. The only related liability recorded on our balance sheets was the amount which represented the difference between the lease payments we had made and the straight-line rent expense we had recorded in our statements of operations. The implementation of ASC Topic ~~842~~ ~~did~~ ~~not~~ ~~have a significant impact on our pattern of expense recognition for any of our multi-year leases.~~

. We determine if an arrangement is a lease at inception. A lease contract is within scope if the contract has an identified asset (property, plant or equipment) and grants the lessee the right to control the use of the asset during the lease term. The identified asset may be either explicitly or implicitly specified in the contract. In addition, the supplier must not have any practical ability to substitute a different asset and would not economically benefit from doing so for the lease contract to be in scope. The lessee’s right to control the use of the asset during the term of the lease must include the ability to obtain substantially all of the economic benefits from the use of the asset as well as decision-making authority over how the asset will be used. Leases are classified as either operating leases or finance leases based on the guidance in ASC Topic 842. Operating leases are included in operating lease ROU assets and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment and finance lease liabilities. We do not currently have any finance leases. ~~We do~~ ~~not~~ ~~have embedded leases nor do we have any initial direct costs related to our lease contracts.~~

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. None of our leases provide an implicit rate; therefore, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease. We include these options in the determination of the amount of the ROU asset and lease liability when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain of our operating leases contain predetermined fixed escalations of minimum rentals and rent holidays during the original lease terms. Rent holidays are periods during which we have control of the leased facility but are not obligated to pay rent. For these leases, our ROU asset and lease liability are calculated including any rent holiday in the determination of the life of the lease.

We have lease agreements which contain both lease and non-lease components, which are generally accounted for separately. In addition to the monthly rental payments due, most of our leases for our offices and warehouse facilities include non-lease components representing our portion of the common area maintenance, property taxes and insurance charges incurred by the landlord for the facilities which we occupy. These amounts are not included in the calculation of the ROU assets and lease liabilities as they are based on actual charges incurred in the periods to which they apply.

Operating lease payments are included in cash outflows from operating activities on our consolidated statements of cash flows. Amortization of ROU assets is presented separately from the change in operating lease liabilities and is included in depreciation and amortization inon our consolidated statements of cash flows.

We have made an accounting policy election not to apply the recognition requirements of ASC Topic 842 to short-term leases (leases with a term of one year or less at the commencement date of the lease). Lease expense for short-term lease payments is recognized on a straight-line basis over the lease term.

Contingent Liability for Repayment of State and Local Grant ~~Proceeds~~Funds Received

In connection with leasing a ~~new~~ facility in Rochester, New York, which our subsidiary, Ambrell, occupied in May 2018, we entered into agreements with the city of Rochester and the state of New York under which we received grants totaling ~~$463~~$550 to help offset a portion of the cost of the leasehold improvements we ~~have~~ made to this facility. The final payment of $87 was received during the three months ended March 31, 2022. In exchange for the funds we received under these agreements, we are required to create and maintain specified levels of employment in this location through various dates ending in ~~2023.~~2024. If we fail to meet these employment targets, we may be required to repay a proportionate share of the proceeds. As of ~~September 30, 2021,~~March 31, 2022, $~~370~~285 of the total proceeds received could still be required to be repaid if we do not meet the targets. We have recorded this amount as a contingent liability which is included in other liabilities on our balance sheet. Those portions of the proceeds which are no longer subject to repayment are reclassified to deferred grant proceeds and amortized to income on a straight-line basis over the remaining lease term for the Rochester facility. Deferred grant proceeds are included in other current liabilities and other liabilities on our balance sheet and totaled ~~$77~~$236 at ~~September 30, 2021.~~March 31, 2022.

As of ~~December~~March 31, ~~2020,~~2022, we were~~not~~ in compliance with the employment targets as specified in the grant agreement with the city of Rochester. ~~We applied for and received a waiver of this requirement for the year ended~~ ~~December 31, 2020.~~ ~~The waiver provided us until~~ ~~December 31, 2021~~ ~~to come into compliance with the targets as outlined in the waiver. As of~~ ~~September 30, 2021,~~ ~~we were in compliance with those targets.~~

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718 (Compensation - Stock Compensation), which requires that employee share-based equity awards be accounted for under the fair value method and requires the use of an option pricing model for estimating fair value of stock options, ~~granted,~~ which is then amortized to expense over the service periods. See further disclosures related to our stock-based compensation ~~plan~~plans in Note ~~10.~~12.

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carryforwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.

~~Net~~ Earnings (Loss) Per Common Share

~~Net earnings~~Earnings (loss) per common share - basic is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during each period. ~~Net earnings~~Earnings (loss) per common share - diluted is computed by dividing ~~net~~ earnings (loss) by the weighted average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent unvested shares of restricted stock and stock options and are calculated using the treasury stock method. Common share equivalents are excluded from the calculation if their effect is anti-dilutive.

The table below sets forth, for the periods indicated, a reconciliation of weighted average common shares outstanding - basic to weighted average common shares and common share equivalents outstanding - diluted and the average number of potentially dilutive securities that were excluded from the calculation of diluted earnings (loss) per share because their effect was anti-dilutive:

In June 2016, the Financial Accounting Standards Board (“FASB”) issued amendments to the guidance for accounting for credit losses. In November 2019, the FASB deferred the effective date of these amendments for certain companies, including smaller reporting companies. As a result of the deferral, the amendments are effective for us for reporting periods beginning after December 15, 2022. The amendments replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The amendments require a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We plan to adopt the amendments when they become effective for us on January 1, 2023. We do ~~not~~are currently ~~expect that~~evaluating the impact the adoption of these amendments will have ~~a material impact~~ on our consolidated financial statements.

As discussed further in Note 3 to our consolidated financial statements in our 2021 Form 10-K, on October 6, 2021, we acquired substantially all of the assets of Z-Sciences Corp. (“Z-Sciences”), a developer of ultra-cold storage solutions for the medical cold chain market. The Z-Sciences product line was re-branded as “North Sciences” after our acquisition. The acquisition enhances our medical offerings and increases our presence in the life sciences market which is a key target market for us. Z-Sciences was founded in 2004. Its founder joined us as a consultant and is expected to become an employee in 2022. As of March 31, 2022, he was still a consultant. The purchase price for Z-Sciences was $500 in cash, subject to a customary post-closing working capital adjustment, $300 of which was paid at closing. The remaining $200, adjusted for the final working capital amount, will be paid on the one-year anniversary of closing based on the seller complying with the terms of his employment agreement. This amount has been recorded as a contingent consideration liability on our balance sheet at March 31, 2022 as our current assumption is that this liability will be paid out in October 2022. It is included in Other Current Liabilities. The fair value of this liability at March 31, 2022 approximates its cost due to the short maturity. In addition to his salary, in connection with his prospective employment, Z-Sciences’ founder will receive a multi-year restricted stock award with vesting provisions which would be contingent upon achieving future performance milestones related to sales growth and profitability of products related to the Z-Sciences business for the fiscal years from 2022 through 2026. The award will be valued at a maximum of $1,800. The actual numbers of shares to be awarded will be based on the stock price on the date of grant with a cap of 200,000 shares at the 100% attainment level of the vesting provisions that are defined in the restricted stock award agreement. The value of the award will be recorded as compensation expense in our statement of operations on a straight-line basis over the period in which the shares vest.

The acquisition of Z-Sciences has been accounted for as a business combination using purchase accounting, and, accordingly, the results of Z-Sciences have been included in our consolidated results of operations from the date of acquisition. The allocation of the Z-Sciences’ purchase price was based on fair values as of October 6, 2021. Further information about the allocation of the purchase price is discussed in Note 3 to our consolidated financial statements in our ~~2020~~2021 Form 10-K.

Unaudited pro forma information which would give effect to the acquisition of Z-Sciences as if the acquisition occurred on January 1, 2021 is not presented because the financial results for Z-Sciences prior to our acquisition are considered immaterial.

As discussed further in Note 3 to our consolidated financial statements in our 2021 Form 10-K, on ~~September 21, 2020,~~October 28, 2021, we ~~notified employees~~acquired substantially all of the assets of Videology Imaging Solutions Inc. and Videology Imaging Solutions Europe B.V. (collectively, “Videology”), a global designer, developer and manufacturer of OEM digital streaming and image capturing solutions. The acquisition of Videology expands our process technology solutions, diversifies our reach into key targeted markets and broadens our customer base. It also builds on our process technology platforms by expanding our automation capabilities to add future product solutions with imaging data and analytical tools. The purchase price for Videology was $12,000 paid in cash at closing subject to a customary post-closing working capital adjustment.

The acquisition of Videology has been accounted for as a business combination using purchase accounting, and, accordingly, the results of Videology have been included in our ~~Fremont, California facility~~consolidated results of ~~a plan to consolidate all manufacturing for our EMS segment into our manufacturing~~ operations ~~located in Mt. Laurel, New Jersey.~~from the date of acquisition. The ~~consolidation of manufacturing operations resulted in the closure~~allocation of the ~~Fremont facility~~Videology purchase price was based on fair values as of October 27, 2021. Further information about the allocation of the purchase price, and ~~the termination of certain employees at that location. As~~goodwill and intangible assets recorded as a result of the ~~consolidation, we incurred charges for severance and other~~ ~~one~~-time termination benefits, other associated costs, including moving and production start-up costs, and charges related to exiting the facility, including an impairment charge related to the ROU asset for the lease of the Fremont facility. These charges are more fullyacquisition is discussed in Note 3 to our consolidated financial statements in our ~~2020~~2021 Form 10-K.

The following unaudited pro forma information gives effect to the acquisition of Videology as if the acquisition occurred on January 1, 2021. These proforma summaries do not reflect any operating efficiencies or costs savings that may be achieved by the combined businesses. These proforma summaries are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been had the acquisition taken place as of that date, nor are they indicative of future consolidated results of operations:

The pro forma results shown above do not reflect the impact on general and administrative expense of investment advisory costs, legal costs and other costs of $288 incurred by us as a direct result of the transaction.

As discussed further in Note 3 to our consolidated financial statements in our 2021 Form 10-K, on December 21, 2021, we completed our acquisition of Acculogic Inc. and its affiliates (collectively, “Acculogic”), a global manufacturer of robotics-based electronic production test equipment and application support services. The acquisition was completed by acquiring all of the outstanding capital stock of Acculogic. The Acculogic acquisition adds electronics test capabilities with new technologies and services as well as broadens our customer base, furthers our end market diversification and expands our international footprint. The purchase price for Acculogic was approximately $9,000 paid in cash at closing subject to a customary post-closing working capital adjustment. In addition, we may pay the seller up to an additional CAD $5,000 in the five-year period from 2022 through 2026. The additional payments will be based on a percent of net invoices for which payments have been received on systems sold to EV or battery customers in excess of CAD $2,500 per year in each of the five years. The maximum payment is capped at CAD $5,000, which equates to approximately $4,000 at March 31, 2022. To estimate the fair value of the contingent consideration at the acquisition date, an option-based income approach using a Monte Carlo simulation model was utilized due to the non-linear payout structure. As of the acquisition date, this resulted in an estimated fair value of $1,430. This amount was recorded as a contingent consideration liability and included in the purchase price as of the acquisition date. In future reporting periods, this same approach will be utilized to estimate the fair value of the contingent consideration at each reporting date. Changes in the amount of the estimated fair value of the earnouts since the acquisition date will be recorded as operating expenses in our statement of operations in the quarter in which they occur.

The acquisition of Acculogic has been accounted for as a business combination using purchase accounting, and, accordingly, the results of Acculogic have been included in our consolidated results of operations from the date of acquisition. The allocation of the purchase price for Acculogic is not yet complete as the calculation of post-closing working capital adjustment has not yet been finalized. We are in discussions with the seller and expect the calculation to be finalized in the second quarter of 2022. We currently expect the final post-closing working capital adjustment to be a decrease in the purchase price in the range of $350 to $450.

The preliminary allocation of the Acculogic purchase price which is presented below was based on estimated fair values as of December 21, 2021. At December 31, 2021, we were still working with third-party valuation specialists to assist us with finalizing several aspects of the ~~time~~purchase price, including the valuation of intangible assets and contingent consideration. During the first quarter of 2022, we finalized the valuation of intangible assets, which did not change materially from the preliminary values reported in our 2021 Form 10-K, and the valuation of contingent consideration, which increased approximately $500 from the preliminary value reported in our 2021 Form 10-K. The increase primarily reflects an increase in the estimate of net invoices for which payments are expected to be received on systems sold to EV or battery customers in excess of CAD $2,500 per year in the five-year period from 2022 through 2026.

The excess of the purchase price over the identifiable intangible and net tangible assets was allocated to goodwill and is not deductible for tax purposes. Goodwill is attributed to synergies that are expected to result from the operations of the combined businesses.

The total purchase price of $9,797, which includes $1,430 for the estimated fair value of contingent consideration, has been allocated as follows:

Further information about the intangible assets recorded as a result of the acquisition is discussed in Note 3 to our consolidated financial statements in our 2021 Form 10-K.

The following unaudited pro forma information gives effect to the acquisition of Acculogic as if the acquisition occurred on January 1, 2021. These proforma summaries do not reflect any operating efficiencies or costs savings that may be achieved by the combined businesses. These proforma summaries are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been had the acquisition taken place as of that date, nor are they indicative of future consolidated results of operations:

The pro forma results shown above do not reflect the impact on general and administrative expense of investment advisory costs, legal costs and other costs of $1,297 incurred by us as a direct result of the transaction.

ASC Topic 820 (Fair Value Measurement) establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC Topic 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2 Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The interest rate swap agreement we entered into in connection with our Term Note, as discussed further in Notes 2 and 11 is measured at fair value on a recurring basis using Level 2 inputs. The contingent consideration liabilities on our balance sheet are measured at fair value on a recurring basis using Level 3 inputs. Our contingent consideration liabilities are a result of our acquisitions of Z-Sciences on October 6, 2021 and Acculogic on December 21, 2021. The contingent consideration liability for Z-Sciences represents the estimated fair value of the additional cash consideration payable that is contingent upon the continued employment with us of the Z-Sciences founder as discussed more fully in Note 3. It is included in Other Current Liabilities on our balance sheet. At December 31, 2021, we have assumed this payment will be made. The contingent consideration liability for Acculogic represents the estimated fair value of the additional cash consideration payable that is contingent upon sales to EV or battery customers as described further in Note 3. This amount was increased by $500 during the three months ended March 31, 2022 in connection with finalizing this aspect of the purchase price allocation.

The following fair value hierarchy table presents information about liabilities measured at fair value on a recurring basis:

Changes in the fair value of our Level 3 contingent consideration liabilities for the three months ended March 31, 2022 were as follows:

During 2021, we recorded restructuring and other charges related to various actions including the consolidation of manufacturing ~~operations, we intended to try to sublease the facility in Fremont, but we did~~ ~~not~~ ~~expect to sublet the facility~~ for ~~the full remaining term of the lease. On~~ ~~July 19, 2021,~~ ~~we executed a sublease for our facility in Fremont. The sublease commenced in~~ ~~August 2021~~ ~~and ends~~ ~~November 30, 2025,~~ ~~which is the termination date~~certain of our ~~lease for this facility. We entered into this sublease approximately~~ 14 ~~months earlier than we had estimated in~~ ~~December 2020.~~ ~~As a result, we will record approximately $350 of incremental sublease income above the level that we had estimated at the time that we recorded the impairment charge in~~ ~~December 2020.~~ ~~This income will be recorded ratably over the term of the sublease~~Electronic Test segment’s products and ~~will be included in other income~~changes in our executive management team. These charges are discussed more fully in Note 5 to our consolidated financial statements ~~of operations.~~

~~During~~in our 2021 Form 10-K. There were 0 restructuring and other charges incurred in the ~~nine~~three months ended ~~September 30,~~ March 31, 2022. During the first quarter of 2021,we incurred ~~$183~~$55 of ~~additional~~ charges associated with finalizing the integration of the aforementioned manufacturing ~~operations. All of these charges were cash charges and are included in restructuring and other charges in our consolidated statement of operations. The integration~~operations of our ~~EMS manufacturing operations took longer than originally anticipated, primarily as a result of the significant increase in our business activity in the~~ ~~first~~~~nine~~ ~~months of~~ ~~2021~~ as we delayed some final integration activities and instead allocated our resources to meet customer demand for shipments of our products during this time. We completed the integration of the EMS manufacturing operations in the ~~third~~ ~~quarter of~~ ~~2021.~~Electronic Test segment.

On ~~June 10, 2021,~~ our Board of Directors (the “Board”) accepted the retirement of Hugh T. Regan, Jr. from the positions of Chief Financial Officer, Treasurer, and Secretary (the “Retirement”). In connection with the Retirement, we entered into a Separation and Consulting Agreement (the “Separation and Consulting Agreement”) with Mr. Regan effective ~~June 11, 2021~~ ~~pursuant to which Mr. Regan agreed to provide consulting services for~~ ~~three~~ ~~months, subject to an extension of up to an additional~~ ~~three~~ ~~months at our option. We did~~ ~~not~~ ~~extend the consulting services beyond the original~~ ~~three~~ months. The Separation and Consulting Agreement also provides that Mr. Regan was entitled to a severance benefit of $120. In connection with the Retirement, we also agreed that certain options issued to Mr. Regan in ~~March 2020~~ ~~to purchase shares of our common stock that remained unvested on the date of the Retirement would continue to vest after the Retirement and expire~~ ~~one~~ ~~year from their respective vesting dates.~~

On ~~June 10, 2021,~~ ~~the Board approved, effective as of~~ ~~June 14, 2021 (~~the “Start Date”), the appointment of Duncan Gilmour to the position of Chief Financial Officer, Treasurer, and Secretary. Mr. Gilmour entered into a letter agreement (the “Letter Agreement”), dated ~~June 10, 2021,~~ ~~subject to his appointment as our Chief Financial Officer, Treasurer, and Secretary, which appointments were approved on~~ ~~June 10, 2021~~ ~~and are effective as of the Start Date.~~

~~Total costs incurred during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ related to these executive management changes were $370, which consisted of $159 for consulting and legal fees related to the transition, $120 for severance paid to our former Chief Financial Officer (“CFO”) and $91 of stock-based compensation expense, primarily as a result of the modification of the ~~March 2020~~ option awards issued to our former CFO, as discussed above. The $120 of severance is included in restructuring and other charges in our consolidated statement of operations. The balance of the costs is included in general and administrative expense in our consolidated statement of operations.

~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~we recorded cash charges totaling $207 for severance and other~~ ~~one~~-time termination benefits and other costs associated with restructuring activities. This amount consisted of $133 related to the resignation of our former Chief Executive Officer, $46 related to headcount reductions in our corporate office and at Ambrell, $14 related to the EMS facility consolidation and $14 of other associated costs.

The liability for accrued restructuring charges at March 31, 2022 relates to costs associated with the move of our corporate office from our Mansfield, Massachusetts facility to our facility in New Jersey, as discussed more fully in Note 5 to our consolidated financial statements in our 2021 Form 10-K. We expect to pay out the remaining amount accrued during the second quarter of 2022.The liability for accrued restructuring charges is included in other current liabilities on our consolidated balance sheet. Changes in the amount of the liability for accrued restructuring for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 iswere as follows:

We have 2three operating segments which are also our reporting units: ~~Thermal~~Electronic Test, Environmental Technologies and ~~EMS.~~Process Technologies. Goodwill and intangible assets on our balance sheets are the result of our ~~acquisitions of Sigma Systems Corp. ("Sigma") in~~ ~~October 2008,~~ ~~Thermonics, Inc. ("Thermonics") in~~ ~~January 2012~~ ~~and Ambrell in~~ ~~May 2017.~~ ~~All our goodwill and intangible assets are allocated to our Thermal segment.~~acquisitions.

Goodwill

Changes in the amount of the carrying value of goodwill for the three months ended March 31, 2022 are as follows:

Goodwill ~~totaled $13,738~~was comprised of the following at ~~both~~ ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~ 2021:~~and was comprised of the following:~~

Intangible Assets

Changes in the amount of the carrying value of indefinite-lived intangible assets for the three months ended March 31, 2022 are as follows:

Changes in the amount of the carrying value of finite-lived intangible assets for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are as follows:

Intangible assets were allocated to our reporting segments at March 31, 2022 and December 31, 2021 as follows:

The following tables provide further detail about our intangible assets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

We generally amortize our finite-lived intangible assets over their estimated useful lives ~~on a straight-line basis, unless an alternate amortization method can be reliably determined. Any such alternate amortization method would be~~ based on the pattern in which the economic benefits of the intangible ~~asset~~assets are expected to be ~~consumed.~~consumed, or on a straight-line basis, if an alternate amortization method cannot be reliably determined. Any such alternate amortization method would. None of our intangible assets have any residual value.

~~Total amortization expense for our finite-lived intangible assets was $309 and $918 for the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and $307 and $927 for the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively.~~ The following table sets forth the estimated annual amortization expense for each of the next five years:

The following tables provide additional information about our revenue from contracts with customers, including revenue by customer and product type and revenue by market. The information about revenue by market for the three months ended March 31, 2021 has been reclassified to be consistent with how the information for the current period is presented. See also Note 1415 for information about revenue by operating segment and geographic region.

There ~~was~~ ~~not~~ awere 0 significant ~~change~~changes in the amount of the allowance for doubtful accounts for the ~~nine~~three months ended ~~September~~March ~~30,~~31, 2022.

During the three months ended March 31, 2022, no customer accounted for 10% or more of our consolidated revenue. During the three months ended March 31, 2021, Texas Instruments Incorporated accounted for 16% of our consolidated revenue. This revenue was primarily generated by our Electronic Test segment. No other customers accounted for 10% or more of our consolidated revenue during the three months ended March 31, 2021.

~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ Texas Instruments Incorporated accounted for 14% of our consolidated net revenues. While both of our segments sold to this customer, these revenues were primarily generated by our EMS segment. NaN other customers accounted for ~~10%~~ ~~or more of our consolidated net revenues during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~ ~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~0 customer accounted for~~ ~~10%~~ ~~or more of our consolidated net revenues.~~

Inventories held at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were comprised of the following:

~~Total charges incurred for excess and obsolete inventory for the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively, were as follows:~~

As previously discussed in Note 2, we account for our leases in accordance with the guidance in ASC Topic 842.We lease our offices, warehouse facilities and certain equipment under non-cancellable operating leases ~~which~~that expire at various dates through 2031. Total operating lease and short-term lease costs for the three months ~~and~~ ~~nine~~ ~~months~~ ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021, respectively, were as follows:

The following is additional information about our leases as of ~~September 30, 2021:~~March 31, 2022:

Maturities of lease liabilities as of ~~September 30, 2021~~March 31, 2022 were as follows:

Total amortization of ROU assets ~~was $231 and $760~~ for the three months ended March 31, 2022 and ~~nine~~2021 ~~months ended~~ ~~September 30, 2021,~~ ~~respectively,~~was $309 and ~~$324 and $977 for~~$280, respectively.

During the three months ~~and~~ ~~nine~~ ~~months~~ ended ~~September 30, 2020,~~ ~~respectively.~~

~~Non-cash increases in operating lease liabilities and ROU assets as a result of a lease modification for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~were as follows:~~

On ~~August 16, 2021,~~March 31, 2022, we executed aan amendment to the lease for ~~approximately 3,888 square feet~~our facility in Singapore which extended the term for a period of ~~office space for the engineering~~ 24 months commencing on April 1, 2022 and ~~sales staff located in Fremont, California. This lease has a 38.5 month term.~~ expiring on March 31, 2024. At the effective date of this ~~lease,~~modification, we recorded ana non-cash increase in our ROU assets and operating lease liabilities of approximately ~~$202.~~$51.

~~Non-cash increases in operating lease liabilities and ROU assets as a result of lease modifications for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~were as follows:~~

On ~~January 23, 2020,~~ ~~we executed an amendment to the lease for our EMS facility in Fremont, California, which extended the term for a period of~~ 61 ~~months commencing on~~ ~~November 1, 2020~~ ~~and expiring on~~ ~~November 30, 2025.~~ ~~At the effective date of this modification, we recorded an increase in our ROU assets and operating lease liabilities of approximately $1,176. As discussed in Note~~ 3 ~~to our consolidated financial statements in our~~ ~~2020~~ ~~Form~~ 10~~-K, as of~~ ~~December 31, 2020,~~ ~~we recorded an impairment charge of $522 related to the ROU asset associated with this lease. On~~ ~~July 19, 2021,~~ ~~we executed a sublease for this facility which commenced on~~ ~~August 1, 2021~~ ~~and ends~~ ~~November 30, 2025,~~ ~~which is the termination date of our lease for this facility. We entered into this sublease approximately~~ 14 ~~months earlier than we had estimated in~~ ~~December 2020.~~ ~~As a result, we will record approximately $350 of incremental sublease income above the level that we had estimated at the time that we recorded the impairment charge in~~ ~~December 2020.~~ ~~This income will be recorded ratably over the term of the sublease and will be included in other income in our consolidated statements of operations.~~

On ~~September 22, 2020,~~ ~~we executed an amendment to the lease for our EMS facility in Mt. Laurel, New Jersey, which extended the term of the existing lease for a period of 120 months commencing on~~ ~~May 1, 2021.~~ ~~At the effective date of this modification, we recorded an increase in our ROU assets and operating lease liabilities of approximately $2,051.~~

Letters of Credit

We have issued letters of credit as the security deposits for certain of our domestic leases. These letters of credit are secured by pledged certificates of deposit which are classified as Restricted Certificates of Deposit on our ~~consolidated~~ balance sheets. The terms of our leases require us to renew these letters of credit at least 30 days prior to their expiration dates for successive terms of not less than one year until lease expiration.

Our outstanding letters of credit at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of the following:

~~As of~~ ~~September 30, 2021,~~ ~~we had a revolving credit facility with M&T Bank (“M&T”) which is discussed more fully in Note~~ 10 ~~to our consolidated financial statements included in our~~ ~~2020~~ ~~Form~~ 10~~-K and Note~~ 9 ~~to our consolidated financial statements included in our Form~~ 10~~-Q for the quarterly period ended~~ ~~June 30, 2021,~~ ~~filed on~~ ~~August 12, 2021~~ ~~with the SEC.~~ On October 15, 2021 (the “Closing Date”), we entered into an Amended and Restated Loan and Security Agreement (the “October 2021 Agreement”) with M&T ~~which replaced this facility. The~~ ~~October 2021~~ ~~Agreement is discussed further under “Credit Facility” in Note~~ ~~15.~~

~~As of~~ ~~September 30, 2021,~~ ~~we had unvested restricted stock awards and stock options granted under stock-based compensation plans that are described more fully in Note~~ 13 ~~to the consolidated financial statements in our~~ ~~2020~~ ~~Form~~ 10-K.

Our unvested restricted stock awards and stock options are accounted for based on their grant date fair value. As of ~~September 30, 2021,~~ total compensation expense to be recognized in future periods is $2,928. The weighted average period over which this expense is expected to be recognized is 2.6 years. The following table shows the allocation of the compensation expense we recorded during the ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively, related to stock-based compensation:~~

~~There was 0 stock-based compensation expense capitalized in the~~ ~~three~~ ~~months or~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ or ~~2020.~~

~~Restricted Stock Awards~~

We record compensation expense for restricted stock awards based on the quoted market price of our stock at the grant date and amortize the expense over the vesting period. Restricted stock awards generally vest over ~~four~~ ~~years for employees and over~~ ~~one~~ ~~year for our independent directors (25% at each of~~ ~~March 31,~~ ~~June 30,~~ ~~September 30,~~ ~~and~~ ~~December 31~~ ~~of the year in which they were granted).~~

On ~~August 24, 2020,~~ ~~our new President and CEO received~~ ~~two~~ restricted stock awards totaling 141,610 shares valued at $650 as of the date of grant, which was also his hire date. Of the total shares awarded, 66,448 shares vest over 4 years (25% at each anniversary) and 75,162 shares vest on the ~~third~~ ~~anniversary of the grant date at a vesting percentage that could range from 0% to 150% of the number of shares awarded on~~ ~~August 24, 2020.~~ The final vesting percentage will be based on the achievement of certain performance metrics, including net revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of ~~September 30, 2021,~~ ~~we have estimated that these shares will vest at 100% of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the~~ ~~three~~~~-year vesting period. Our estimate of the final expected vesting percentage is reassessed and adjusted, as needed, at the end of each reporting period.~~

On ~~March 10, 2021,~~ ~~we issued restricted stock awards totaling 18,000 shares to members of the senior management within our operating segments. These shares will vest on the~~ ~~third~~ ~~anniversary of the grant date at a vesting percentage that could range from 0% to 150% of the number of shares awarded on~~ ~~March 10, 2021.~~ The final vesting percentage will be based on the achievement of certain performance metrics related to the operating results of the business units for which these members of management are responsible. As of ~~September 30, 2021,~~ ~~we have estimated that these shares will vest at 100% of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the~~ ~~three-year vesting period. Our estimate of the final expected vesting percentage is reassessed and adjusted, as needed, at the end of each reporting period.~~

On ~~June 14, 2021,~~ ~~our new CFO received~~ ~~two~~ restricted stock awards totaling 7,941 shares valued at $133 as of the date of grant, which was also his hire date. Of the total shares awarded, 1,988 shares vest over 4 years (25% at each anniversary) and 5,953 shares vest on ~~August 24, 2023~~ ~~at a vesting percentage that could range from 0% to 150% of the number of shares awarded on~~ ~~June 14, 2021.~~ The final vesting percentage will be based on the achievement of certain performance metrics, including net revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of ~~September 30, 2021,~~ we have estimated that these shares will vest at 100% of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the vesting period. Our estimate of the final expected vesting percentage is reassessed and adjusted, as needed, at the end of each reporting period.

~~The following table summarizes the activity related to unvested shares of restricted stock for the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021:~~

~~The total fair value of the shares that vested during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ ~~was $981 and $296, respectively, as of the vesting dates of these shares.~~

~~Stock Options~~

~~We record compensation expense for stock options based on the fair value of the options as of the grant date.~~ No ~~option~~ ~~may~~ ~~be granted with an exercise period in excess of~~ ~~ten~~ ~~years from the date of grant. Generally, stock options will be granted with an exercise price equal to the fair market value of our stock on the date of grant and will vest over~~ ~~four~~ ~~years.~~

~~The fair value for stock options granted during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ ~~was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:~~

~~The per share weighted average fair value of stock options issued during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ was $5.70 and $1.48, respectively.

The following table summarizes the activity related to stock options for the ~~nine~~ ~~months ended~~ ~~September 30, 2021:~~

On ~~July 31, 2019,~~ ~~our Board of Directors authorized the repurchase of up to $3,000 of our common stock from time to time on the open market, in compliance with Rule~~ ~~10b~~-18 ~~under the Securities Exchange Act of~~ ~~1934,~~ ~~as amended (the “Exchange Act”), or in privately negotiated transactions pursuant to a newly authorized stock repurchase plan (the~~ ~~“2019~~ ~~Repurchase Plan”~~Bank (“M&T”). ~~Repurchases are to be made under a Rule~~ ~~10b5~~-1 ~~plan entered into with RW Baird & Co., which permits shares to be repurchased when we might otherwise be precluded from doing so under insider trading laws and our internal trading windows. The~~ ~~2019~~ ~~Repurchase Plan does~~ ~~not~~ ~~obligate us to purchase any particular amount of common stock and can be suspended or discontinued at any time without prior notice. The~~ ~~2019~~ ~~Repurchase Plan is funded using our operating cash flow or available cash. Purchases began on~~ ~~September 18, 2019~~ ~~under this plan. On~~ ~~March 2, 2020,~~ ~~we suspended repurchases under the~~ ~~2019~~ ~~Repurchase Plan. From the adoption of the~~ ~~2019~~ Repurchase Plan through the suspension of the plan, we repurchased a total of 243,075 shares at a cost of $1,216, which includes fees paid to our broker of $6. All of the repurchased shares were retired.

~~The inTEST Corporation Employee Stock Purchase Plan (the “ESPP”) was adopted by the Board in~~ ~~April 2021~~ ~~subject to approval by our stockholders, which occurred on~~ ~~June 23, 2021~~ at our Annual Meeting of Stockholders. The ESPP provides our eligible employees with an opportunity to purchase common stock through accumulated payroll deductions at a discounted purchase price. The ESPP became effective on ~~October 1, 2021.~~

The ESPP provides that an aggregate of up to 250,000 shares of our common stock will be available for issuance under the ESPP. The shares of our common stock purchasable under the ESPP will be shares of authorized but unissued or reacquired shares, including shares repurchased by us on the open market.

~~We have defined contribution~~ ~~401~~(k) plans for our employees who work in the U.S. All permanent employees of inTEST Corporation, inTEST EMS LLC (“inTEST EMS”), Temptronic Corporation (“Temptronic”) and inTEST Silicon Valley Corporation (“inTEST SV”) who are at least 18 years of age are eligible to participate in the inTEST Corporation Incentive Savings Plan. We match employee contributions dollar for dollar up to 10% of the employee's annual compensation, with a maximum limit of $5. Employer contributions vest ratably over ~~four~~ ~~years. Matching contributions are discretionary. For the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~we recorded $51 and $322 of expense for matching contributions, respectively. For the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~we recorded $56 and $313 of expense for matching contributions, respectively.~~

All permanent employees of Ambrell are immediately eligible to participate in the Ambrell Corporation Savings & Profit Sharing Plan (the "Ambrell Plan") upon employment and are eligible for employer matching contributions after completing ~~six~~ months of service, as defined in the Ambrell Plan. The Ambrell Plan allows eligible employees to make voluntary contributions up to 100% of compensation, up to the federal government contribution limits. We will make a matching contribution of 50% of each employee's contributions up to a maximum of 10% of the employee's deferral with a maximum limit of $5. For the ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~we recorded $44 and $131 of expense for matching contributions, respectively. For the~~ ~~three~~ ~~months and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~we recorded $17 and $49 of expense for matching contributions, respectively.~~

We have 2 reportable segments, Thermal and EMS, which are also our reporting units. Thermal includes the operations of Temptronic, Thermonics, Sigma, inTEST Thermal Solutions GmbH (Germany), inTEST Pte, Limited (Singapore) and Ambrell. Sales of this segment consist primarily of temperature management systems which we design, manufacture and market under our Temptronic, Thermonics and Sigma product lines, and precision induction heating systems which are designed, manufactured and marketed by Ambrell. In addition, this segment provides post-warranty service and support. EMS includes the operations of our manufacturing facilities in Mt. Laurel, New Jersey and, prior to the consolidation of manufacturing operations late in the ~~fourth~~ ~~quarter of~~ ~~2020,~~ ~~Fremont, California. Sales of this segment consist primarily of manipulator, docking hardware and tester interface products, which we design, manufacture and market.~~

~~We operate our business worldwide and sell our products both domestically and internationally. Both of our segments sell to semiconductor manufacturers,~~ ~~third~~-party test and assembly houses and ATE manufacturers. Thermal also sells into a variety of markets outside of the Semi Market, including the automotive, defense/aerospace, medical, industrial, telecommunications and other markets.

~~The following tables provide information about our geographic areas of operation. Net revenues from unaffiliated customers are based on the location to which the goods are shipped.~~

On ~~October 6, 2021,~~ we acquired substantially all of the assets of Z-Sciences Corp. (“Z-Sciences”) pursuant to the Asset Purchase Agreement dated as of that same date. Z-Sciences is a developer of ultra-cold storage solutions for the life sciences cold chain market. The acquisition of the Z-Sciences business will broaden the product line of our Thermal segment. The purchase price for the assets, net of assumed liabilities, was approximately $500 in cash. We placed $200 of the purchase price in escrow to provide security for certain indemnification obligations set forth in the acquisition agreement. In connection with this acquisition, we also entered into a separate management services agreement with Z-Sciences and certain of its employees to provide management, transitional, and administrative services to us. We also expect that the founder of Z-Sciences, Jean Fallacara, will become an employee of inTEST in ~~2022.~~ In connection with his prospective employment, Mr. Fallacara would receive a multi-year restricted stock award with vesting provisions which would be contingent upon achieving future performance milestones related to sales growth and profitability of products related to the Z-Sciences business.

The Z-Sciences acquisition will be accounted for as a purchase business combination and, accordingly, the results will be included in our consolidated results of operations from the date of acquisition. We have ~~not~~ ~~completed our purchase accounting for this transaction and are still in the process of valuing the assets acquired. We expect to complete this process by~~ ~~December 31, 2021.~~ ~~The results of Z-Sciences will be included in our Thermal segment.~~

On ~~October 28, 2021,~~ ~~we acquired substantially all of the assets of Videology Imaging Solutions, Inc. and Videology Imaging Solutions Europe B.V. (collectively, “Videology”), pursuant to~~ ~~two~~ separate asset purchase agreements, both of which were dated as of that same date. Videology is a global designer, developer and manufacturer of OEM digital streaming and image capturing solutions. The acquisition of Videology will broaden the product line of our Thermal segment. The purchase price for the assets, net of assumed liabilities, was approximately $12,000 in cash. We placed $1,200 of the purchase price in escrow to provide security for certain indemnification obligations set forth in the asset purchase agreements.

The Videology acquisition will be accounted for as a purchase business combination and, accordingly, the results will be included in our consolidated results of operations from the date of acquisition. We have ~~not~~ ~~completed our purchase accounting for this transaction and are still in the process of valuing the assets acquired. We expect to complete this process by~~ ~~December 31, 2021.~~ ~~The results of Videology will be included in our Thermal segment.~~

~~As discussed in Note~~ 9, on ~~October 15, 2021 (~~~~the “Closing Date”), we entered into the~~ ~~October 2021~~ ~~Agreement with M&T Bank.~~ The October 2021 Agreement includes a $25,000 non-revolving delayed draw term note (the “Term Note”) and a $10,000 revolving credit ~~facility (the “Revolver Note”) and replaces the Loan and Security Agreement, dated~~ ~~April 10, 2020,~~ ~~as amended by the First Amendment to Loan and Security Agreement, dated~~ ~~December 16, 2020,~~ ~~and the Second Amendment to Loan and Security Agreement, dated~~ ~~April 10, 2021.~~ ~~Our domestic subsidiaries, Ambrell, inTEST EMS, inTEST SV and Temptronic, are guarantors under the~~ ~~October 2021~~ ~~Agreement (collectively, the “Guarantors”).~~facility. The October 2021 Agreement has a five year contract period that began on the Closing Date and expires on October 15, 2026 (the “Contract Period”), and draws under the ~~delayed draw term note~~Term Note will be permissible for two years. As of March 31, 2022, we had not borrowed any amounts under the revolving credit facility, and we had $4,500 available under our Term Note. Our borrowings under the Term Note are discussed below. Interest expense for the three months ended March 31, 2022 was $137. There was no interest expense in the three months ended March 31, 2021.

The principal balance of the revolving credit facility and the principal balance of any amount drawn under the Term Note will accrue interest based on the secured overnight financing rate for U.S. government securities (“SOFR”) or a bank-defined base rate plus an applicable margin, depending on leverage. ~~Currently, this equates to a rate of approximately 2.2%.~~ Each draw under the ~~delayed draw term note~~Term Note will have an option for us of either (i) up to a five year amortizing term loan with a balloon due at maturity, or (ii) up to a five year term with up to seven years amortization with a balloon due at maturity. Any amortization greater than five years will be subject to an excess cash flow recapture. The October 2021 Agreement also allows us to enter into hedging contracts with M&T, including interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, or any other agreements or that are designed to protect us against fluctuations in interest rates or currency exchange rates.

The October 2021 Agreement contains customary default provisions, including but not limited to the failure by us to repay obligations when due, violation of provisions or representations provided in the October 2021 Agreement, bankruptcy by us, suspension of our business or any of our subsidiaries and certain material judgments. After expiration of the Contract Period or if a continued event of default occurs, interest will accrue on the principal balance at a rate of 2% in excess of the then applicable non-default interest rate. The October 2021 Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA and a fixed charge coverage ratio. Our obligations under the October 2021 Agreement are secured by liens on substantially all of our tangible and intangible assets that are owned as of the Closing Date or acquired thereafter.

On October 28, 2021, we drew $12,000 under the Term Note to finance the acquisition of Videology as discussed above. We also entered into an interest rate swap agreement with M&T as of this date which is designed to protect us against fluctuations in interest rates during the five year repayment and amortization period. As a result, the annual interest rate we expect to pay for this draw under the Term Note is fixed at approximately 3.2% based on current leverage.

On ~~October 28,~~December 29, 2021, we drew $8,500 under the Term Note to finance the acquisition of Acculogic as discussed above. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At March 31, 2022 it was approximately 2.2% based on current leverage. Effective April, 1 2022 this rate increased to approximately 2.4%.

The following table sets forth the maturities of long-term debt for each of the next five years:

As of March 31, 2022, we had unvested restricted stock awards and stock options granted under stock-based compensation plans that are described more fully in Note 15 to the consolidated financial statements in our 2021 Form 10-K.

Our unvested restricted stock awards and stock options are accounted for based on their grant date fair value. As of March 31,2022, total compensation expense to be recognized in future periods is $3,232. The weighted average period over which this expense is expected to be recognized is 2.4 years.

The following table summarizes the compensation expense we recorded during the ~~October~~ three months ended March 31, 2022 and 2021~~Agreement~~ related to unvested shares of restricted stock and stock options:

There was ~~amended~~0 compensation expense capitalized in three months ended March 31, 2022 or 2021.

Stock Options

We record compensation expense for stock options based on the fair market value of the options as of the grant date. No option may be granted with an exercise period in excess of ten years from the date of grant. Generally, stock options will be granted with an exercise price equal to ~~include~~the fair market value of our ~~subsidiary, Videology Imaging Corporation,~~stock on the date of grant and will vest over four years.

The fair value for stock options granted during the three months ended March 31, 2022 and 2021 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

The per share weighted average fair value of stock options issued during the three months ended March 31, 2022 and 2021 was $5.19 and $5.09, respectively.

The following table summarizes the activity related to stock options for the three months ended March 31, 2022:

Restricted Stock Awards

We record compensation expense for restricted stock awards based on the quoted market price of our stock at the grant date and amortize the expense over the vesting period. Restricted stock awards generally vest over four years for employees and over one year for our independent directors (25% at each of March 31, June 30, September 30, and December 31 of the year in which they were granted).

Since August 2020, we have increasingly granted performance-based restricted stock awards where the ultimate number of shares that vest can vary between 0% and 150% of the amount of the original award and is based on the achievement of specified performance metrics. Vesting for these awards is generally cliff vesting at the end of the period over which the performance metrics are measured. Compensation expense for these awards is recorded on a straight-line basis over the vesting period and is based on the expected final vesting percentage, which is re-assessed at the end of each reporting period and adjusted with a catch-up adjustment, as needed. Our initial assumption at the grant date of these awards is that the award will vest at the 100% level. The awards granted prior to January 1, 2022 are discussed in more detail in Note 15 to the consolidated financial statement in our 2021 Form 10-K. There have been no significant changes to our assumptions related to the expected vesting percentages for these awards as of March 31, 2022.

On March 9, 2022, our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") received restricted stock awards totaling 20,493 shares valued at $200 as of the date of grant. These shares vest on the third anniversary of the grant date at a ~~subsidiary guarantor thereunder.~~vesting percentage that could range from 0% to 150% of the number of shares awarded on March 9, 2022. The final vesting percentage will be based on the achievement of certain performance metrics, including revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of March 31, 2022, we have estimated that these shares will vest at 100% of the original amount.

The following table summarizes the activity related to unvested restricted stock awards for the three months ended March 31,2022:

The total fair value of the restricted stock awards that vested during the three months ended March 31, 2022 and 2021 was $188 and $244, respectively, as of the vesting dates of these awards.

The inTEST Corporation Employee Stock Purchase Plan (the “ESPP”) was adopted by the Board in April 2021 subject to approval by our stockholders, which occurred on June 23, 2021 at our Annual Meeting of Stockholders. The ESPP provides our eligible employees with an opportunity to purchase common stock through accumulated payroll deductions at a discounted purchase price. The ESPP became effective on October 1, 2021.

On March 31, 2022, employees purchased 5,245 shares of our stock through the ESPP at a cost of $56. The closing market price on the date of the purchase was $10.73. The price paid by employees was $9.12 which represented a 15% discount. The total amount of the discount of $8 was recorded as compensation expense in our consolidated statements of operations. From the effective date of the ESPP through March 31, 2022, a total of 9,236 shares of stock have been purchased by employees through the ESPP at a cost of $91. We have recorded a total of $16 of compensation expense in our consolidated statements of operations related to these shares.

We have defined contribution 401(k) plans for our employees who work in the U.S. All permanent employees of inTEST Corporation, inTEST EMS LLC, Temptronic Corporation and Videology who are at least 18 years of age are eligible to participate in the inTEST Corporation Incentive Savings Plan. We match employee contributions dollar for dollar up to 10% of the employee's annual compensation, with a maximum limit of $5. Employer contributions vest ratably over four years. Matching contributions are discretionary. For the three months ended March 31, 2022 and 2021 we recorded $216 and $171 of expense for matching contributions, respectively.

All permanent employees of Ambrell are immediately eligible to participate in the Ambrell Corporation Savings & Profit Sharing Plan (the "Ambrell Plan") upon employment and are eligible for employer matching contributions after completing six months of service, as defined in the Ambrell Plan. The Ambrell Plan allows eligible employees to make voluntary contributions up to 100% of compensation, up to the federal government contribution limits. We will make a matching contribution of 50% of each employee's contributions up to a maximum of 10% of the employee's deferral with a maximum limit of $5. For the three months ended March 31, 2022 and 2021 we recorded $101 and $43 of expense for matching contributions, respectively.

During the year ended December 31, 2021, we managed our business as 2 operating segments which were also our reportable segments and reporting units: Thermal and EMS. As previously discussed in Note 1, effective January 1, 2022, we reorganized our segments to better align with our plan to manage and report our business going forward. This change in our operating and reporting structure reflects the evolution of our business, particularly as a result of the broadening of our product portfolio through the acquisitions we completed in the fourth quarter of 2021, which are discussed more fully in Note 3. Accordingly, for 2022, we have three reportable segments which are also our reporting units: Electronic Test (which includes our semiconductor test equipment, flying probe and in-circuit testers), Environmental Technologies (which includes our thermal test, process and storage products) and Process Technologies (which includes our induction heating and video imaging products). Prior period information has been reclassified to be comparable to the current period’s presentation.

Our management team, including our CEO who is also our Chief Operating Decision Maker as defined under U.S. GAAP, evaluates the performance of our operating segments primarily on income from divisional operations which represents earnings before income tax expense and excludes other income (expense), corporate expenses and acquired intangible amortization.

The following table provides information about our geographic areas of operation. Revenue is based on the location to which the goods are shipped.

In addition to historical information, this Quarterly Report on Form 10-Q for the period ended ~~September 30, 2021~~March 31, 2022 (this “Report”), including this management’s discussion and analysis (“MD&A”), contains statements that are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements do not convey historical information but relate to predicted or potential future events and financial results, such as statements of our plans, strategies and intentions, or our future performance or goals that are based upon management's current expectations. Our forward-looking statements can often be identified by the use of forward-looking terminology such as "believes," "expects," "intends," "may," “could,” "will," "should," "plans," “projects,” “forecasts,” “seeks,” “anticipates,” “goal,” “objective,” “target,” “estimate,” “future,” “outlook,” “vision,” or variations of such words or similar terminology. Investors and prospective investors are cautioned that such forward-looking statements are only projections based on current estimations. These statements involve risks and uncertainties and are based upon various assumptions. Such risks and uncertainties include, but are not limited to:

These risks and uncertainties, among others, could cause our actual future results to differ materially from those described in our forward-looking statements or from our prior results. Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks to circumstances only as of the date on which it is made. We are not obligated to update these forward-looking statements, even though our situation may change in the future.

This MD&A should be read in conjunction with the accompanying consolidated financial statements. In addition, please refer to the discussion of our business and markets contained in Part 1, Item 1 of our 2021 Form 10-K.

We are a global supplier of innovative test and process solutions for use in manufacturing and testing across a wide range of markets including automotive, defense/aerospace, industrial, life sciences, ~~semiconductor~~security and ~~telecommunications. We manage~~semiconductor. During the year ended December 31, 2021, we managed our business as two operating ~~segments:~~segments which were also our reportable segments and reporting units: Thermal Products ("Thermal") and ~~EMS. Our Thermal segment designs, manufactures~~Electromechanical Solutions ("EMS"). Effective January 1, 2022, we reorganized our operating segments to better align with our plan to manage and ~~sells~~report our business going forward. This change in our operating and reporting structure reflects the evolution of our business, particularly as a result of the broadening of our product portfolio through the acquisitions we completed in the fourth quarter of 2021, which are discussed more fully in Note 3. Accordingly, for 2022, we have three reportable segments which are also our reporting units: Electronic Test (which includes our semiconductor test equipment, flying probe and in-circuit testers), Environmental Technologies (which includes our thermal test, process and ~~thermal process products while~~storage products) and Process Technologies (which includes our ~~EMS segment designs, manufactures~~induction heating and ~~sells our semiconductor test products.~~video imaging products). Prior period information has been reclassified to be comparable to the current period’s presentation.

Our EMS segment sells its products to semiconductor manufacturers and third-party test and assembly houses (end user sales) and to ATE manufacturers (“OEM sales”), who ultimately resell our equipment with theirs to both semiconductor manufacturers and third-party test and assembly houses. These sales all fall within the ATE sector of the broader semiconductor market. Our Thermal segment sells its products to many of these same types of customers; however, it also sells to customers in the wafer processing sector within the broader semiconductor market and to customers in a variety of other markets outside the semiconductor market, including the automotive, defense/aerospace, industrial (including consumer products packaging, fiber optics and other sectors within the broader industrial market), life sciences and telecommunications markets.

~~Both~~All of our operating segments have multiple products that we design, manufacture and market to our customers. Due to a number of factors, our products have varying levels of gross margin. These factors include, for example, the amount of engineering time required to develop the product, the market or customer to which we sell the product and the level of competing products available from other suppliers. The needs of our customers ultimately determine the products that we sell in a given time period. Therefore, the mix of products sold in a given period can change significantly when compared against the prior period. As a result, our consolidated gross margin may be significantly impacted by a change in the mix of products sold in a particular period.

~~We refer to~~As discussed further in Part 1, Item 1 “Markets” of our 2021 Form 10-K, we are focused on specific target markets which include automotive, defense/aerospace, industrial, life sciences, security as well as both the front-end and back-end of the semiconductor manufacturing industry (“semi” or “semi market”). The semi market, ~~including~~which includes both the broader semiconductor market, as well as the more specialized ~~semiconductor~~ ATE and wafer processing sectors within the broader semiconductor market, as the “Semi Market.” All other markets are designated as “Multimarket.” Business within our Thermal segment can fall into either the Semi Market or Multimarket, depending upon how our customers utilize our products or upon their respective applications.

While the Semi Market represents the historical roots of inTEST and remains a very important component of our business, Multimarket is where we have focused our strategic growth efforts in the last several years. Our goal was to grow our business, both organically and through acquisition, in these markets as we believe these markets havehas historically been ~~less~~the largest single market in which we operate. The semi market is characterized by rapid technological change, competitive pricing pressures and cyclical ~~than~~market patterns and is subject to periods of significant expansion or contraction in demand. Our intention is to continue diversifying our markets, our product offerings within the ~~Semi Market.Moving forward, with the launch of~~markets we serve and our new strategic plan which is discussed in Part 1, Item 1 under “Our Strategies” in our 2020 Form 10-K, we intend to broaden our strategic growth efforts to target both organic and inorganic growth incustomer base across all of our ~~currently served~~ markets ~~which includes~~with the ~~Semi Market. Our~~ goal isof reducing our dependence on any one market, product or customer. In particular, we are seeking to ~~further expand our existing product lines, strengthen our positions in served markets and drive expansion into new markets.~~

~~Prior to our acquisition~~reduce the impact of Ambrell in May 2017, we offered only highly specialized engineering solutions used for testing applications in Multimarket, the demand for which is limited and which varies significantly from period to period. Our acquisition of Ambrell not only provided expansion into new markets but also broadened our product offerings to include products sold into process or manufacturing applications. Historically, Ambrell sold its precision induction heating systems almost exclusively to customersvolatility in the ~~industrial~~semi market ~~but since 2018, has also had significant sales into the Semi Market. Overall, however, the acquisition~~on our results of ~~Ambrell has helped to diversify our customer base.~~operations.

The portion of our business that is derived from the ~~Semi Market~~semi market is substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of integrated circuits ~~or,~~(“ICs”) and, for ~~Ambrell,~~our induction heating products, the demand for wafer processing equipment. Demand for ATE or wafer processing equipment is primarily driven by semiconductor manufacturers that are opening new, or expanding existing, semiconductor fabrication facilities or upgrading equipment, which in turn is dependent upon the current and anticipated market demand for ~~semiconductors~~ICs and products incorporating ~~semiconductors.~~ICs. Such market demand can be the result of market expansion, development of new technologies or redesigned products to incorporate new features, or the replacement of aging equipment. ~~In addition, we continue to focus on design improvements and new approaches for our own products that contribute to our net revenues as our customers adopt these new products.~~

In the past, the ~~Semi Market~~semi market has been highly cyclical with recurring periods of oversupply, which often severely impact the ~~Semi Market's~~semi market's demand for the products we manufacture and sell into the market. This cyclicality can cause wide fluctuations in both our orders and ~~net revenues~~revenue and, depending on our ability to react quickly to these shifts in demand, can significantly impact our results of operations. Market cycles are difficult to predict and, because they are generally characterized by sequential periods of growth or declines in orders and ~~net revenues~~revenue during each cycle, year over year comparisons of operating results may not always be as meaningful as comparisons of periods at similar points in either up or down cycles. These periods of heightened or reduced demand can shift depending on various factors impacting both our customers and the markets that they serve. In addition, during both downward and upward cycles in the ~~Semi Market,~~semi market, in any given quarter, the trend in both our orders and ~~net revenues~~revenue can be erratic. This can occur, for example, when orders are canceled or currently scheduled delivery dates are accelerated or postponed by a significant customer or when customer forecasts and general business conditions fluctuate during a quarter.

Third party market share statistics are not available for the products we manufacture and sell into the Semi Market; therefore, comparisons of period over period changes in our market share are not easily determined. As a result, it is difficult to ascertain if Semi Market volatility in any period is the result of macro-economic or customer-specific factors impacting Semi Market demand, or if we have gained or lost market share to a competitor during the period.

While ~~approximately half~~a significant portion of our orders and ~~net revenues~~revenue are ~~generally~~ derived from the ~~Semi Market,~~semi market, and our operating results generally follow the overall trend in the ~~Semi Market,~~semi market, in any given period we may experience anomalies that cause the trend in our ~~net revenues~~revenue from the semi market to deviate from the overall trend in the ~~Semi Market.~~market. We believe that these anomalies may be driven by a variety of factors within the ~~Semi Market,~~semi market, including, for example, changing product requirements, longer periods between new product offerings by OEMs and changes in customer buying patterns. In addition, in recent periods, we have seen instances when demand within the ~~Semi Market~~semi market is not consistent for each of our operating segments or for any given product within a particular operating segment. This ~~lack of consistency~~inconsistency in demand can be driven by a number of factors but, in most cases, we have found that the primary reason is unique customer-specific changes in demand for certain products driven by the needs of their customers or markets served. Recently this has become more pronounced for our sales into the wafer processing sector within the broader semiconductor market due to the limited market penetration we have into this sector and the variability of orders we have experienced from the few customers we support.These shifts in market practices and customer-specific needs have had, and may continue to have, varying levels of impact on our operating results and are difficult to quantify or predict from period to period. Management has taken, and will continue to take, such actions it deems appropriate to adjust our strategies, products and operations to counter such shifts in market practices as they become evident.

As previously mentioned, as part of our ongoing strategy to grow our business, we continue to diversify our served markets to address the thermal test and thermal process requirements of several markets outside the Semi Market. These include the automotive, defense/aerospace, industrial, life sciences, telecommunications and other markets, which we refer to as Multimarket. We believe that these markets are usually less cyclical than the Semi Market. While market share statistics exist for some of these markets, due to the nature of our highly specialized product offerings in these markets, we do not expect broad market penetration in many of these markets and therefore do not anticipate developing meaningful market shares in most of these markets.

In addition, because of our limited market share, our Multimarket orders and net revenues in any given period do not necessarily reflect the overall trends in the markets within Multimarket. Consequently, we are continuing to evaluate buying patterns and opportunities for growth in Multimarket that may affect our performance. The level of our Multimarket orders and net revenues has varied in the past, and we expect will vary significantly in the future, as we work to build our presence in Multimarket and establish new markets for our products.

A key element to our strategy for growth is through acquisitions. As discussed more fully in Note 3 to our consolidated financial statements in this Report, during 2021, we completed three acquisitions that expanded our technology offerings, diversified our markets and customers and expanded our reach into Europe.

On October 6, 2021, we acquired substantially all of the assets of Z-Sciences ~~as discussed further in Note 15 to our consolidated financial statements in this Report. Z-Sciences is~~(now North Sciences), a developer of ultra-cold storage solutions for the life sciences cold chain market. ~~The acquisition of the Z-Sciences~~This small, tuck-in transaction enhances our technology, adds new talent, and provides a low-cost entry into this fast growing, fragmented market. This business will broaden the product line of our Thermal segment. The purchase price for the assets, net of liabilities assumed, was approximately $500,000 in cash. The Z-Sciences acquisition will be accounted for as a purchase business combination and, accordingly, the results will beis included in our consolidated results of operations from the date of acquisition. We have not completed our purchase accounting for this transaction and are still in the process of valuing the assets acquired. We expect to complete this process by December 31, 2021.Environmental Technologies segment.

On October 28, 2021, we acquired substantially all of the assets of Videology, ~~as discussed further in Note 15 to our consolidated financial statements in this Report. Videology is~~ a global designer, developer and manufacturer of OEM digital streaming and image capturing solutions. The ~~purchase price for the assets, net of liabilities assumed, was approximately $12 million in cash. The Videology~~ acquisition ~~will be accounted for as a purchase~~expanded our process technology offerings, diversified our reach into key target markets and broadened our customer base. This business ~~combination and, accordingly, the results will be~~is included in our consolidated results of operations from the date of acquisition. We have not completed our purchase accounting for this transaction and are still in the process of valuing the assets acquired. We expect to complete this process by December 31, 2021.

~~Both acquired businesses will be integrated into our Thermal~~Process Technologies segment.

~~As discussed further in Notes 9 and 15 to our consolidated financial statements in this Report, on October 15,~~On December 21, 2021, we ~~entered into the October 2021 Agreement~~acquired Acculogic, a global manufacturer of robotics-based electronic production test equipment and application support services. The acquisition expanded our global reach and enhanced our product portfolio with ~~M&T Bank. The October 2021 Agreement includes a $25 million non-revolving delayed draw term note~~leading technologies and a $10 million revolving credit facility and replaces our prior credit facility with M&T Bank. The October 2021 Agreement has a five-year contract period that expires on October 15, 2026, and draws under the delayed draw term note will be permissible for two years. The principal balance of the revolving credit facility and the principal balance of any amount drawn under the non-revolving delayed draw term note will accrue interest based on SOFR or a bank-defined base rate plus an applicable margin, depending on leverage. The October 2021 Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA and a fixed charge coverage ratio. Our obligations under the October 2021 Agreement are secured by liens on substantially all of our tangible and intangible assets. On October 28, 2021, we drew $12 million under the Term Note to finance the acquisition of Videology discussed above. We also entered into an interest rate swap agreement with M&T as of this date whichautomation services. This business is designed to protect us against fluctuations in interest rates during the five year repayment and amortization period. As a result, the annual interest rate we expect to pay for this draw under the Term Note is fixed at approximately 3.2% based on current leverage. On October 28, 2021, the October 2021 Agreement was amended to include our subsidiary, Videology Imaging Corporation, as a subsidiary guarantor thereunder.

~~On September 21, 2020, we notified employees~~included in our Fremont, California facility of a plan to consolidate all manufacturing for our EMS segment into our manufacturing operations located in Mt. Laurel, New Jersey. Prior to the consolidation, our interface products were manufactured in the Fremont facility, and our manipulator and docking hardware products were manufactured in the Mt. Laurel facility. The consolidation was undertaken to better serve customers through streamlined operations and reduce the fixed annual operating costs for the EMSElectronic Test segment. A small engineering and sales office is being maintained in northern California. The integration of our EMS manufacturing operations took longer than originally anticipated primarily as a result of the significant increase in our business activity in the first nine months of 2021. We completed the integration during the third quarter of 2021. The costs related to these actions are included in restructuring and other charges on our consolidated statement of operations and are discussed in more detail in Note 3 to our consolidated financial statements in this Report and in our 2020 Form 10-K.

Orders and Backlog

The following table sets forth, for the periods indicated, a breakdown of the orders received by operating segment and market (in thousands).

Total consolidated orders for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$21.1~~$25.1 million compared to ~~$14.4~~$25.2 million for the same period in ~~2020~~2021 and ~~$25.1~~$30.5 million for the three months ended ~~June 30,~~December 31, 2021. Orders from customers in ~~Multimarket~~semi for the three months ended September 30, 2021 were 37% of total consolidated orders compared to 50% of total consolidated orders for the same period in 2020 and 34% of total consolidated orders for the three months ended June 30, 2021.

We believe that the significant level of increase in orders from the Semi Market during the three months ended September 30, 2021 asMarch 31, 2022 declined 28% compared to the same period in 2020 reflects the impact of increased demand for semiconductors (also referred to as “integrated circuits” or “ICs”), generally, which has led to the current shortage in the global supply. We believe this increase in the demand for semiconductors is being driven both by changing technology as well as increased use of technology across all aspects of daily life, such as in devices that facilitate remote work2021 and education, smart technology used in homes and businesses, the increase in the number of ICs used in the automotive industry and changes occurring in the telecommunications and mobility markets. We also experienced an increase in orders from Multimarket for the three months ended September 30, 2021 as compared to the same period in 2020. This increase was primarily from the automotive market, which includes the electric vehicle (“EV”) market. During the third quarter of 2021, we received a significant order from one of our EV customers which we expect to ship over the next several quarters. Our orders from customers in Multimarket declined as42% compared to the three months ended ~~June 30,~~December 31, 2021. During the ~~second~~first quarter of 2021, we experienced ~~higher~~exceptionally strong demand from our back-end semi customers as the market was in a period of significant expansion. Demand from these customers in ~~both~~ the ~~defense/aerospace~~first quarter of 2021 has moderated, which we believe reflects the typical purchasing cycle in this market as customers complete the installation and ~~automotive (both traditional and EV) markets~~set-up of equipment purchased throughout 2021. In addition, orders in the fourth quarter of 2021 included a $10.0 million order for our front-end semi solutions which we did not expect to repeat in the first quarter of 2022. This order will ship over the next several quarters.

Orders for the three months ended March 31, 2022 as compared to both the ~~third quarter of 2021. It is important to note that we have seen an increasing tendency~~same period in 2021 and the three months ended December 31, 2021 reflected strong demand from the automotive market, in particular for electric vehicle (“EV”) applications utilizing our induction heating technology and our newly acquired battery test solutions. Orders increased in life sciences as well, driven by ~~certain~~demand for a variety of our ~~customers, particularly those~~technology solutions including digital imaging and induction heating. Demand from the defense/aerospace market for environmental technology solutions was also strong in Multimarket, to place large orders with us that will ship over several quarters. We expect this may, at times, result in period over period fluctuations in order levels that are not necessarily indicative of changing demand but rather reflect the ~~timing of when these large orders were placed.~~three months ended March 31, 2022.

At ~~September 30, 2021,~~March 31, 2022, our backlog of unfilled orders for all products was approximately ~~$20.4~~$35.0 million compared with approximately ~~$8.7~~$17.1 million at ~~September 30, 2020~~March 31, 2021 and ~~$20.4~~$34.1 million at ~~June 30,~~December 31, 2021. The amounts at March 31, 2022 and December 31, 2021 included approximately $7.6 million and $6.5 million, respectively, from acquired businesses. The significant increase in our backlog as compared to March 31, 2021 primarily reflects the aforementioned $10.0 million order received from one of our front-end semi market customers during the fourth quarter of 2021 and the impact of the acquired businesses. Our backlog includes customer orders which we have accepted, ~~approximately 75%~~essentially all of which we expect to deliver in ~~2021.~~2022, subject to supply chain constraints. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.

~~Net Revenues~~Revenue

The following table sets forth, for the periods indicated, a breakdown of ~~the net revenues~~revenue by operating segment and market (in thousands).

Total consolidated ~~net revenues~~revenue for the three months ended ~~September 30, 2021 were $21.1~~March 31, 2022 was $24.1 million compared to ~~$14.4~~$19.6 million for the same period in ~~2020~~2021 and ~~$21.8~~$22.4 million for the three months ended ~~June 30,~~December 31, 2021. ~~We believe~~Revenue for the ~~increase~~three months ended March 31, 2022 included $4.0 million from the businesses we acquired during the fourth quarter of 2021, as previously discussed. Acquired businesses accounted for $1.5 million of revenue during the fourth quarter of 2021.

Organic growth in ~~our consolidated net revenues as~~revenue for the three months ended March 31, 2022 was 3% compared to the same period in ~~2020 reflects the aforementioned increase in~~2021 and reflected demand from the ~~Semi Market. We saw this~~automotive market, in particular EVs, as well as industrial markets. The acquired businesses contributed to growth in life sciences, security and other markets. Revenue from the semi market was relatively unchanged compared to the same period in 2021 as demand ~~decrease~~from front-end semi customers offset the decline in sales to the back-end semi customers which were exceptionally strong in the ~~third~~same period in 2021, as previously mentioned. Compared with the three months ended December 31, 2021, revenue excluding acquired businesses declined approximately 4% largely reflecting logistics and supply chain constraints that did not allow us to ship all of the orders we had planned to ship during the first quarter of 2022. The incremental increase from acquired businesses primarily reflects that we owned these businesses for the full quarter while we only had revenue in the fourth quarter of 2021 ~~which resulted~~from the respective dates of acquisition through December 31, 2021.

The ongoing war between Russia and Ukraine continues to contribute to global inflationary pressures and the availability of certain raw materials produced in that region, further exacerbating global supply chain challenges that emerged after the onset of the COVID-19 pandemic as described below. As discussed in Part 1, Item IA “Risk Factors” in our ~~net revenues~~2021 Form 10-K, Acculogic, which we acquired in December 2021, purchases certain material from a key sole-source supplier in Belarus, which is bordered by Russia to the ~~Semi Market~~east and northeast and Ukraine to the south. We estimate that we currently have a six to nine month supply of this material. Since February 2022, we have been working through the process of qualifying an alternate supplier for this material. Although we expect to have completed that qualification by the ~~third quarter~~end of ~~2021 as compared to~~ the second quarter of ~~2021. This decline was partially offset by~~2022, if we do not successfully identify and qualify an ~~increase~~alternate vendor for this material, our revenue and earnings could be adversely affected in ~~shipments~~future periods.

In addition, while we were able to ~~Multimarket customers, primarily those~~mitigate a significant portion of the supply chain and logistics challenges that we encountered in the ~~industrial market which~~first quarter of 2022, we ~~believe reflects the ongoing, broad-based recovery within industrial sectors~~have approximately $1.0 million of products that we ~~serve.~~were not able to ship during the quarter because of such constraints. We expect to ship all of such products during the second quarter of 2022. However, we expect to continue to experience increased prices, lack of availability and logistics delays for the foreseeable future. The actions we are taking to mitigate these risks include qualifying new vendors as alternate sources in our supply chain, increasing our inventory of raw materials and ordering further in advance of when we expect to need materials than has been our practice in the past. We are also ~~attribute~~increasing the ~~increase~~prices that we charge our customers as a result of increased raw material expenses, and we are working with our customers to ~~new product introductions~~find alternate options for the shipment of products where they control aspects of the logistics process. However, the situation is evolving and shifting rapidly at times, and the ~~reopening~~success of ~~trade shows,~~our efforts to mitigate and address the impacts on our business may not be successful. As a result, we could see increases in our costs or reduced revenues which ~~have resulted~~would impact the level of our earnings in ~~new customer opportunities and wins. We believe the EV market continues to gain traction with a variety of applications for induction heating technology.~~future periods.

~~Net revenues from customers in Multimarket~~Please refer to Part 1, Item 1A of our 2021 Form 10-K for further discussion of the three months ended September 30, 2021 were 35% of total consolidated net revenues compared to 49% of total consolidated net revenues for the same period in 2020 and 28% of total consolidated orders for the three months ended June 30, 2021.risks associated with our business operations, including risks associated with foreign operations.

~~As of~~With respect to the ~~date of this Report, our U.S. offices remain open. We~~COVID-19 pandemic, we are following the guidance of the ~~CDC~~Centers for Disease Control and ~~accordingly,~~Prevention and the local regulatory authorities in regions outside the U.S. While in most cases we are no longer requiring ~~all~~ employees ~~working in our offices~~ to wear masks indoors in our domestic locations, in certain of our facilities, where we have experienced a recent increase in the number of employees contracting the virus, we have re-instituted a mask requirement. We are encouraging all employees to receive COVID-19 vaccinations and boosters, if possible. We are continuing to conduct temperature screenings and encouraging all employees to maintain ~~appropriate~~ social ~~distancing.~~distancing when appropriate. We are also continuing to allow employees to work remotely either part-time or full-time in circumstances ~~where~~when possible. AsWe are still assessing the impact of the ~~date~~recent increase in cases in certain of our facilities and exploring alternatives to address the lost production time. With regard to the recent shutdowns in China, we are working with our customers to identify alternate plans for delivery of our products to this Report, our offices in Europe have also reopened to varying degrees, while our employees in Asia remain under more significant restrictions. Our employees outside of the U.S. continue to follow the guidance of their local regulatory authorities, which in most cases includes wearing masks, observing social distancing, limiting travel and quarantining after travel, as required.

~~While the negative impact of COVID-19 on our business was reduced significantly in the second half of 2020 and the first nine months of 2021,~~region. If the spread of ~~the virus~~COVID-19 or its variants ~~of the virus could continue~~continues to worsen, ~~and~~we may experience additional lost production time or further interruption in our ability to ship our products to our customers. In addition, if one or more of our significant customers or suppliers ~~could be~~is impacted, or significant additional governmental regulations and restrictions ~~could be~~are imposed, ~~thus negatively impacting~~ our business in the ~~future.~~future could be negatively impacted. We continue to monitor the situation closely ~~in the regions in which we operate in the U.S. and abroad~~ and will adjust our operations as necessary to protect the health and well-being of our employees. To the extent that further governmental mandates or restrictions are implemented in the future, we currently expect to be able to continue to operate our business in a manner similar to how we have operated over the past year.

The results of operations for all of our ~~two~~ operating segments are generally affected by the same factors described in the Overview section above. Separate discussions and analyses for each segment would be repetitive. The discussion and analysis that follows, therefore, is presented on a consolidated basis and includes discussion of factors unique to each segment where significant to an understanding of that segment.

Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

~~Net Revenues.~~Revenue. ~~Net revenues were $21.1~~Revenue was $24.1 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$14.4~~$19.6 million for the same period in ~~2020,~~2021, an increase of ~~$6.7~~$4.5 million, or ~~46%~~23%. We believe the increase in our ~~net revenues~~revenue during the ~~third~~first quarter of ~~2021~~2022 primarily reflects the factors previously discussed in the Overview section.

Gross Margin. Our consolidated gross margin was ~~49%~~46% of ~~net revenues~~revenue for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to ~~45%~~49% of ~~net revenues~~revenue for the same period in ~~2020.~~2021. The ~~increase~~decrease in our gross margin primarily reflects ~~that~~a combination of an increase in our ~~fixed operating~~component material costs ~~were more fully absorbed by the higher net revenue levels in 2021. Although our fixed operating costs were relatively unchanged in absolute dollar terms,~~ as a percentage of ~~net revenues these costs decreased from 17%~~revenue, reflecting changes in product and customer mix, and an increase in our direct labor as a percentage of ~~net revenues~~revenue, reflecting an increase in the relative labor component of our cost structure. This increase reflects both the impact of the acquired businesses as well as increases in the average rates paid for ~~the three months ended September 30, 2020 to 12% of net revenues for the same period in 2021. During the three months ended September 30, 2021~~labor as compared to the same period in ~~2020, decreases~~2021. The increase in ~~facility-related costs in our EMS segment~~labor rates reflects both inflation and ~~reduced premiums for medical insurance in both our segments were offset by increased salaries and benefits expense due to additional headcount in our Thermal segment. The decrease~~merit increases given on April 1, 2021. To a lesser extent, there was also an increase in our fixed operating costs as a ~~percentage~~percent of ~~net revenues during~~revenue, reflecting both the ~~three months ended September 30, 2021~~impact of the acquired businesses as ~~compared to the same period in 2020 was partially offset by an increase~~well as headcount investments in our ~~component material costs, reflecting changes in product mix.~~legacy business.

Selling Expense. Selling expense was ~~$2.8~~$3.5 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$1.7~~$2.4 million for the same period in ~~2020~~2021 an increase of $1.1 million, or ~~63%~~44%. ~~Commissions increased by $560,000 which~~The acquired businesses account for approximately $721,000 of this increase. The remaining increase primarily reflects ~~the higher net revenue levels. We also had an increase~~headcount investments and increased travel across all our segments. These increases were partially offset by a decrease in ~~salaries and benefits~~commission expense, ~~due to additional headcount and higher levels of travel and trade show expense as COVID-19 restrictions were reduced or eliminated. We expect this increase~~reflecting changes in ~~travel costs to continue throughout the balance of 2021 as we return to a more normal business model with regard to~~ customer ~~support and on-site visits.~~mix.

Engineering and Product Development Expense. Engineering and product development expense was ~~essentially unchanged at $1.3~~$1.9 million for ~~both~~ the three months ended ~~September 30,~~March 31, 2022 compared to $1.3 million for the same period in 2021 an increase of $602,000, or 46%. The acquired businesses account for approximately $478,000 of this increase. The remaining increase primarily reflects headcount investments and ~~2020. Increases~~an increase in ~~our EMS segment as a result of headcount additions and higher spending on third-party consultants~~supplies used in product ~~development~~development. These increases were partially offset by ~~reductions~~a reduction in ~~our Thermal segment for~~ legal fees related to our intellectual ~~property and supplies used in product development.~~property.

General and Administrative Expense. General and administrative expense was ~~$3.6~~$4.8 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$2.8~~$3.2 million for the same period in ~~2020,~~2021 an increase of ~~$821,000,~~$1.7 million, or ~~29%~~53%. ~~During the three months ended September 30, 2021, we spent $336,000 on costs related to potential acquisitions which is a part~~The acquired businesses account for approximately $1.3 million of ~~our corporate growth strategy,~~this increase. The remaining increase primarily reflects headcount investments as ~~previously discussed. There were no similar expenses in the three months ended September 30, 2020. In addition, we recorded higher levels of stock-based compensation expense, reflecting~~well as an increase in ~~the price of~~professional fees paid to various third parties who assist us with our ~~common stock,~~strategic initiatives and an increase in profit-based bonuses, reflecting our increased earnings in the three months ended September 30, 2021 as compared to the same period in 2020. These increases were partially offset by a reduction in non-acquisition related legal fees during the three months ended September 30, 2021 as compared to the same period in 2020. The higher legal fees in the third quarter of 2020 were primarily related to the resignation of our former CEO and the hiring of our new CEO which occurred in August 2020.regulatory compliance.

Restructuring and Other Charges. For the three months ended ~~September 30,~~March 31, 2021, we recorded ~~$51,000~~$55,000 in restructuring and other charges related to the consolidation of our EMS manufacturing operations. ~~During~~There were no similar charges in the ~~same period in 2020, we recorded $161,000 in restructuring and other charges related primarily to severance and other one-time termination benefits for our former CEO.~~three months ended March 31, 2022.

Income Tax ~~Expense (Benefit).~~Expense. For the three months ended ~~September 30, 2021,~~March 31, 2022, we recorded income tax expense of ~~$357,000~~$78,000 compared to an income tax ~~benefit~~expense of ~~$25,000~~$366,000 for the same period in ~~2020.~~2021. Our effective tax rate was ~~14%~~12% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~(6)%~~14% for the same period in ~~2020.~~2021. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses. The lower effective tax rate in the three months ended September 30, 2020 reflects adjustments that were made to bring the effective tax rate for the nine-month period ended September 30, 2020 to the expected annualized effective tax rate as of that date.

~~Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

~~Net Revenues.~~ Net revenues were $62.5 million for the nine months ended September 30, 2021 compared to $38.9 million for the same period in 2020, an increase of $23.6 million, or 61%. We believe the increase in our net revenues during the first nine months of 2021 primarily reflects the increase in demand from the Semi Market as discussed in the Overview.

~~Gross Margin.~~ Our consolidated gross margin was 49% of net revenues for the nine months ended September 30, 2021 as compared to 45% of net revenues for the same period in 2020. The increase in our gross margin primarily reflects that our fixed operating costs were more fully absorbed by the higher net revenue levels in 2021. Although our fixed operating costs were relatively unchanged in absolute dollar terms, as a percentage of net revenues these costs decreased from 19% of net revenues for the nine months ended September 30, 2020 to 12% of net revenues for the same period in 2021. During the nine months ended September 30, 2021 as compared to the same period in 2020, decreases in facility related costs, primarily in our EMS segment, and a reduction in premiums for medical insurance in both our segments were offset by increased salaries and benefits expense due to additional headcount in our Thermal segment and, to a lesser extent, increases in supplies used in our manufacturing facilities. The decrease in our fixed operating costs as a percentage of net revenues during the nine months ended September 30, 2021 as compared to the same period in 2020 was partially offset by an increase in our component material costs, reflecting changes in product mix.

~~Selling Expense.~~ Selling expense was $7.8 million for the nine months ended September 30, 2021 compared to $5.6 million for the same period in 2020 an increase of $2.3 million, or 41%. Commissions increased $1.5 million and standard warranty accruals increased $168,000, both of which primarily reflect the higher net revenue levels. We also had an increase in salaries and benefits expense due to additional headcount in our EMS segment and higher levels of travel and trade show expense in both of our segments as COVID-19 restrictions were reduced or eliminated. We expect this increase in travel costs to continue throughout the balance of 2021 as we return to a more normal business model with regard to customer support and on-site visits.

~~Engineering and Product Development Expense.~~ Engineering and product development expense was $4.0 million for the nine months ended September 30, 2021 compared to $3.8 million for the same period in 2020 an increase of $187,000, or 5%. The increase primarily reflects higher salaries and benefits expense as a result of headcount additions in both our segments.

~~General and Administrative Expense.~~ General and administrative expense was $10.6 million for the nine months ended September 30, 2021 compared to $8.5 million for the same period in 2020, an increase of $2.0 million, or 24%. During the nine months ended September 30, 2021, as compared to the same period in 2020, we recorded higher levels of stock-based compensation expense, reflecting an increase in the price of our common stock, and an increase in profit-based bonuses, reflecting our increased earnings in the first nine months of 2021. In addition, during the nine months ended September 30, 2021, we incurred $359,000 of costs related to potential acquisitions and $250,000 of legal and consulting fees and stock-based compensation costs related to the retirement of our former CFO and the appointment of our new CFO. There were no similar costs in the nine months ended September 30, 2020.

~~Restructuring and Other Charges~~. For the nine months ended September 30, 2021, we recorded $303,000 in restructuring and other charges related to retirement of our former CFO and the consolidation of our EMS manufacturing operations. During the same period in 2020, we recorded $207,000 in restructuring and other charges related to the resignation of our former CEO in August 2020 and headcount reductions in our Corporate staff and our Thermal segment.

~~Income Tax Expense (Benefit).~~ For the nine months ended September 30, 2021, we recorded income tax expense of $1.2 million compared to an income tax benefit of $262,000 for the same period in 2020. Our effective tax rate was 14% for the nine months ended September 30, 2021 compared to 34% for the same period in 2020. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses. The lower effective tax rate in the nine months ended September 30, 2021 primarily reflects both an increase in the deduction for foreign-derived intangible income and an increase in the level of our tax deductions related to stock-based compensation. To a lesser extent, we also recorded increased levels of expected tax credits driven by both research and development activities and foreign operations.

Liquidity and Capital Resources

As discussed more fully in the Overview, our business and results of operations are substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for ATE makes estimates of future ~~revenues,~~revenue, results of operations and net cash flows difficult.

Our primary historical source of liquidity and capital resources has been cash flow generated by our ~~operations,~~operations. In 2021, we also utilized our new credit facility, which is discussed further in the Overview and webelow, to fund our acquisitions. We manage our businesses to maximize operating cash flows as our primary source of ~~liquidity.~~liquidity for our short-term cash requirements, as discussed below. We use cash to fund growth in our operating assets, for new product research and development, for acquisitions and for ~~acquisitions.~~stock repurchases. We currently anticipate that any additional long-term cash requirements related to our strategy would be funded through a combination of our cash and cash equivalents, our new credit facility or by issuing equity.

As discussed in Note 11 to our consolidated financial statements in this Report, on October 15, 2021, we entered into the October 2021 Agreement with M&T. The October 2021 Agreement includes a $25 million Term Note and a $10 million revolving credit facility and replaces our prior credit facility with M&T. The October 2021 Agreement has a five-year contract period that expires on October 15, 2026 and draws under the Term Note will be permissible for two years. The principal balance of the revolving credit facility and the principal balance of any amount drawn under the Term Note will accrue interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The October 2021 Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA and a fixed charge coverage ratio. Our obligations under the October 2021 Agreement are secured by liens on substantially all of our tangible and intangible assets.

On October 28, 2021, we drew $12 million under the Term Note to finance the acquisition of Videology. We also entered into an interest rate swap agreement with M&T as of this date which is designed to protect us against fluctuations in interest rates during the five-year repayment and amortization period. As a result, the annual interest rate we expect to pay for this draw under the Term Note is fixed at approximately 3.2% based on current leverage.

On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At December 31, 2021, it was approximately 2.1% based on current leverage.

At March 31, 2022, there were no amounts borrowed under our revolving credit facility. This facility has a total borrowing availability of $10.0 million. At March 31, 2022 we had utilized $20.5 million of the availability under our Term Note and we had $4.5 million remaining available under our Term Note.

Liquidity

Our cash and cash equivalents and working capital were as follows (in thousands):

As of ~~September 30, 2021, $2.5~~March 31, 2022, $3.5 million, or ~~13%~~20%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing ~~availability~~capacity available under our revolving credit facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our revolving credit facility is discussed in ~~Notes 9 and 15~~Note 11 to our consolidated financial ~~statements in this Report.~~statements.

Our material short-term cash requirements include payments due under our various lease agreements, recurring payroll and benefits obligations to our employees, ~~and~~ purchase commitments for materials that we use in the products we ~~sell.~~sell and principal and interest payments on our debt. We estimate that our minimum short-term working capital requirements currently range between ~~$5.0~~$8.0 million and ~~$7.0~~$10.0 million. We also anticipate making investments in our business in the next twelve months including hiring of additional staff, updates to our website and other systems and investments related to our geographic and market expansion efforts. We expect our current cash and cash equivalents, in combination with the borrowing capacity available under our revolving credit facility and the anticipated net cash to be provided by our operations to be sufficient to support these additional investments as well as our current short-term cash requirements.

Our current strategy for growth ~~strategy~~ includes pursuing acquisition opportunities for complementary businesses, technologies or products. As discussed further in the Overview, on October 28, 2021, we acquired substantially all of the assets of ~~Videology.~~Videology and on December 21, 2021, we completed the acquisition of Acculogic. We utilized $20.5 million under our new credit facility ~~which is also discussed further in the Overview~~ to finance ~~the purchase price of $12 million. We~~these acquisitions. As previously discussed, we currently anticipate that any additional long-term cash requirements related to our ~~acquisition~~ strategy would be funded through a combination of our cash and cash equivalents, the remaining availability under our new credit facility or by issuing equity.

Operating Activities. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we recorded net earnings of ~~$7.0 million.~~$577,000. Net cash ~~provided by~~used in operations during this period was ~~$8.1~~$2.8 million. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we had non-cash charges of ~~$2.2~~$1.3 million for depreciation and amortization which included ~~$760,000~~$309,000 of amortization related to our ROU assets. Our operating lease liabilities declined ~~$918,000~~$346,000 during this same period. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we also recorded ~~$1.1 million~~$372,000 for amortization of deferred compensation expense related to stock-based awards. Accounts receivable increased ~~$3.9 million~~$832,000 during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, reflecting the ~~significant~~ increase in ~~net revenues~~revenue in the first ~~nine months~~quarter of ~~2021,~~2022, while inventories and accounts payable ~~and accrued sales commissions~~ increased ~~$2.1 million, $1.4~~$2.2 million and ~~$366,000,~~$1.6 million, respectively, also reflecting the increase in business levels. Accrued wages and benefits ~~increased $942,000~~decreased $1.2 million during the ~~first nine~~three months ~~of 2021~~ended March 31, 2022 reflecting ~~higher levels~~the payment in March 2022 of profit-based bonuses ~~accruals as a result of~~accrued in 2021 on our ~~level of profit in~~results for the ~~first nine months of 2021. Customer deposits increased $1.7 million during the nine months ended June 30,~~ 2021 ~~primarily in our Thermal segment.~~year.

Investing Activities. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, purchases of property and equipment were ~~$577,000,~~$335,000, primarily reflecting leasehold improvements to our facility in ~~Mt. Laurel, New Jersey which~~Mansfield, Massachusetts for the space that our Videology subsidiary will be occupying in the second quarter of 2022. These improvements were funded using our working capital. We have no significant commitments for capital expenditures for the balance of ~~2021;~~2022; however, depending upon changes in market demand or manufacturing and sales strategies, we may make such purchases or investments as we deem necessary and appropriate. These additional cash requirements would be funded by our cash and cash equivalents, anticipated net cash to be provided by operations and our revolving credit facility.

Financing Activities. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we made principal payments on our Term Note totaling $883,000 and received ~~$1.0 million~~$56,000 as a result of ~~the exercise of options to acquire 149,010 shares~~purchases of our ~~stock. These options~~stock that were ~~issued to certain current and former~~made by our employees under ~~our stock-based compensation plans which are discussed in Note 10 to our consolidated financial statements in this Report.~~the ESPP.

See the Notes to our consolidated financial statements in this Report for information concerning the implementation and impact of new or recently adopted accounting standards.

Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, ~~revenues,~~revenue, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, long-lived assets, goodwill, identifiable intangibles, contingent consideration liabilities and deferred income tax valuation allowances. We base our estimates on historical experience and on appropriate and customary assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Some of these accounting estimates and assumptions are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that future events affecting them may differ markedly from what had been assumed when the financial statements were prepared. As of ~~September 30, 2021,~~March 31, 2022, there have been no significant changes to the accounting estimates that we have deemed ~~critical other than the change in accounting estimate that is discussed in Note 15 to our consolidated financial statements in our Form 10-Q for the quarter ended June 30, 2021.~~critical. Our critical accounting estimates are more fully described in our ~~2020~~2021 Form 10-K.

There were no off-balance sheet arrangements during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, ~~revenues~~revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act. Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our management, including the ~~Chief Executive Officer (“CEO”)~~CEO and ~~Chief Financial Officer (“CFO”),~~CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all error and all fraud. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Accordingly, our management has designed the disclosure controls and procedures to provide reasonable assurance that the objectives of the control system were met.

CEO/CFO Conclusions about the Effectiveness of the Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Exchange Act, inTEST management, including our CEO and CFO, conducted an evaluation as of the end of the period covered by this Report, of the effectiveness of our disclosure controls and procedures ~~including the impact of COVID-19~~. Based on that evaluation, our CEO and CFO concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective at the reasonable assurance level.

During the period covered by this Report, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ~~We will continue monitoring and assessing any impacts from COVID-19 on our internal controls~~.

From time to time we may be a party to legal proceedings occurring in the ordinary course of business. We are not currently involved in any material legal proceedings.

Information regarding the primary risks and uncertainties that could materially and adversely affect our future performance or could cause actual results to differ materially from those expressed or implied in our forward-looking statements, appears in Part I, Item 1A - "Risk Factors" of our ~~2020~~2021 Form 10-K filed with the Securities and Exchange Commission on March 23, ~~2021.~~2022. There have been no material changes from the risk factors set forth in our ~~2020~~2021 Form 10-K.

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.

	Three Months Ended March 31, 2021

Revenue	$	21,855
Net earnings	$	2,832
Diluted earnings per share	$	0.27

Goodwill	$	3,363
Identifiable intangible assets		5,123
Tangible assets acquired and liabilities assumed:
Cash		312
Trade accounts receivable		2,630
Inventories		1,329
Other current assets		240
Property and equipment		156
Accounts payable		(406	)
Accrued expenses		(2,950	)
Total purchase price	$	9,797

	Three Months Ended March 31, 2021

Revenue	$	22,286
Net earnings	$	2,185
Diluted earnings per share	$	0.21

	Amounts at		Fair Value Measurement Using
	Fair Value		Level 1		Level 2		Level 3
As of March 31, 2022
Contingent consideration liability – Z-Sciences	$	179	$	0	$	0	$	179
Contingent consideration liability – Acculogic	$	1,478	$	0	$	0	$	1,478
Interest rate swap	$	289	$	0	$	289	$	0

	Three Months Ended March 31, 2022
Balance at beginning of period	$	1,109
Adjustment to contingent consideration liability in connection with the acquisition of Acculogic		500
Impact of foreign currency translation adjustments		48

Balance at end of period	$	1,657

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021		2020

Net revenues	$	21,144		$	14,443		$	62,520	$	38,948
Cost of revenues		10,749			7,993			31,642		21,564
Gross margin		10,395			6,450			30,878		17,384
Operating expenses:
Selling expense		2,841			1,747			7,849		5,560
Engineering and product development expense		1,334			1,316			4,012		3,825
General and administrative expense		3,620			2,799			10,550		8,525
Restructuring and other charges		51			161			303		207

Total operating expenses		7,846			6,023			22,714		18,117

Operating income (loss)		2,549			427			8,164		(733	)
Other income (loss)		(17	)		6			2		(44	)
Earnings (loss) before income tax expense (benefit)		2,532			433			8,166		(777	)
Income tax expense (benefit)		357			(25	)		1,170		(262	)

Net earnings (loss)	$	2,175		$	458		$	6,996	$	(515	)

Net earnings (loss) per common share - basic	$	0.21		$	0.04		$	0.67	$	(0.05	)


Weighted average common shares outstanding - basic		10,496,188			10,269,995			10,422,851		10,247,779

Net earnings (loss) per common share - diluted	$	0.20		$	0.04		$	0.65	$	(0.05	)

Weighted average common shares and common share equivalents outstanding - diluted		10,792,290			10,287,562			10,694,351		10,247,779

	Nine Months Ended September 30, 2021
											Accumulated
						*Additional*					*Other*						*Total*
	*Common Stock*					*Paid-in*			*Retained*		*Comprehensive*			*Treasury*			*Stockholders'*
	*Shares*			*Amount*		*Capital*			*Earnings*		*Earnings*			*Stock*			*Equity*
Balance, January 1, 2021		10,562,200		$	106	$	26,851		$	17,110	$	889		$	(204	)	$	44,752

Net earnings		-			0		0			2,212		0			0			2,212
Other comprehensive loss		-			0		0			0		(101	)		0			(101	)
Amortization of deferred compensation related to stock-based awards		-			0		269			0		0			0			269
Issuance of unvested shares of restricted stock		81,468			1		(1	)		0		0			0			0
Stock options exercised		99,740			1		716			0		0			0			717

Balance, March 31, 2021		10,743,408			108		27,835			19,322		788			(204	)		47,849

Net earnings		-			0		0			2,609		0			0			2,609
Other comprehensive earnings		-			0		0			0		24			0			24
Amortization of deferred compensation related to stock-based awards		-			0		454			0		0			0			454
Issuance of unvested shares of restricted stock		44,741			0		0			0		0			0			0
Forfeiture of unvested shares of restricted stock		(18,125	)		0		0			0		0			0			0
Stock options exercised		45,835			0		285			0		0			0			285

Balance, June 30, 2021		10,815,859			108		28,574			21,931		812			(204	)		51,221

Net earnings		-			0		0			2,175		0			0			2,175
Other comprehensive loss		-			0		0			0		(68	)		0			(68	)
Amortization of deferred compensation related to stock-based awards		-			0		371			0		0			0			371
Stock options exercised		3,435			0		17			0		0			0			17

Balance, September 30, 2021		10,819,294		$	108	$	28,962		$	24,106	$	744		$	(204	)	$	53,716

	EMS Facility Consolidation			Executive Management Changes			Total
Balance – January 1, 2021	$	233		$	107		$	340
Accruals for severance		0			120			120
Accruals for other costs associated with facility consolidation		183			0			183
Cash payments		(416	)		(140	)		(556	)
Balance – September 30, 2021	$	0		$	87		$	87

Balance - January 1, 2022	$	70
Cash payments		(7	)
Balance - March 31, 2022	$	63

Balance - January 1, 2022	$	21,448
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 for contingent consideration and intangible assets related to acquisition of Acculogic (see Note 3)		451
Impact of foreign currency translation adjustments		(36	)
Balance - March 31, 2022	$	21,863

Balance - January 1, 2022	$	8,428
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 related to acquisition of Acculogic (see Note 3)		20
Impact of foreign currency translation adjustments		2
Balance - March 31, 2022	$	8,450

Balance - January 1, 2021	$	5,711
Amortization		(918	)
Balance September 30, 2021	$	4,793

Balance - January 1, 2022	$	13,206
Adjustments to preliminary amounts recorded in the fourth quarter of 2021 related to acquisition of Acculogic (see Note 3)		29
Impact of foreign currency translation adjustments		2
Amortization		(782	)
Balance - March 31, 2022	$	12,455

	September 30, 2021						March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	10,480	$	5,767	$	4,713	$	16,566	$	6,634	$	9,932
Technology		600		528		72		2,971		682		2,289
Patents		590		582		8		590		587		3
Backlog								507		276		231
Software		270		270		0		270		270		0
Trade name		140		140		0		140		140		0
Total finite-lived intangible assets		12,080		7,287		4,793		21,044		8,589		12,455
Indefinite-lived intangible assets:
Trademarks		6,710		-		6,710		8,450		-		8,450
Total intangible assets	$	18,790	$	7,287	$	11,503	$	29,494	$	8,589	$	20,905

	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	16,544	$	6,160	$	10,384
Technology		2,950		569		2,381
Patents		590		585		5
Backlog		521		85		436
Software		270		270		0
Trade name		140		140		0
Total finite-lived intangible assets		21,015		7,809		13,206
Indefinite-lived intangible assets:
Trademarks		8,428		-		8,428
Total intangible assets	$	29,443	$	7,809	$	21,634

	December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	10,480	$	4,912	$	5,568
Technology		600		477		123
Patents		590		570		20
Software		270		270		0
Trade name		140		140		0
Total finite-lived intangible assets		12,080		6,369		5,711
Indefinite-lived intangible assets:
Trademarks		6,710		-		6,710
Total intangible assets	$	18,790	$	6,369	$	12,421

2021 (remainder)	$	309
2022	$	1,167
2022 (remainder)			$	1,937
2023	$	1,067	$	2,137
2024	$	980	$	2,013
2025	$	905	$	1,799
2026			$	1,188

	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Raw materials	$	6,768	$	5,371	$	11,179	$	10,403
Work in process		1,148		1,085		1,562		1,250
Inventory consigned to others		44		45		44		44
Finished goods		1,399		975		2,128		1,166
Total inventories	$	9,359	$	7,476	$	14,913	$	12,863

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021

Operating lease cost	$	247	$	393	$	865	$	1,174	$	326	$	324
Short-term lease cost	$	20	$	13	$	60	$	35	$	30	$	8

Range of remaining lease terms (in years)	0.5	to	9.6		1.0	to	9.1
Weighted average remaining lease term (in years)			6.0			5.5
Weighted average discount rate			4.2	%		4.2%

2021 (remainder)	$	358
2022		1,469
2023		1,482
2024		1,474
2025		722
Thereafter		1,845
Total lease payments	$	7,350
Less imputed interest		(811	)
Total	$	6,539

2022	$	1,227
2023		1,636
2024		1,573
2025		735
2026		467
Thereafter		1,378
Total lease payments	$	7,016
Less imputed interest		(696	)
Total	$	6,320

Modification to lease for facility in Fremont, California		$	1,176
Modification to lease for facility in Mt. Laurel, New Jersey		$	2,051

				Letters of Credit Amount Outstanding
	Original L/C Issue Date	L/C Expiration Date	Lease Expiration Date	September 30, 2021		December 31, 2020
Mt. Laurel, NJ	3/29/2010	4/30/2022	4/30/2031	$	50	$	90
Mansfield, MA	10/27/2010	12/31/2024	12/31/2024		50		50
				$	100	$	140

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2021		237,155		$	4.93
Granted		126,209			11.74
Vested		(78,206	)		7.24
Forfeited		(18,125	)		9.02
Unvested shares outstanding, September 30, 2021		267,033			7.19

	2021			2020
Risk-free interest rate		1.03	%		0.46	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.50			.44
Weighted average expected life of stock options (years)		6.25			6.25

	Number of Shares			Weighted Average Grant Date Fair Value
Options outstanding, January 1, 2021 (204,630 exercisable)		438,200		$	6.25
Granted		282,404			11.77
Exercised		(149,010	)		6.84
Forfeited		(80,550	)		9.55
Options outstanding, September 30, 2021 (141,370 exercisable)		491,044			8.70

	September 30, 2021		December 31, 2020
*Identifiable assets:*
Thermal	$	51,368	$	50,782
EMS		16,309		9,667
Corporate		7,052		1,581
	$	74,729	$	62,030

	September 30, 2021		December 31, 2020
*Net property and equipment:*
U.S.	$	2,200	$	2,053
Foreign		197		297
	$	2,397	$	2,350

2022 (remainder)	$	3,217
2023		4,100
2024		4,100
2025		4,100
2026		3,700
	$	19,217

	Number of Shares		Weighted Average Exercise Price
Options outstanding, January 1, 2022 (59,195 exercisable)		408,869		9.07
Granted		38,540		9.76
Exercised		0		0
Canceled		0		0
Options outstanding, March 31, 2022 (101,670 exercisable)		447,409		9.13

	●	our ability to execute on our 5-Point Strategy;
	●	our ability to grow our presence in the life sciences, security, industrial and international markets;
	●	the possibility of future ~~acquisitions and our ability to realize the potential benefits of~~ acquisitions or dispositions and the successful integration of any acquired ~~operations, for example with respect to our acquisitions of Videology and Z-Sciences;~~operations;
	●	the success of our strategy to diversify our business by entering markets outside the ~~Semi Market, including~~semiconductor and automated test equipment (“ATE”) markets, collectively the ~~automotive, defense/aerospace, industrial, life sciences, telecommunications and other markets and changes in demand in these markets;~~“semi market”;
	●	~~the impact of COVID-19 and its variant strains on our business, liquidity, financial condition and results of operations;~~

	●	indications of a change in the market cycles in the ~~Semi Market~~semi market, or other markets we serve;
	●	developments and trends in the ~~Semi Market,~~semi market, including changes in the demand for semiconductors;
	●	our ability to convert backlog to sales and to ship product in a timely manner;
	●	the loss of any one or more of our largest customers, or a reduction in orders by a major customer;
	●	~~changes in the rate of, and timing of, capital expenditures by our customers;~~
	●	the availability of materials used to manufacture our products;
	●	the impact of current global supply chain constraints or other interruptions in our supply chain caused by external ~~factors;~~factors, including the ongoing war in Ukraine and COVID-19;
	●	the impact of inflation on our business and financial condition;
	●	the impact of COVID-19 on our business, liquidity, financial condition and results of operations;
	●	the sufficiency of cash balances, lines of credit and net cash from operations;
	●	stock price fluctuations;
	●	the ~~possibility of future acquisitions or dispositions and the successful integration of any acquired operations;~~
	●	~~our~~ ability to borrow funds or raise capital to finance ~~major~~ potential ~~acquisitions;~~acquisitions or for working capital;
	●	~~competitive pricing pressures;~~
	●	changes in the ~~development~~rate of, ~~new products~~ and ~~technologies~~timing of, capital expenditures by ~~us or~~ our ~~competitors;~~customers;
	●	effects of exchange rate fluctuations;
	●	progress of product development programs;
	●	the anticipated market for our products;
	●	the availability of and retention of key personnel or our ability to hire personnel at anticipated costs;
	●	general economic conditions both domestically and ~~globally;~~
	●	~~other projections of net revenues, taxable earnings (loss), net earnings (loss), net earnings (loss) per share, capital expenditures and other financial items;~~globally, and
	●	other risk factors included in Part I, Item 1A - "Risk Factors" in our ~~2020~~2021 Form 10-K.

	Three Months Ended September 30,				Change					Three Months Ended June 30,		Change
	2021		2020			$	%				2021		$		%
*Orders:*
Thermal	$	13,713	$	11,004	$	2,709		25	%	$	14,826	$	(1,113	)	(8	)%
EMS		7,435		3,423		4,012		117	%		10,279		(2,844	)	(28	)%
	$	21,148	$	14,427	$	6,721		47	%	$	25,105	$	(3,957	)	(16	)%

Semi Market	$	13,365	$	7,263	$	6,102		84	%	$	16,532	$	(3,167	)	(19	)%
Multimarket		7,783		7,164		619		9	%		8,573		(790	)	(9	)%
	$	21,148	$	14,427	$	6,721		47	%	$	25,105	$	(3,957	)	(16	)%

	Three Months Ended March 31,				Change						Three Months Ended December 31,		Change
	2022		2021		$			%			2021		$			%
*Orders:*
Electronic Test	$	9,297	$	10,484	$	(1,187	)		(11	)%	$	5,324	$	3,973			75	%
Environmental Technologies		6,914		5,644		1,270			23	%		6,468		446			7	%
Process Technologies		8,852		9,102		(250	)		(3	)%		18,667		(9,815	)		(53	)%
	$	25,063	$	25,230	$	(167	)		(1	)%	$	30,459	$	(5,396	)		(18	)%


Semi	$	12,382	$	17,185	$	(4,803	)		(28	)%	$	21,386	$	(9,004	)		(42	)%
Industrial		3,222		2,526		696			28	%		2,504		718			29	%
Auto/EV		2,619		1,168		1,451			124	%		1,413		1,206			85	%
Life Sciences		1,216		952		264			28	%		654		562			86	%
Defense/Aerospace		1,851		1,110		741			67	%		862		989			115	%
Security		153		-		153			n/a			1,620		(1,467	)		(91	)%
Other		3,620		2,289		1,331			58	%		2,020		1,600			79	%
	$	25,063	$	25,230	$	(167	)		(1	)%	$	30,459	$	(5,396	)		(18	)%