United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended ~~June 30,~~December 31, 2022

☐

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

For the transition period from ___ to ___

Commission File No: 0-11740

MESA LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

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

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

Registrant’s telephone number, including area code: (303) 987-8000

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

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

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 (Section 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 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 ☒

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date:

There were ~~5,317,270~~5,346,174 shares of the Issuer’s common stock, no par value, outstanding as of ~~July 28, 2022~~February 1, 2023.

Table of Contents

Table of Contents

Part I. Financial Information		1

	Item 1. Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Notes to Condensed Consolidated Financial Statements	6
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	2021
	Item 4. Controls and Procedures	2122

Part II. Other Information		2223

	Item 1. Legal Proceedings	2223
	Item 1A. Risk factors	2223
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2223
	Item 6. Exhibits	2324
	Signatures	2425
	Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350
	Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Mesa Laboratories, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(~~dollars~~ in thousands, except share amounts)

	*June 30,*			*March 31,*		*December 31,*			*March 31,*
	*2022*			*2022*		*2022*			*2022*
ASSETS
Current assets:
Cash and cash equivalents	$	43,747		$	49,346	$	26,101		$	49,346
Accounts receivable, less allowances of $1,035 and $630, respectively		41,840			41,224
Accounts receivable, less allowance for doubtful accounts of $758 and $630, respectively							42,395			41,224
Inventories		26,874			24,606		33,739			24,606
Prepaid expenses and other		15,666			9,142		11,950			9,142
Total current assets		128,127			124,318		114,185			124,318
Property, plant and equipment, net of accumulated depreciation of $18,495 and $17,726 respectively		28,006			28,620
Property, plant and equipment, net of accumulated depreciation of $19,708 and $17,726, respectively							28,263			28,620
Deferred tax asset		689			1,318		708			1,318
Other assets		10,424			11,830		10,572			11,830
Intangibles, net		235,000			250,117		223,447			250,117
Goodwill		283,565			291,166		285,809			291,166
Total assets	$	685,811		$	707,369	$	662,984		$	707,369

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,557		$	7,897	$	6,288		$	7,897
Accrued payroll and benefits		9,401			14,717		8,134			14,717
Unearned revenues		15,268			13,830		14,584			13,830
Other accrued expenses		11,901			11,611		12,611			11,611
Total current liabilities		44,127			48,055		41,617			48,055
Deferred tax liability		37,323			39,224		36,946			39,224
Other long-term liabilities		7,340			7,924		8,172			7,924
Credit Facility		47,000			49,000		19,000			49,000
Convertible senior notes, net of discounts and debt issuance costs		169,590			169,365		170,044			169,365
Total liabilities		305,380			313,568		275,779			313,568
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,297,308 and 5,265,627 shares, respectively		318,328			313,460
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,341,890 and 5,265,627 shares, respectively							326,933			313,460
Retained earnings		74,394			76,675		74,444			76,675
Accumulated other comprehensive (loss) income		(12,291	)		3,666		(14,172	)		3,666
Total stockholders’ equity		380,431			393,801		387,205			393,801
Total liabilities and stockholders’ equity	$	685,811		$	707,369	$	662,984		$	707,369

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

	*Three Months Ended June 30,*						*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	*2022*			*2021*			*2022*		*2021*			*2022*			*2021*

Revenues	$	50,453		$	34,920		$	54,287	$	54,696		$	163,489		$	125,456
Cost of revenues		19,112			12,709			21,522		26,069			62,997			51,478
Gross profit		31,341			22,211			32,765		28,627			100,492			73,978
Operating expenses:
Selling		10,023			4,858			8,437		8,958			27,660			18,459
General and administrative		20,212			11,419			16,129		17,017			54,543			40,119
Research and development		5,700			2,811			4,797		5,164			15,486			10,588
Total operating expenses		35,935			19,088			29,363		31,139			97,689			69,166
Operating (loss) income		(4,594	)		3,123
Operating income (loss)								3,402		(2,512	)		2,803			4,812
Nonoperating expense (income):
Interest expense and amortization of debt discount		1,014			874			1,162		1,018			3,390			2,647
Other (income) expense, net		(196	)		831
Total nonoperating expense		818			1,705
(Loss) earnings before income taxes		(5,412	)		1,418
Income tax (benefit)		(3,974	)		(577	)
Net (loss) income	$	(1,438	)	$	1,995
Other expense (income), net								324		(1,189	)		(475	)		(1,455	)
Total nonoperating expense (income)								1,486		(171	)		2,915			1,192
Earnings (loss) before income taxes								1,916		(2,341	)		(112	)		3,620
Income tax provision (benefit)								1,465		(281	)		(431	)		(35	)
Net income (loss)							$	451	$	(2,060	)	$	319		$	3,655

(Loss) earnings per share:
Earnings (loss) per share:
Basic	$	(0.27	)	$	0.39		$	0.08	$	(0.39	)	$	0.06		$	0.70
Diluted	$	(0.27	)	$	0.38		$	0.08	$	(0.39	)	$	0.06		$	0.69

Weighted-average common shares outstanding:
Basic		5,273			5,152			5,339		5,233			5,312			5,199
Diluted		5,273			5,301			5,360		5,233			5,354			5,333

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~

(unaudited)

(in thousands)

Three Months Ended June 30,

2022

2021

Net (loss) income
$ (1,438 ) $ 1,995
Other comprehensive (loss) income:

Foreign currency translation adjustments
(15,957 ) 5,371
Comprehensive (loss) income
$ (17,395 ) $ 7,366

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

Net income (loss)	$	451	$	(2,060	)	$	319		$	3,655
Other comprehensive income (loss):
Foreign currency translation adjustments		11,345		(6,165	)		(17,838	)		(7,297	)
Comprehensive income (loss)	$	11,796	$	(8,225	)	$	(17,519	)	$	(3,642	)

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	*Three Months Ended June 30,*						*Nine Months Ended December 31,*
	*2022*			*2021*			*2022*			*2021*
Cash flows from operating activities:
Net (loss) income	$	(1,438	)	$	1,995
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Net income							$	319		$	3,655
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,134			4,572			24,769			15,686
Stock-based compensation expense		3,432			2,197			9,859			7,939
Non-cash interest and debt amortization		225			221
Deferred taxes		(908	)
Amortization of step-up in inventory basis								-			6,062
Other		(1,763	)		(826	)		(359	)		(504	)
Cash (used in) provided by changes in operating assets and liabilities:
Accounts receivable, net		(1,484	)		3,285			(1,979	)		(2,258	)
Inventories		(2,732	)		(753	)		(9,191	)		351
Prepaid expenses and other assets		(2,180	)		(1,631	)		(2,312	)		(1,933	)
Accounts payable		(205	)		(476	)		(1,339	)		1,270
Accrued liabilities and taxes payable		(5,328	)		867			(5,221	)		(1,403	)
Unearned revenues		1,436			138			918			1,056
Net cash (used in) provided by operating activities		(2,811	)		9,589
Net cash provided by operating activities								15,464			29,921
Cash flows from investing activities:
Acquisitions, net of cash acquired								(4,950	)		(300,793	)
Purchases of property, plant and equipment		(225	)		(653	)		(3,518	)		(3,650	)
Net cash (used in) investing activities		(225	)		(653	)		(8,468	)		(304,443	)
Cash flows from financing activities:
Proceeds from the issuance of debt								-			70,000
Payments of debt		(2,000	)		0			(30,000	)		(10,000	)
Dividends		(843	)		(824	)		(2,550	)		(2,495	)
Proceeds from the exercise of stock options		1,436			1,089			4,523			6,171
Payment of tax withholding obligation on vesting of restricted stock								(909	)		(819	)
Payments of contingent consideration								-			(234	)
Net cash (used in) provided by financing activities		(1,407	)		265			(28,936	)		62,623
Effect of exchange rate changes on cash and cash equivalents		(1,156	)		2,644			(1,305	)		(260	)
Net (decrease) increase in cash and cash equivalents		(5,599	)		11,845
Net (decrease) in cash and cash equivalents								(23,245	)		(212,159	)
Cash and cash equivalents at beginning of period		49,346			263,865			49,346			263,865
Cash and cash equivalents at end of period	$	43,747		$	275,710		$	26,101		$	51,706

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

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(dollars in thousands, except per share data)

	*Common Stock*													*Common Stock*
	*Number of Shares*		*Amount*		*Retained Earnings*			AOCI*			*Total*			*Number of Shares*			*Amount*			*Retained Earnings*			AOCI*			*Total*
March 31, 2022		5,265,627	$	313,460	$	76,675		$	3,666		$	393,801			5,265,627		$	313,460		$	76,675		$	3,666		$	393,801
Exercise of stock options and vesting of restricted stock units		31,681		1,436		0			0			1,436			31,690			1,438			-			-			1,438
Tax withholding on vesting of restricted stock units															(9	)		(2	)		-			-			(2	)
Dividends paid, $0.16 per share		-		-		(843	)		-			(843	)		-			-			(843	)		-			(843	)
Stock-based compensation expense		-		3,432		-			-			3,432			-			3,432			-			-			3,432
Foreign currency translation		-		-		-			(15,957	)		(15,957	)		-			-			-			(15,957	)		(15,957	)
Net (loss)		-		0		(1,438	)		0			(1,438	)		-			-			(1,438	)		-			(1,438	)
June 30, 2022		5,297,308	$	318,328	$	74,394		$	(12,291	)	$	380,431			5,297,308		$	318,328		$	74,394		$	(12,291	)	$	380,431
Exercise of stock options and vesting of restricted stock units															42,014			2,778			-			-			2,778
Tax withholding on vesting of restricted stock units															(3,051	)		(572	)		-			-			(572	)
Dividends paid, $0.16 per share															-			-			(852	)		-			(852	)
Stock-based compensation expense															-			4,371			-			-			4,371
Foreign currency translation															-			-			-			(13,226	)		(13,226	)
Net income															-			-			1,306			-			1,306
September 30, 2022															5,336,271		$	324,905		$	74,848		$	(25,517	)	$	374,236
Exercise of stock options and vesting of restricted stock units															7,376			307			-			-			307
Tax withholding on vesting of restricted stock units															(1,757	)		(335	)		-			-			(335	)
Dividends paid, $0.16 per share															-			-			(855	)		-			(855	)
Stock-based compensation expense															-			2,056			-			-			2,056
Foreign currency translation															-			-			-			11,345			11,345
Net income															-			-			451			-			451
December 31, 2022															5,341,890		$	326,933		$	74,444		$	(14,172	)	$	387,205

	*Common Stock*													*Common Stock*
	*Number of Shares*		*Amount*			*Retained Earnings*			AOCI*		*Total*			*Number of Shares*		*Amount*			*Retained Earnings*			AOCI*			*Total*
March 31, 2021		5,140,568	$	317,652		$	72,459		$	16,116	$	406,227			5,140,568	$	317,652		$	72,459		$	16,116		$	406,227
Exercise of stock options and vesting of restricted stock units		58,324		1,089			0			0		1,089			58,324		1,836			-			-			1,836
Dividends paid, $0.16 per share		-		-			(824	)		-		(824	)
Tax withholding on vesting of restricted stock units																	(747	)								(747	)
Dividends paid, $0.16 per share															-		-			(824	)		-			(824	)
Stock-based compensation expense		-		2,197			-			-		2,197			-		2,197			-			-			2,197
Foreign currency translation		-		-			-			5,371		5,371			-		-			-			5,371			5,371
Cumulative adjustment due to adoption of ASU No. 2020-06		-		(22,735	)		5,683			-		(17,052	)		-		(22,735	)		5,683			-			(17,052	)
Net income		-		-			1,995			-		1,995			-		-			1,995			-			1,995
June 30, 2021		5,198,892	$	298,203		$	79,313		$	21,487	$	399,003			5,198,892	$	298,203		$	79,313		$	21,487		$	399,003
Exercise of stock options and vesting of restricted stock units															24,340		2,060			-			-			2,060
Tax withholding on vesting of restricted stock units																	(68	)								(68	)
Dividends paid, $0.16 per share															-		-			(834	)		-			(834	)
Stock-based compensation expense															-		2,039			-			-			2,039
Foreign currency translation															-		-			-			(6,503	)		(6,503	)
Net income															-		-			3,720			-			3,720
September 30, 2021															5,223,232	$	302,234		$	82,199		$	14,984		$	399,417
Exercise of stock options and vesting of restricted stock units															21,396		2,275			-			-			2,275
Tax withholding on vesting of restricted stock units																	(4	)								(4	)
Dividends paid, $0.16 per share															-		-			(837	)		-			(837	)
Stock-based compensation expense															-		3,703			-			-			3,703
Foreign currency translation															-		-			-			(6,165	)		(6,165	)
Net (loss)															-		-			(2,060	)		-			(2,060	)
December 31, 2021															5,244,628	$	308,208		$	79,302		$	8,819		$	396,329

*Accumulated Other Comprehensive (Loss) Income.

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

In this quarterly report on Form 10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries, is collectively referred to as “we,” “us,” “our,” the “Company” or “Mesa.”

We are a multinational manufacturer, developer, and seller of life science tools and critical quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements. We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and Asia Pacific, and by independent distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross profit margins.

As of ~~June 30,~~December 31, 2022, we managed our operations in four reportable segments, or divisions:

	●	Clinical Genomics - develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical ~~genomic~~ testing in several therapeutic areas, such as ~~newborn~~ screenings for hereditary diseases, pharmacogenetics and ~~oncology.~~ oncology related applications.
	●	Sterilization and Disinfection Control - manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, ~~dental,~~ medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry.

●

Biopharmaceutical Development - develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacture of biotherapeutic drugs. ~~Customers include biopharmaceutical research, development, and manufacturing teams at biopharmaceutical companies and academic research and development laboratories.~~

●

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

Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial ~~information and pursuant to the rules and regulations of the Securities and Exchange Commission.~~information. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments necessary for the fair statement of our financial position and results of operations. The results of operations for the interim periods are not necessarily indicative of results that may be achieved for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. We made no material changes to the application of our significant accounting policies that were disclosed in our Form 10-K. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2022.

~~Certain prior year amounts have been reclassified in order to conform to the current year presentation.~~

Our fiscal year ends on March 31. References in this Quarterly Report to a particular “year” or “year-end” mean our fiscal year, ~~and~~ references to the first quarter of fiscal year 2023 refer to the period from April 1, 2022 through June 30, 2022, references to the second quarter of fiscal year 2023 refer to the period from July 1, 2022 through September 30, 2022, and references to the third quarter of fiscal year 2023 refer to the period from October 1,2022 through December 31, 2022. References to “fiscal year 2022” refer to the fiscal year ended March 31, 2022, and to “fiscal year 2023” refer to the fiscal year ending March 31, 2023.

Prior Period Reclassification

Certain amounts presented for prior periods in Note 3. "Revenue Recognition" ~~in prior periods of fiscal year~~ ~~2022~~have been reclassified. Certain revenues related to the Biopharmaceutical Development division have been reclassified out of revenues from consumables and into revenues from hardware and services. Certain revenues related to the Clinical Genomics division have been reclassified out of revenues from hardware and into revenues from consumables. These reclassifications have not resulted in any change to the Condensed Consolidated Financial Statements for ~~the~~and periods presented in this Form ~~three~~10 ~~months ended~~ ~~June 30, 2022~~ ~~and~~ ~~2021.~~-Q.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's ~~judgement~~judgment about the outcome of future events. ~~Our estimates include, among others, asset reserve requirements as well as~~The business and economic uncertainty resulting from supply chain challenges, cost pressure, the ~~amounts~~overall effects of ~~future cash flows associated with certain assets~~the current high inflation environment on customers' purchasing patterns, and ~~businesses that are used in assessing~~ the ~~risk of impairment. The negative impacts associated with the ongoing~~ novel coronavirus pandemic ("COVID-19") ~~global pandemic significantly lessened during fiscal year~~ ~~2022.~~ ~~The extent and duration of negative impacts in the future, which~~ ~~may~~ ~~include inflationary pressures and supply chain disruptions, are uncertain and~~ ~~may~~ ~~require changes~~has made such estimates more difficult to ~~estimates. Actual~~calculate. Accordingly, actual results could differ from those estimates.

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Recently Issued Accounting Pronouncements

We have reviewed all recently issued accounting pronouncements and have concluded that they are either not applicable to us or are not expected to have a significant impact on our consolidated financial statements.

Note 2. Significant Transactions

~~Acquisition~~Belyntic GmbH

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

Agena Bioscience, ~~Inc.~~Inc

On October 20, 2021, we completed the acquisition of Agena Bioscience, Inc. (“Agena”) for $300,793, net of cash acquired but inclusive of working capital adjustments (the “Agena Acquisition”). The Agena Acquisition aligned with our overall acquisition strategy, moved our business towards the life sciences tools sector, and expanded our market opportunities, particularly in Asia. Agena is a leading clinical genomics tools company that develops, manufactures, markets, and supports proprietary instruments and related consumables and services that enable genetic analysis for a broad range of diagnostic and research applications. Using Agena's MassARRAY® instruments and chemical reagent solutions, customers can analyze DNA samples for a variety of high volume clinical testing applications, such as inherited genetic disease testing, pharmacogenetics, various oncology tests, infectious disease testing, and other ~~highly-differentiated~~highly differentiated applications.

We funded the acquisition and transactions relating thereto with cash on hand and borrowings under the Credit Facility (as defined below). Of the cash consideration we paid, approximately $267,000 represented cash consideration to holders of Agena’s preferred and common stock, approximately $2,000 represented cash consideration paid for the settlement of Agena’s warrants, and approximately $31,800 represented cash consideration for the settlement of Agena's vested stock options as of the closing date.

~~Agena Preliminary Purchase Price Allocation~~Fair Value of Net Assets Acquired

~~During~~The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the final valuation of Agena. We have made appropriate adjustments to deferred taxes and tax-related balances during the three months ended ~~June 30, 2022,~~ December 31. 2022.we continued analyses of the valuation of net assets acquired in the Agena Acquisition. This preliminary purchase price allocation is subject to revision as more detailed analyses are completed with respect to prepaid taxes, tax accruals, and deferred tax positions.

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

	*Life (in years)*		*Amount*		*Life (in years)*		*Amount*
Cash and cash equivalents			$	7,544			$	7,544
Accounts receivable				11,100				11,100
Other current assets				25,480				25,480
Total current assets				44,124				44,124
Property, plant and equipment/noncurrent assets				15,832				15,832
Deferred tax asset				811				811
Intangible assets:
Goodwill		N/A		135,880		N/A		135,728
Customer relationships		12		103,800		12		103,800
Intellectual property		8		45,400		8		45,400
Tradenames		12		15,700		12		15,700
Total Assets acquired			$	361,547			$	361,395
Accounts payable				2,174				2,174
Unearned revenues				2,713				2,713
Other current liabilities				12,295				11,052
Total current liabilities				17,182				15,939
Deferred tax liability				27,765				28,856
Other noncurrent liabilities				8,263				8,263
Total liabilities assumed			$	53,210			$	53,058
Total purchase price, net of cash acquired			$	300,793			$	300,793

Acquired Goodwill

Acquired goodwill of ~~$135,880,~~$135,728, all of which is allocated to the Clinical Genomics reportable segment, represents the value expected to arise from ~~the value of~~ expanded market opportunities, expected synergies, and assembled workforce, none of which qualify as amortizable intangible assets. The goodwill acquired is not deductible for income tax purposes.

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Unaudited Pro Forma Information

The following unaudited pro forma financial information presents the combined results of operations of Mesa and Agena as if the acquisition had occurred on April 1, 2021 after giving effect to certain pro forma adjustments.

	Three Months Ended June 30,					*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	2022			2021		*2022*		*2021*			*2022*		*2021*
Pro forma total revenues	$	50,453		$	53,553	$	54,287	$	56,659		$	163,489	$	163,733
Pro forma net income		(4,709	)		2,521
Pro forma net income (loss)							558		(8,426	)		887		(3,989	)

The pro forma financial information includes adjustments that are directly attributable to the business combinations and are factually supportable. The pro forma adjustments include incremental amortization of intangible assets, additional ~~stock based~~stock-based compensation expense for key Agena employees, the removal of interest expense attributable to Agena’s external debt that was paid off as part of the acquisition, and the pro forma tax impact for such adjustments. Cost savings or operating synergies expected to result from the acquisition are not included in the pro forma results. For the three and ninemonths ended ~~June 30,~~December 31, 2022, the pro forma financial information excludes ~~$356~~$145 and $768 of non-recurring acquisition-related expenses, ~~as well as costs associated with a performance share award granted to key employees of Agena that would have been fully expensed by the start of our~~ ~~first~~ ~~quarter~~ ~~2022.~~respectively. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations.

Note 3. Revenue Recognition

We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related software, consumables, and services. We evaluate revenues internally based primarily on operating segment and the nature of goods and services provided.

~~Sales of hardware and software,~~Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, and data ~~loggers, are generally driven by our acquisition of new customers, growth of existing customers, or customers replacing existing equipment.~~loggers. Hardware sales may be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function. ~~We also offer discrete and ongoing service and maintenance contracts on our instruments.~~

Our consumables, such as panels or reagents that are used for molecular and genetic analysis, are critical for the ongoing use of our instruments. In contrast, biological indicator test strips are used on a standalone basis. Consumables are typically used on a one-time basis and require frequent replacement in our customers' operating cycles. Consumables such as reagents used for molecular and genetic analysis or solutions used for protein synthesis are critical to the ongoing use of our instruments. Consumables such as biological indicator test strips are used on a standalone basis.

We ~~evaluate~~offer service and maintenance contracts for our ~~revenues internally based on operating segment, the timing~~instruments, which may contain performance obligations satisfied: over time, such as an obligation to perform repairs or replace parts as needed over a contractually-specified period of ~~revenue generation, and the nature~~time; upon completion of ~~goods and~~a discrete service, such as stand-alone maintenance services ~~provided.~~ or discrete services within annual contracts; or, in many cases, both.

Typically, ~~discrete~~ revenue is recognized ~~at the shipping point or~~upon shipment of a product, upon completion of ~~the~~a discrete service, ~~while contracted revenue is recognized~~or over a period of time reflective of the performance obligation period in the applicable ~~contract.~~contract, depending on when our obligation to the customer is satisfied. The significant majority of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

The following tables present disaggregated revenues for the three and ninemonths ended ~~June 30,~~December 31, 2022and 2021, respectively:

	*Three Months Ended June 30, 2022*										*Three Months Ended December 31, 2022*
	Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*		*Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Discrete Revenues
Consumables	$	10,910	$	12,228	$	4,856	$	854	$	28,848	$	10,885	$	14,307	$	3,584	$	553	$	29,329
Hardware and Software		2,105		306		3,686		5,693		11,790		3,371		95		5,844		7,023		16,333
Services		528		765		1,159		2,661		5,113		1,329		1,881		2,218		3,197		8,625
Contracted Revenues
Services and Software		962		1,475		1,266		999		4,702
Total Revenues	$	14,505	$	14,774	$	10,967	$	10,207	$	50,453	$	15,585	$	16,283	$	11,646	$	10,773	$	54,287

	*Three Months Ended June 30, 2021*										*Three Months Ended December 31, 2021*
	Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*		Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*
Discrete Revenues
Consumables	$	0	$	12,876	$	3,772	$	952	$	17,600	$	10,221	$	11,718	$	4,099	$	889	$	26,927
Hardware and Software		0		160		3,393		7,082		10,635		4,407		250		6,100		6,978		17,735
Services		0		701		582		2,235		3,518		1,857		1,863		2,557		3,757		10,034
Contracted Revenues
Services and Software		0		1,413		1,130		624		3,167
Total Revenues	$	0	$	15,150	$	8,877	$	10,893	$	34,920	$	16,485	$	13,831	$	12,756	$	11,624	$	54,696

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

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

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

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Revenues from external customers are attributed to individual countries based upon the locations to which the products are shipped or exported, or ~~the location of service~~locations where services are performed, as follows:

	*Three Months Ended June 30,*				*Three Months Ended December 31,*				*Nine Months Ended December 31,*
	*2022*		*2021*		*2022*		*2021*		*2022*		*2021*
United States	$	29,122	$	18,455	$	28,645	$	30,414	$	88,756	$	68,253
Foreign		21,331		16,465
China						7,482		6,243		18,659		9,960
Other						18,160		18,039		56,074		47,243
Total revenues	$	50,453	$	34,920	$	54,287	$	54,696	$	163,489	$	125,456

Other than China, Nono foreign country exceeds 10% of total revenues.

Contract Balances

Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in unearned revenues or customer deposits, called contract liabilities. Short-term contract liabilities are included within other accrued expenses and unearned revenues in the accompanying Condensed Consolidated Balance Sheets, and long-term contract liabilities are included within other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.

A summary of contract liabilities is as follows:

Contract liabilities as of March 31, 2022
$ 15,069
Prior year liabilities recognized in revenues during the three months ended June 30, 2022
(3,298 )
Contract liabilities added during the three months ended June 30, 2022, net of revenues recognized
3,497
Contract liabilities balance as of June 30, 2022
$ 15,268

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

Contract liabilities primarily relate to service contracts with original expected service durations of 12 months or less and will be recognized to revenue over time as ~~time passes.~~our performance obligations are satisfied.

Note 4. Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value. We measure our cash equivalents at fair value using quoted market prices in an active market, and we classify them within Level 1 of the fair value hierarchy.

Historically, the financial instruments that subject us to the highest concentration of credit risk are cash and cash equivalents and accounts receivable. It is our policy to invest in highly liquid cash equivalent financial instruments with high credit ratings and to maintain low single issuer exposure (except U.S. treasuries). Concentration of credit risk with respect to accounts receivable is limited to customers to which we make significant sales. We reserve an allowance for potential write-offs of accounts receivable using historical collection experience and current and expected future economic and market conditions, but we have not written off any significant accounts to date. To manage credit risk, we consider the creditworthiness of new and existing customers, and we regularly review outstanding balances and payment histories. We may require pre-payments from customers under certain circumstances and may limit future purchases until payments are made on past due amounts.

We have outstanding $172,500 aggregate principal of 1.375% convertible senior notes due August 15, 2025 (the "Notes"). We estimate the fair value of the Notes based on the last actively traded price or observable market input preceding the end of the reporting period and the fair value is approximately correlated to our stock price. The estimated fair value and carrying value of the Notes were as follows:

June 30, 2022

March 31, 2022

Carrying Value

Fair Value (Level 2)

Carrying Value

Fair Value (Level 2)

Notes
$ 169,590 $ 161,934 $ 169,365 $ 185,438

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

Assets recognized or disclosed at fair value in the unaudited condensed consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets. These assets are measured at fair value if determined to be impaired. During the three months ended December 31, 2022, in response to the loss of a significant customer, we used Level 3 inputs to test the recoverability of the Clinical Genomics division’s intangible asset group and evaluate the division’s goodwill for impairment in response to the loss of a significant customer. After considering all information available to us as of the date of testing, we concluded that no impairment is indicated. Fair values preliminarily assigned to assets acquired and liabilities assumed in the Belyntic acquisition were measured using Level 3 inputs, and are subject to change. There were no transfers between the levels of the fair value hierarchy during the three and ninemonths ended ~~June 30,~~December 31, 2022or 2021, respectively.

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Note 5. Supplemental Balance Sheets Information

Inventories consist of the following:

	*June 30, 2022*		*March 31, 2022*		*December 31, 2022*		*March 31, 2022*
Raw materials	$	15,014	$	14,172	$	20,122	$	14,172
Work in process		2,150		4,419		1,972		4,419
Finished goods		9,710		6,015		11,645		6,015
Inventories, net	$	26,874	$	24,606
Total inventories					$	33,739	$	24,606

Prepaid expenses and other consist of the following:

	*June 30, 2022*		*March 31, 2022*		*December 31, 2022*		*March 31, 2022*
Prepaid expenses	$	4,173	$	2,871	$	3,450	$	2,871
Deposits						1,702		1,410
Prepaid income taxes		6,181		2,536		3,352		2,536
Other current assets		5,312		3,735		3,446		2,325
Total prepaid expenses and other	$	15,666	$	9,142	$	11,950	$	9,142

Accrued payroll and benefits consist of the following:

	*June 30, 2022*		*March 31, 2022*		*December 31, 2022*		*March 31, 2022*
Bonus payable	$	2,138	$	7,468	$	2,714	$	7,468
Wages and paid-time-off payable		3,116		3,677		2,926		3,677
Payroll related taxes		2,551		2,069		1,773		2,069
Other benefits payable		1,596		1,503		721		1,503
Total accrued payroll and benefits	$	9,401	$	14,717	$	8,134	$	14,717

Note 6. Goodwill and Intangible Assets, Net

~~Finite-lived intangible~~Intangible assets, the significant majority of which are finite-lived, consist of the following:

	*June 30, 2022*							*March 31, 2022*							*December 31, 2022*							*March 31, 2022*
	*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*
Customer relationships	$	235,519	$	(70,499	)	$	165,020	$	244,157	$	(67,469	)	$	176,688	$	237,412	$	(80,627	)	$	156,785	$	244,157	$	(67,469	)	$	176,688
Intellectual property		64,953		(14,186	)		50,767		65,893		(12,620	)		53,273		65,871		(17,732	)		48,139		65,893		(12,620	)		53,273
Other Intangibles		24,752		(5,539	)		19,213		25,350		(5,194	)		20,156
Other intangibles																24,745		(6,222	)		18,523		25,350		(5,194	)		20,156
Total	$	325,224	$	(90,224	)	$	235,000	$	335,400	$	(85,283	)	$	250,117	$	328,028	$	(104,581	)	$	223,447	$	335,400	$	(85,283	)	$	250,117

Amortization expense for finite-lived intangible assets acquired in a business combination was ~~$7,320 and $3,816 for the~~ ~~three~~ ~~months ended~~ ~~June 30, 2022~~ ~~and~~ ~~2021,~~ respectively. Amortization for technology intangibles is included in cost of revenues and amortization for other types of intangibles is expensed to general and administrative expense on the Statements of Operations.as follows:

	*Three Months Ended December 31,*				*Nine Months Ended December 31,*
	*2022*		*2021*		*2022*		*2021*
Amortization in cost of revenues	$	1,695	$	1,227	$	5,094	$	1,877
Amortization in general and administrative		5,452		4,695		16,479		11,618
Total	$	7,147	$	5,922	$	21,573	$	13,495

For the following fiscal years ending March 31, amortization expense is estimated as follows:

Remainder of 2023	21,591	7,250
2024	28,278	28,490
2025	26,704	26,911
2026	25,950	26,149
2027	25,453	25,652

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

	*Clinical Genomics*		*Sterilization and Disinfection Control*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*		*Clinical Genomics*			*Sterilization and Disinfection Control*			*Biopharmaceutical Development*			*Calibration Solutions*			*Total*
March 31, 2022	$	135,914	$	29,750	$	88,265	$	37,237	$	291,166	$	135,914		$	29,750		$	88,265		$	37,237		$	291,166
Effect of foreign currency translation		(197)		(455)		(6,894)		(55)		(7,601)		(244	)		(297	)		(7,871	)		(32	)		(8,444	)
June 30, 2022	$	135,717	$	29,295	$	81,371	$	37,182	$	283,565
Goodwill related to Belyntic acquisition												-			-			2,973			-			2,973
Measurement period adjustment - Agena acquisition												114			-			-			-			114
December 31, 2022											$	135,784		$	29,453		$	83,367		$	37,205		$	285,809

Goodwill acquired in the Biopharmaceutical Development division resulted from the Belyntic acquisition and is tax deductible.

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Note 7. Indebtedness

Credit Facility

We maintain a senior credit facility (the “Credit Facility”) that includes 1) a revolving credit facility in an aggregate principal amount of up to $75,000, 2) a swingline loan in an aggregate principal amount not exceeding $5,000, and 3) letters of credit in an aggregate stated amount not exceeding ~~$2,500 at any time and~~

$2,500. The Credit Facility matures in March 2025. The Credit Facility also provides for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $25,000 and at a maximum $75,000, subject to the satisfaction of certain conditions and lender considerations. As of ~~June 30,~~December 31, 2022, we had ~~$47,000~~$19,000 outstanding under the Credit Facility.

On December 22, 2022, Mesa and the financial institutions amended the Credit Facility to replace references to the Eurodollar Rate with references to the Secured Overnight Financing Rate ("SOFR").

Amounts borrowed under the Credit Facility bear interest at either a base rate or a ~~Eurodollar~~SOFR rate, plus an applicable spread. ~~The weighted average interest rate on borrowing under our line of credit during the~~ ~~first~~ ~~quarter of fiscal year~~ ~~2023~~ ~~was 1.75%.~~ We are obligated to pay quarterly unused commitment fees of between 0.15% and 0.35% of the Credit Facility’s aggregate principal amount, based on our leverage ratio.

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The financial covenants in the Credit Facility include a maximum leverage ratio of 5.0 to 1.0 for the period ended ~~June 30,~~December 31, 2022, except that we may have a leverage ratio of 5.75 to 1.0 for a period of four consecutive quarters following a permitted acquisition. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales. As of ~~June 30,~~December 31, 2022, we were in compliance with all covenants.

In ~~July 2022,~~ ~~we repaid~~ ~~$12,000~~ ~~of the outstanding balance on our Credit Facility.~~

Convertible Notes

On August 12, 2019, we issued an aggregate principal amount of $172,500 of Notes. The net proceeds from the Notes, after deducting underwriting discounts and commissions and other related offering expenses payable by us, were approximately $167,056. The Notes mature on August 15, 2025, unless earlier repurchased or converted, and bear interest at a rate of 1.375% payable semi-annually in arrears on February 15 and August 15 each ~~year beginning on~~ ~~February 15, 2020.~~ year.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. Our current intent is to settle conversions entirely in shares of common stock. We will reevaluate this policy from time to time as we receive conversion notices from note holders. The circumstances necessary for conversion were not met during the three months ended ~~June 30,~~December 31, 2022. As of ~~June 30,~~December 31, 2022, the Notes are classified as a long-term liability on our Condensed Consolidated Balance Sheets as the circumstances necessary for conversion were not satisfied as of the end of the period. The if-converted value of the Notes did not exceed the principal balance as of ~~June 30,~~December 31, 2022.

The net carrying amount of the Notes was as follows:

	*June 30, 2022*			*March 31, 2022*			*December 31, 2022*			*March 31, 2022*
Principal outstanding	$	172,500		$	172,500		$	172,500		$	172,500
Unamortized debt issuance costs		(2,910	)		(3,135	)		(2,456	)		(3,135	)
Net carrying value	$	169,590		$	169,365		$	170,044		$	169,365

We recognized interest expense on the Notes as follows:

	*Three Months Ended June 30,*				*Three Months Ended December 31,*				*Nine Months Ended December 31,*
	*2022*		*2021*		*2022*		*2021*		*2022*		*2021*
Coupon interest expense at 1.375%	$	593	$	593	$	593	$	593	$	1,779	$	1,779
Amortization of debt discounts and issuance costs		225		221		227		223		679		666
Total	$	818	$	814
Total interest and amortization of debt issuance costs					$	820	$	816	$	2,458	$	2,445

The effective interest rate on the notes is approximately 1.9%.

Note 8. Stockholders' Equity

Stock-Based Compensation

During the ~~first~~nine ~~quarter of fiscal year~~months ended ~~2023,~~December 31, 2022, we issued stock options, restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Mesa Laboratories, Inc. 2021 Equity Incentive Plan (the "2021 Equity Plan"), which authorizes the issuance of 330 shares of common stock to eligible participants.

Expense recognized related to stock-based compensation is as follows:

	*Three Months Ended June 30,*						*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	*2022*			*2021*			*2022*		*2021*			*2022*			*2021*
Stock-based compensation expense	$	3,432		$	2,197		$	2,056	$	3,703		$	9,859		$	7,939
Amount of income tax (benefit) expense recognized in earnings		(1,992	)		(2,785	)
Amount of income tax (benefit) recognized in earnings								226		(743	)		(1,855	)		(4,247	)
Stock-based compensation expense, net of tax	$	1,440		$	(588	)	$	2,282	$	2,960		$	8,004		$	3,692

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

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The following is a summary of stock option award activity for the ~~three~~nine months ended ~~June 30, 2022:~~December 31, 2022:

	*Stock Options*									*Stock Options*
	*Shares Subject to Options*			*Weighted- Average Exercise Price per Share*		*Weighted-Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*		*Shares Subject to Options*			*Weighted- Average Exercise Price per Share*		*Weighted-Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*
Outstanding as of March 31, 2022		202		$	167.14		2.9	$	18,261		202		$	167.14		2.9	$	18,261
Awards granted		42			185.57						43			185.61
Awards forfeited or expired		(4	)		231.15						(7	)		225.12
Awards exercised		(16	)		93.12						(45	)		100.19
Outstanding as of June 30, 2022		224		$	174.93		3.3	$	9,493
Outstanding as of December 31, 2022											193		$	184.70		3.1	$	3,406

The stock options granted during the ~~three~~nine months ended ~~June 30,~~December 31, 2022vest in equal installments on the first, second, and third anniversary of the grant date.

The following is a summary of RSU award activity for the ~~three~~nine months ended ~~June 30, 2022:~~December 31, 2022:

	*Time-Based Restricted Stock Units*					*Performance-Based Restricted Stock Units*					*Time-Based Restricted Stock Units*					*Performance-Based Restricted Stock Units*
	*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*		*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*		*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*		*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*
Outstanding as of March 31, 2022⁽¹⁾		51		$	252.86		55		$	288.45		51		$	252.86		55		$	288.45
Awards granted ⁽¹⁾		33			185.57		19			185.57		42			187.45		19			179.63
Performance adjustment⁽²⁾		0			0		2			202.00		-			-		2			202.00
Awards forfeited		(2	)		245.31		0			0		(8	)		232.20		-			-
Awards distributed(2)		(7	)		204.62		(10	)		202.00		(26	)		250.81		(10	)		202.00
Outstanding as of June 30, 2022⁽¹⁾		75		$	227.63		66		$	269.18
Outstanding as of December 31, 2022⁽¹⁾												59		$	210.44		66		$	267.97

⁽¹⁾	Balances for ~~performance-based restricted stock units ("PSUs")~~PSUs are reflected at target.

⁽²⁾	During the ~~three~~nine months ended ~~June 30,~~December 31, 2022, the fiscal year 2020 PSUs vested and were distributed at 126% of target, based on actual performance results and completion of service conditions.

The outstanding time-based RSUs vest and settle in shares of our common stock on a one-for-one basis. ~~All~~Substantially all of the RSUs granted during the ~~three~~nine months ended ~~June 30,~~December 31, 2022vest in equal installments on the first, second, and third anniversary of the grant date. We recognize the expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period.

PSUs vest upon completion of the service period described in the award agreement and based on achievement of the ~~financial~~performance targets described in the award agreements. We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the ~~financial~~performance targets on a straight-line basis over the service period.

During the ~~three~~nine months ended ~~June 30,~~December 31, 2022, the Compensation Committee of the Board of Directors created a plan to award 19 PSUs at target (the ~~"FY~~ 23"FY23 PSUs") that are subject to both service and performance conditions to eligible employees. The performance period for the FY 23FY23 PSUs is from April 1, 2022 until March 31, 2023 and the service period is from April 1, 2022 until March 31, 2025. Of the FYtotal 23FY23 PSUs granted, 13 vest based on our achievement of specific performance criteria during fiscal year 2023 and they have a grant date fair value of $185.57. Based on actual performance through the nine months ended December 31, 2022, we reduced the number of awards expected to vest. The remaining 6 awards will be settled in shares of our common stock, but they are subject to performance criteria that are subjective and as such do not have a grant date. The awards will be marked-to-market each reporting period during the performance ~~period.~~ period and have a fair value of $166.21 per share as of December 31, 2022. The quantity of shares that will be issued upon vesting will range from 0% to 200% of the targeted number of shares; if the defined minimum targets are not met, then no shares will vest.

During fiscal year ~~2020,~~2022, we awarded 87 PSUs ~~(the "FY~~ 20 ~~PSUs")~~to key employees of Agena that are subject to both service and performance ~~conditions to eligible employees. The FY~~ 20 ~~PSUs had a grant date fair value of $202.00 per share and vested during the~~ ~~three~~ ~~months ended~~ ~~June 30, 2022.~~ conditions. Based on actual performance ~~targets achieved,~~ through the period ended December 31, 2022, the awards ~~vested at 126% of target, resulting in a total of 10 awards distributed.~~are not expected to vest.

During fiscal year 2022, the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of PSUs covering a target of 40 shares that is subject to both performance and service conditions to our Chief Executive Officer. Based on actual performance through the period ended December 31, 2022, the award is estimated to vest at 93%.

During the three months ended December 31, 2022, we adjusted our estimate of PSUs expected to vest under all outstanding plans based on actual results achieved through the performance period. We recorded a cumulative effect release of ($1,427) during the period ($1,127 net of tax as well as $0.21 per basic and diluted share for both the three and nine months ended December 31, 2022), which is recorded in general and administrative and selling expense on our Condensed Consolidated Statements of Operations.

In the future, we expect non-cash stock based compensation expense to decrease approximately $392 per quarter as a result of our new estimate of performance share units expected to vest.

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Note 9. Earnings (Loss) Per Share

Basic earnings (loss) ~~earnings~~ per share is computed by dividing net income (loss) ~~income~~ by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings (loss) ~~earnings~~ per share (“diluted EPS”) is computed similarly to basic earnings (loss) ~~earnings~~ per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. Potentially dilutive securities include stock options and both time and performance based RSUs (collectively “stock awards”), as well as common shares underlying the Notes. Stock awards are excluded from the calculation of diluted EPS if they are subject to performance conditions that have not yet been achieved or are antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would then have an antidilutive effect. ~~There was~~ no ~~dilution in our diluted EPS calculation for the~~ ~~three~~ ~~months ended~~ ~~June 30, 2022~~ ~~as we incurred a net loss and the effect would have been antidilutive.~~

The impact of the assumed conversion of the Notes calculated under the if-converted method was antidilutive, and as such, shares underlying the Notes were excluded from the diluted EPS calculation for the three and nine months ended ~~June 30,~~December 31, 2022and ~~June 30, 2021.~~ December 31, 2021.

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

Three Months Ended June 30,

2022

2021

Net (loss) income available for shareholders
$ (1,438 ) $ 1,995
Weighted average outstanding shares of common stock
5,273 5,152
Dilutive effect of stock options
0 108
Dilutive effect of RSUs
0 41
Fully diluted shares
5,273 5,301

Basic (loss) earnings per share
$ (0.27 ) $ 0.39
Diluted (loss) earnings per share
$ (0.27 ) $ 0.38

	*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	*2022*		*2021*			*2022*		*2021*
Net income (loss) available for shareholders	$	451	$	(2,060	)	$	319	$	3,655
Weighted average outstanding shares of common stock		5,339		5,233			5,312		5,199
Dilutive effect of stock options		17		-			28		107
Dilutive effect of RSUs		4		-			14		27
Fully diluted shares		5,360		5,233			5,354		5,333

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

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

	*Three Months Ended June 30,*				*Three Months Ended December 31,*				*Nine Months Ended December 31,*
	*2022*		*2021*		*2022*		*2021*		*2022*		*2021*
Assumed conversion of the Notes		608		608		608		608		608		608
Stock awards that were anti-dilutive		315		38		176		285		159		38
Stock awards subject to performance conditions		45		8		49		40		51		18
Total stock awards excluded from diluted EPS		968		654		833		933		818		664

Note 10. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. There is a potential for volatility in the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

Our effective income tax rate was ~~(73.4%~~76.5% and 384.8% for the three and nine months ended December 31, 2022, respectively, compared to 12.0% and (1.0%) for the three ~~months ended~~and ~~June 30, 2022~~ ~~and (40.7%) for the~~ ~~three~~nine months ended ~~June 30,~~December 31, 2021. The effective tax rate for both the three and nine months ended ~~June 30,~~December 31, 2022differed from the statutory federal rate of 21% primarily due to the share-based payment awards for employees and the effect of income generated in foreign ~~jurisdictions~~jurisdictions. The effective tax rate for the ~~first~~three and ~~three~~nine months ofended ~~2023~~December 31, 2022 was higher than the ~~same period in~~ ~~2022~~comparable prior year periods primarily due to lower windfall benefits on stock option exercises and the ~~share based compensation~~vesting of restricted stock units and the effect of income in foreign jurisdictions.

Note 11. Commitments and Contingencies

We review the adequacy of our legal reserves on a quarterly basis and establish reserves for loss contingencies that are both probable and reasonably estimable. As of ~~June 30,~~December 31, 2022, there were no material legal reserves recorded on the accompanying unaudited Condensed Consolidated Balance Sheets.

As part of the Belyntic acquisition, we have agreed to pay an additional $1,500 to the sellers if contractually specified patents related to the technology purchased are issued. We believe that it is probable that the patents will be issued and we will pay the sellers in full within the next 36 months. The liability is recorded in other long-term liabilities on the accompanying Condensed Consolidated Balance Sheets.

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Note 12. Segment Information

~~During fiscal year~~ ~~2022,~~ ~~we realigned~~The following tables set forth our financial reporting segments to reflect how management evaluates the business and allocates resources. The acquisition of Agena expanded our presence further into the life sciences tools market and provided an impetus for the creation of our new Clinical Genomics reportable segment. The strategic shift in our business also resulted in a change to the way we manage other business units, and as a result, our historical Instruments and Continuous Monitoring reportable segments have been combined to create Calibration Solutions. Prior year amounts presented have been reclassified to conform to current year presentation. Our change in financial reporting segments has ~~not~~ ~~resulted in any change to previously reported consolidated amounts.~~segment information:

	*Three Months Ended June 30,*						*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	*2022*			*2021*			*2022*		*2021*			*2022*			*2021*
Revenues:
Clinical Genomics	$	14,505		$	0		$	15,585	$	16,485		$	48,525		$	16,485
Sterilization and Disinfection Control		14,774			15,150			16,283		13,831			48,021			43,014
Biopharmaceutical Development		10,967			8,877			11,646		12,756			34,757			32,188
Calibration Solutions		10,207			10,893			10,773		11,624			32,186			33,769
Total revenues (a)	$	50,453		$	34,920		$	54,287	$	54,696		$	163,489		$	125,456

Gross profit
Clinical Genomics	$	7,849		$	0		$	8,045	$	3,924		$	26,535		$	3,924
Sterilization and Disinfection Control		10,768			11,428			11,614		9,945			34,581			31,859
Biopharmaceutical Development		7,077			4,692			7,359		8,768			21,993			20,061
Calibration Solutions		5,664			6,112			5,740		6,090			17,411			18,330
Reportable segment gross profit		31,358			22,232			32,758		28,727			100,520			74,174
Corporate and Other (b)		(17	)		(21	)		7		(100	)		(28	)		(196	)
Gross profit	$	31,341		$	22,211		$	32,765	$	28,627		$	100,492		$	73,978
Reconciling Items:
Operating expenses		35,935			19,088			29,363		31,139			97,689			69,166
Operating (loss) income		(4,594	)		3,123
Nonoperating (income) expense, net		818			1,705
(Loss) earnings before income taxes	$	(5,412	)	$	1,418
Operating income (loss)								3,402		(2,512	)		2,803			4,812
Nonoperating expense (income), net								1,486		(171	)		2,915			1,192
Earnings (loss) before income taxes							$	1,916	$	(2,341	)	$	(112	)	$	3,620

^(a)

Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

^(b)

Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

The following table sets forth inventories by reportable segment. Our chief operating decision maker is not provided with any other segment asset information.

	*June 30,*		*March 31,*		*December 31,*		*March 31,*
	*2022*		*2022*		*2022*		*2022*
Clinical Genomics	$	12,711	$	11,802	$	14,591	$	11,802
Sterilization and Disinfection Control		2,310		2,176		3,022		2,176
Biopharmaceutical Development		4,960		4,495		7,797		4,495
Calibration Solutions		6,893		6,133		8,329		6,133
Total inventories	$	26,874	$	24,606	$	33,739	$	24,606

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in thousands, except per share amounts)

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form 10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Q which are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position; potential impairment of future earnings; anticipated effects of, and future actions to be taken in response to, the COVID-19 pandemic; results of acquisitions; management’s strategy, plans and objectives for future operations or acquisitions, product development and sales; product research and development; regulatory approvals; selling, general and administrative expenditures; intellectual property; development and manufacturing plans; availability of materials and components; and adequacy of capital resources and financing plans constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. In addition, other written and oral statements that constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as“~~expect,~~” “~~intend,~~” “seek,” “believe,” “~~anticipate,~~may,” “intend,” “could,”“~~estimate,~~expect,” “anticipate,” “plan,” “target,” “~~may,~~estimate,” “project,” or variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including risks associated with: our ability to successfully grow our business, including as a result of acquisitions; the results that acquisitions have on our operations; our ability to consummate acquisitions at our historical rate and at appropriate prices, and our ability to effectively integrate acquired businesses and achieve desired results; the market acceptance of our products; technological or market viability of our products; reduced demand for our products, including as a result of competitive factors; conditions in the global economy and the particular markets we serve; ~~the duration and impact of the COVID-19 pandemic and its adverse effects on our business;~~ significant developments or uncertainties stemming from governmental actions, including changes in trade policies and medical device regulations; the timely development and commercialization, and customer acceptance, of enhanced and new products and services; retirement of old products and customer migration to new products; projections of revenues, growth, operating results, profit margins, earnings, expenses, margins, tax rates, tax provisions, liquidity, cash flows, demand, and competition; the effects of additional actions taken to become more efficient or lower costs; ~~restructuring activities~~supply chain challenges; cost pressures and the overall effects of the current high inflation environment on customers;’ purchasing patterns;laws regulating fraud and abuse in the health care industry and the privacy and security of health and personal information; product liability; information security; outstanding claims, legal and regulatory proceedings; international business challenges including anti-corruption and sanctions laws; tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic, industry, and capital markets conditions, including rising interest rates and potential recessionary conditions; the timing of any of the foregoing; and assumptions underlying any of the foregoing. Such risks and uncertainties also include those listed in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2022 and in this report. The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. We disclaim any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Overview

We are a multinational manufacturer, developer, and seller of life science tools and quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements. We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and Asia Pacific, and by independent distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross profit margins.

As of ~~June 30,~~December 31, 2022, we managed our operations in four reportable segments, or divisions: Clinical Genomics, Sterilization and Disinfection Control, Biopharmaceutical Development, and Calibration Solutions. Each of our divisions are described further in "Results of Operations" below. ~~Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.~~

Corporate Strategy

We strive to create shareholder value and further our purpose of Protecting the Vulnerable^® by growing our business both organically and through acquisitions, by improving our operating efficiency, and by continuing to hire, develop and retain top talent. As a business, we commit to our purpose of Protecting the Vulnerable^® every day by taking a customer-focused approach to developing, building, and delivering our products. We serve a broad set of industries, in particular the pharmaceutical, healthcare services, and medical device verticals, ~~that require dependable quality control and calibration solutions to ensure~~in which the safety, quality, and efficacy of ~~the~~ products ~~they use.~~is critical. By delivering the highest quality products possible, we are committed to protecting people, the environment, and end products.

Organic Revenues Growth

Organic revenues growth is ~~primarily~~ driven by the expansion of our customer base, increases in sales volumes, new product offerings, and price increases, and may be affected positively or negatively by changes in foreign currency rates. Our ability to increase organic revenues is affected by general economic conditions, both domestic and international, customer capital spending trends, competition, and the introduction of new products. Our policy is to price our products competitively and, where possible, we pass along cost increases to our customers in order to maintain our margins. We typically evaluate costs and pricing ~~annually;~~annually with price increases effective January 1; however, as a result of high inflation in recent quarters, we ~~have elected to put through~~implemented an additional mid-year price ~~increases which will take effect during~~increase late in the second quarter of ~~our~~ fiscal year 2023.

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

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Inorganic Growth - Acquisitions

During the third quarter of fiscal year 2023, we completed the Belyntic acquisition for an aggregate purchase price of $6,450. The acquisition provided a natural complement to our peptide synthesis business by adding a consumables product line.

During the third quarter of fiscal year 2022, we completed the acquisition of Agena for an aggregate net purchase price of $300,793. Agena is a leading clinical genomics tools company that develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical testing in several therapeutic areas, such as ~~newborn~~ screenings for hereditary diseases, pharmacogenetics and ~~oncology.~~oncology related applications. The acquisition of Agena accelerated our strategic trajectory towards higher growth applications within the regulated segments of the life sciences tools market.

Over the past decade, we have consummated a number of acquisitions as part of our growth strategy. ~~The~~These acquisitions ~~of these businesses~~ have allowed us to expand our product offerings, globalize our company, and increase the scale at which we operate, which in turn affords us the ability to improve our operating efficiency, extend our customer base, and further the pursuit of our purpose: Protecting the Vulnerable®.

Improving Our Operating Efficiency

We maximize value in both our existing businesses and those we acquire by implementing efficiencies in our manufacturing, commercial, engineering, and administrative operations. We achieve efficiencies using the four pillars that make up The Mesa Way, which is our customer-centric, lean-based system for continuously improving and operating a set of high-margin, niche businesses. The Mesa Way is focused on: Measuring What Matters using our customers' perspective and setting high standards for performance; Empowering Teams to improve operationally and exceed customer expectations; Steadily Improving using lean-based tools designed to help us identify the root cause of opportunities and prioritize the biggest opportunities; and Always Learning so that performance continuously improves.

Hire, Develop, and Retain Top Talent

At the center of our organization are talented people who are capable of taking on new challenges using a team approach. It is our exceptionally talented workforce that works together and uses our lean-based tool set to find ways to continuously improve our products, our services, and ourselves, resulting in long-term value creation for our shareholders.

General Trends

~~COVID-19 has caused~~We are a global company, and a significant portion of our revenues and expenses are denominated in currencies other than the U.S. dollar (“USD”). Exchanges rates have been volatile throughout our fiscal year 2023 and a weakening or ~~exacerbated broad market phenomena such~~strengthening of foreign currencies against the USD increases or decreases our revenues and gross profit margins as well as impacting the comparability of our results between periods. Currency exchange rates negatively impacted our reported revenues for the nine months ended December 31, 2022 as compared to the same period in the previous fiscal year. Any further strengthening of the USD against major currencies would adversely impact our reported revenues, but would, to a lesser extent, positively impact our reported expenses for the remainder of the fiscal year; conversely, any weakening of the U.S. dollar against major currencies would positively impact our reported revenues but would negatively impact our expenses for the remainder of the fiscal year.

We have experienced, and expect to continue to experience, inflation impacting the cost of raw materials, labor, and freight, as a result of global macroeconomic trends, including government mandated actions in response to the Coronavirus pandemic (“COVID-19”) and the conflict between Russia and Ukraine. Our actions to mitigate the impact of supply chain disruptions ~~inflation,~~ and wage pressure to which we are susceptible. While supply chain constraints continue to impact all of our divisions and particularly our Calibration Solutions and Biopharmaceutical Development divisions, we expect that constraints will abate somewhat over the remainder of fiscal year 2023. We continue to work with our suppliers to understand the existing and potential future impacts to our supply chain and are taking actions in an effort to mitigate such impacts,inflation, including pre-ordering components in higher ~~quantities~~ than usual ~~which has resulted in increased~~quantities, sourcing new vendors and increasing prices have been somewhat successful; however, raw materials ~~balances on~~shortages have at times impacted our consolidated balance sheets as of June 30, 2022. We have also experienced labor shortages and inflationary pressures due to labor market conditions, impacting all of our divisions, but particularly our Sterilization and Disinfection Control division. It is possible that labor shortagesCalibrations Solutions division, in our Sterilization and Disinfection Control Division may continue to impact our ability to manufacture product on preferred timelines during the remainder of fiscal year 2023 which could directly impact our revenues and related gross profit. particular.

We ~~continue~~experienced disruptions to ~~actively monitor the COVID-19 pandemic, including the spread of variants of the virus and the potential impacts that the virus may have on~~ our employees, our customers, and our supply chain. Conditions related to the COVID-19 pandemic have generally improved during the first quarter of our fiscal year 2023; however, there has been significant variationbusiness in ~~business impact by geography. For example, late in fiscal year 2022, an increase in COVID-19 cases in certain parts of~~ China ~~resulted in the re-imposition of~~resulting from government mandated shut-downs and restrictions ~~which impacted~~during our fiscal year 2023. Additionally, the Chinese government recently revoked many COVID-19 related restrictions and while these policy changes did not significantly impact our results of operations ~~in China, particularly~~for our ~~Clinical Genomics division. Such regulatory restrictions have~~third fiscal quarter, it is possible that future quarters may be impacted. The impact of COVID-19 has negatively impacted commercial execution ~~limiting~~in different ways throughout fiscal year 2023, and in some cases, has limited sales of Clinical Genomics consumables to existing customers and instruments to new customers. As stay-at-home and quarantine mandates have eased to some extent, we expect an eventual return to normalized activity levels. The continued impact of COVID-19 remains highly uncertain because of the speed with which the situation continues to evolve, the global breadth of its spread, the range of governmental and community responses thereto and the diversity of our geographic reach and business offerings. Even after the COVID-19 pandemic has largely subsided as a public health matter, we may experience material adverse impacts to our business as a result of the pandemic's adverse impact on the global economy, in-person collaboration and sales efforts, and our customers’ changed purchasing behaviors and confidence.

During the third quarter of fiscal year 2023, we were notified by Sema4 Holdings Corp. ("Sema4"), a customer of our Clinical Genomics division, that they are exiting the reproductive health screening business and as a result, they intend to significantly reduce the quantity of orders they place with us in the future. Revenue from sales to Sema4 were approximately $8,200 during the first twelve months of our ownership of Agena. Following the notice, we evaluated our business operations and enacted several cost-cutting measures in the Clinical Genomics division, including a reduction-in-force, to preserve our financial model. These actions are expected to generate more than $4,000 in future annualized savings.

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Results of Operations

Our results of operations and period-over-period changes are discussed in the following section. The tables and discussion below should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements and the notes thereto appearing in Item 1. Financial Statements (in thousands, except percent data).

Revenues from our reportable segments decreased 1% and increased ~~44%~~30% for the three and nine months ended December 31, 2022, respectively, as compared to the same periods in the prior year. The decrease in revenues for the three months ended ~~June 30, 2022.~~December 31, 2022 was attributable to a 2.1% decline in organic revenues which resulted from both unfavorable changes in foreign currency rates and $1,500 of COVID-19 related revenues for the three months ended December 31, 2021. Revenues growth for the nine months ended December 31, 2022 was primarily attributable to the acquisition of ~~Agena; however,~~Agena, and to a lesser extent, organic revenues growth ~~was 3% for the three months ended June 30, 2022.~~ of 3.5%.

Gross profit as a percentage of revenues ~~decreased~~increased seven and two percentage points for the three and nine months ended ~~June 30,~~December 31, 2022, ~~compared to the three months ended June 30, 2021~~respectively, primarily as a result of ~~continued supply chain constraints, wage and other inflationary pressures, and impacts~~the recognition of ~~government-imposed lockdowns related to~~a $6,062 non-cash inventory step-up charge, as part of purchase accounting for the ~~COVID-19 pandemic.~~ Agena acquisition during the three months ended December 31, 2021.

Results by reportable segment are as follows:

	Revenues				Organic Revenues Growth						Gross Profit as a % of Revenues						Revenues				Organic Revenues Growth						Gross Profit as a % of Revenues
	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Three Months Ended December 31, 2022		Three Months Ended December 31, 2021		Three Months Ended December 31, 2022			Three Months Ended December 31, 2021			Three Months Ended December 31, 2022			Three Months Ended December 31, 2021
Clinical Genomics (*)	$	14,505	$	-		N/A			N/A			54	%		N/A		$	15,585	$	16,485		(10.0	%)		N/A			52	%		24	%
Sterilization and Disinfection Control		14,774		15,150		(2	%)		16	%		73	%		75	%		16,283		13,831		17.7	%		5.8	%		71	%		72	%
Biopharmaceutical Development		10,967		8,877		24	%		49	%		65	%		53	%		11,646		12,756		(8.7	%)		46.4	%		63	%		69	%
Calibration Solutions		10,207		10,893		(6	%)		-	%		55	%		56	%		10,773		11,624		(7.3	%)		(6.1	%)		53	%		52	%
Mesa's reportable segments	$	50,453	$	34,920		3	%		17	%		62	%		64	%	$	54,287	$	54,696		(2.1	%)		11.8	%		60	%		53	%

Revenues

Organic Revenues Growth

Gross Profit as a % of Revenues

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Nine Months Ended December 31, 2022

Nine Months Ended December 31, 2021

Clinical Genomics (*)
$ 48,525 $ 16,485 (10.0 %) N/A 55 % 24 %
Sterilization and Disinfection Control
48,021 43,014 11.6 % 14.1 % 72 % 74 %
Biopharmaceutical Development
34,757 32,188 8.0 % 35.3 % 63 % 62 %
Calibration Solutions
32,186 33,769 (4.7 %) (2.1 %) 54 % 54 %
Mesa's reportable segments
$ 163,489 $ 125,456 3.5 % 13.5 % 61 % 59 %

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

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~~Table of Contents~~
Our unaudited condensed consolidated results of operations are as follows:

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Revenues
$ 50,453 $ 34,920 44 % $ 54,287 $ 54,696 (1 %) $ 163,489 $ 125,456 30 %
Gross profit
31,341 22,211 41 % 32,765 28,627 14 % 100,492 73,978 36 %
Operating expenses
35,935 19,088 88 % 29,363 31,139 (6 %) 97,689 69,166 41 %
Operating (loss) income
(4,594 ) 3,123 (247 %)
Net (loss) income
$ (1,438 ) $ 1,995 (172 %)
Operating income (loss)
3,402 (2,512 ) (¤) 2,803 4,812 (42 %)
Net income (loss)
$ 451 $ (2,060 ) (¤) $ 319 $ 3,655 (91 %)
(¤) Not a meaningful comparison
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Reportable Segments

Clinical Genomics
The Clinical Genomics division ~~created following the Agena Acquisition,~~ develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by clinical labs to perform genomic clinical testing in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics and oncology related applications.

Three Months Ended June 30,

Percentage

2022

2021

Change

Revenues
$ 14,505 $ - N/A
Gross profit
7,849 - N/A
Gross profit as a % of revenues
54 % N/A N/A

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Revenues
$ 15,585 $ 16,485 (5 %) $ 48,525 $ 16,485 194 %
Gross profit
8,045 3,924 105 % 26,535 3,924 576 %
Gross profit as a % of revenues
52 % 24 % 28 % 55 % 24 % 31 %

Clinical Genomics revenues ~~were negatively impacted by~~decreased 5% for the ~~government-imposed shutdowns in parts of China due~~three months ended December 31, 2022 compared to the ~~COVID-19 pandemic, which began at~~relevant prior year period, primarily as a result of a reduction in COVID-related revenues of $1,374 and adverse changes in foreign currency exchange rates, partially offset by a longer period of ownership of Agena in the ~~end of fiscal year 2022 and continued throughout the majority of the first~~third quarter of fiscal year 2023. ~~Shut-downs~~Clinical Genomics revenues increased 194% for the nine months ended December 31, 2022 compared to the relevant prior year period due to a significantly shorter period of ownership of Agena for the nine months ended December 31, 2021. The loss of Sema4 is expected to result in a significant reduction of anticipated revenues for this division in future quarters. However, our distribution partner Guangzhou Darui Biotechnology Co., Ltd. recently received China's National Medical Products Administration approval for a Class III in vitro diagnostics ("IVD") panel covering hereditary deafness. This is the first approved Class III IVD panel in China ~~limited~~from our sales efforts and decreased sales of consumables as laboratory customers were closed, limiting usage of our products. As these government-imposed shutdowns become less frequent, we expect to see a recovery to more normal demand. Of the revenues reported, $195 represents revenues from COVID-19 related sales.distribution partner program.

Gross profit percentage for the Clinical Genomics ~~gross profit was $7,849~~division increased 28% and 31% for the three and nine months ended ~~June 30,~~December 31, 2022, ~~and was significantly impacted by lower than expected revenues~~respectively, compared to the relevant prior year periods due to the ~~government-imposed shutdowns~~amortization of a $6,062 inventory step-up required by purchase accounting in ~~China related~~the third quarter of fiscal year 2022. We have taken actions to reduce our costs in this division which will help offset the ~~COVID-19 pandemic. The decreased revenues impacted gross profit as a percentage~~loss of revenues ~~as lower revenues were available to cover our partially fixed cost base.~~from Sema4.

Sterilization and Disinfection Control
Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry. Sterilization and disinfection control products are disposable and are used on a routine basis.

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Revenues
$ 14,774 $ 15,150 (2 %) $ 16,283 $ 13,831 18 % $ 48,021 $ 43,014 12 %
Gross profit
10,768 11,428 (6 %) 11,614 9,945 17 % 34,581 31,859 9 %
Gross profit as a % of revenues
73 % 75 % (2 %) 71 % 72 % (1 %) 72 % 74 % (2 %)

Sterilization and Disinfection Control revenues ~~decreased 2%~~increased 18% and 12% for the three and nine months ended ~~June 30,~~December 31, 2022, ~~primarily due~~respectively, compared to the ~~strengthening of~~relevant prior year periods, despite the ~~U.S. dollar ("USD")~~USD strengthening against the ~~euro~~euro. During the second and ~~labor shortages~~third quarters of fiscal year 2023, we added temporary and permanent manufacturing headcount at our Bozeman Montana facility, which ~~impacted our ability~~enabled us to ~~manufacture products on desired timelines, partially offset by~~fulfill a higher volume of customer orders compared to the first quarter of fiscal year 2023. The three and nine months ended December 31, 2022 also benefited from favorable product mix and to a lesser extent, price increases.

Sterilization and Disinfection Control's gross profit percentage decreased one and two percentage points for the three and nine months ended ~~June 30,~~December 31, 2022, respectively, compared to the relevant prior year periods as a result of ~~lower~~foreign currency fluctuations negatively impacting our reported revenues, ~~due to the strengthening of the USD against the euro and~~ increased labor and ~~labor-related~~benefit costs, including the cost of temporary headcount, and increased freight costs.

Biopharmaceutical Development
Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and ~~manufacturing~~manufacture of biotherapeutic drugs.

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Revenues
$ 10,967 $ 8,877 24 % $ 11,646 $ 12,756 (9 %) $ 34,757 $ 32,188 8 %
Gross profit
7,077 4,692 51 % 7,359 8,768 (16 %) 21,993 20,061 10 %
Gross profit as a % of revenues
65 % 53 % 12 % 63 % 69 % (6 %) 63 % 62 % 1 %

Biopharmaceutical Development revenues ~~increased 24%~~decreased 9% for the three months ended ~~June 30,~~December 31, 2022 compared to the relevant prior year period, primarily due to unfavorable changes in foreign currency exchange rates. Additionally, the division faced a difficult compare versus the prior year, which reported an anomalous 46% revenues growth, partially offset by price increases. Biopharmaceutical Development revenues increased 8% for the nine months ended December 31, 2022 compared to the relevant prior year period primarily due to increased ~~sales of both consumables~~product adoption and ~~services, as well as~~ price increases, ~~and an easier compare to the first quarter of fiscal year 2022. Increases in revenues were~~ partially offset by unfavorable changes in foreign currency exchange rates.

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Biopharmaceutical Development's gross profit percentage ~~increased 12~~decreased six percentage points for the ~~first quarter of fiscal year 2023~~three months ended December 31, 2022 compared to ~~the first quarter of fiscal~~relevant prior year ~~2022~~period as a result of ~~a favorable change in~~ foreign ~~exchange rates applied to costs recorded in Swedish Krona ("SEK"), favorable product mix~~currency fluctuations negatively impacting our reported revenues and higher sales of peptide synthesis ~~solutions, and production efficiencies resulting from~~hardware at a lower gross profit percentage compared to the overall division margin percentages. Biopharmaceutical Development's gross profit percentage increased one percentage point for the nine months ended December 31, 2022 compared to the relevant prior year period as a result of higher revenues on a partially-fixed cost base, partially offset by ~~higher labor~~unfavorable product mix and ~~material costs.~~foreign currency fluctuations negatively impacting our reported revenues.

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

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Revenues
$ 10,207 $ 10,893 (6 %) $ 10,773 $ 11,624 (7 %) $ 32,186 $ 33,769 (5 %)
Gross profit
5,664 6,112 (7 %) 5,740 6,090 (6 %) 17,411 18,330 (5 %)
Gross profit as a % of revenues
55 % 56 % (1 %) 53 % 52 % 1 % 54 % 54 % - %

Calibration Solutions ~~division~~ revenues decreased 6%7% and 5% for the three and nine months ended ~~June 30,~~December 31, 2022, respectively, compared to the relevant prior year periods, primarily as a result of supply constraints limiting our ability to manufacture ordered quantities of certain ~~products, partially offset by price increases and increased calibration hardware sales.~~products. Production difficulties continue to result in longer lead times for customer orders, which have negatively impacted the timing of new orders; however, we anticipate that such difficulties will begin to abate in the fourth quarter of fiscal year 2023.

~~The~~ Calibration ~~Solutions division's~~Solutions' gross profit percentage ~~decreased one percentage point during~~was essentially flat for the three and nine months ended ~~June 30, 2022. Costs in this division increased somewhat from the first quarter of~~December 31, 2022 compared to the ~~first quarter of 2023, partially offset by a favorable product mix.~~three and nine months ended December 31, 2021.

Operating Expenses
Operating expenses decreased 6% and increased ~~88%~~41% for the three and nine months ended ~~June 30,~~December 31, 2022, respectively, compared to the ~~three months ended June 30, 2021~~relevant prior year periods, primarily as a result of lower personnel costs and the Agena ~~Acquisition~~acquisition. Operating expenses were favorably impacted by the strengthening of the USD during the three and ~~as our overall business grew.~~nine months ended December 31, 2022.

Selling
Selling expense is driven primarily by labor costs, including salaries and commissions; accordingly, it may vary with sales levels.

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Selling expense
$ 10,023 $ 4,858 106 % $ 8,437 $ 8,958 (6 %) $ 27,660 $ 18,459 50 %
As a percentage of revenues
20 % 14 % 6 % 16 % 16 % - % 17 % 15 % 2 %

Selling expense for the three months ended ~~June 30,~~December 31, 2022 decreased 6% compared to the relevant prior year period, primarily as a result of lower personnel costs. Selling expense for the nine months ended December 31, 2022 increased ~~106%~~50% compared to the relevant prior year period, primarily as a result of the ~~acquisition of Agena.~~Agena acquisition. Excluding ~~the impact of~~ Agena, selling expense increased ~~17%~~7% for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 primarily as a result of ~~professional services costs as we made improvements to our corporate website, as well as~~ increased travel and tradeshow costs as we continued to resume in-person meetings and ~~events.~~events, higher stock-based compensation expense, and higher professional services costs as we made improvements to our corporate website.

General and Administrative
Labor costs, including non-cash stock-based compensation, and amortization of intangible assets drive the substantial majority of our general and administrative expense.

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

General and administrative expense
$ 20,212 $ 11,419 77 % $ 16,129 $ 17,017 (5 %) $ 54,543 $ 40,119 36 %
As a percentage of revenues
40 % 33 % 7 % 30 % 31 % (1 %) 33 % 32 % 1 %

General and administrative expenses ~~increased 77%~~decreased 5% for the three months ended ~~June 30,~~December 31, 2022 compared to the relevant prior year period, primarily as a result of reduced stock-based compensation expense as we reduced the number of PSUs expected to vest. General and administrative expenses increased 36% for the nine months ended December 31, 2022 compared to the relevant prior year period, primarily as a result of the Agena acquisition, including intangible amortization expense of ~~Agena, including $2,490 of amortization of intangibles associated with intangibles acquired in the Agena Acquisition.~~$7,321. Excluding ~~the impact of~~ Agena, general and administrative ~~expenses~~expense increased ~~33%~~8% for the ~~three~~nine months ended ~~June 30, 2022.~~
~~Excluding Agena, the increase in general and administrative costs for the first quarter of fiscal year 2023 was~~December 31, 2022, primarily as a result of higher stock-based compensation expense, ~~increased labor and labor-related expenses, and costs associated with the implementation of our enterprise resource planning tool for Agena,~~ partially offset by lower ~~legal expenses.~~intangible amortization expense as a result of the strengthening of the USD.

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

Three Months Ended June 30,

Percentage

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

2022

2021

Change

Research and development expense
$ 5,700 $ 2,811 103 % $ 4,797 $ 5,164 (7 %) $ 15,486 $ 10,588 46 %
As a percentage of revenues
11 % 8 % 3 % 9 % 9 % - % 9 % 8 % 1 %

Research and development expenses ~~increased 103%~~decreased 7% for the three months ended ~~June 30,~~December 31, 2022 compared to the relevant prior year period, primarily as a result of lower personnel costs and the ~~acquisition~~benefit of ~~Agena.~~a strong USD on research and development costs in Europe. Research and development expenses increased 46% for the nine months ended December 31, 2022 compared to the relevant prior year period, primarily due to the Agena acquisition. Excluding the impact of Agena, research and development costs for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 increased ~~23%~~relative to the prior year period primarily ~~as a result of~~due our purchase of in process research and development technology that we ~~intend to~~are further ~~develop~~developing in order to enhance a product offering in our Sterilization and Disinfection Control division.

Nonoperating Expense

Three Months Ended June 30,

Percentage

2022

2021

Change

Nonoperating (income) expense
$ 818 1,705 (52 %)

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

Nonoperating expense (income)
$ 1,486 (171 ) (¤) $ 2,915 $ 1,192 145 %
(¤) Not a meaningful comparison

Nonoperating expense for the three and nine months ended ~~June 30,~~December 31, 2022 is composed primarily of interest expense and amortization of the debt discount associated with the Notes and ~~net~~the Credit Facility as well as gains and losses on foreign currency transactions. Nonoperating expense was ~~lower in~~higher for the ~~first quarter of fiscal year 2023~~three and nine months ended December 31, 2022 compared to the ~~first quarter~~relevant prior year periods due to interest expense on the Credit Facility, which had a weighted average balance of ~~fiscal year~~$36,839 during the nine months ended December 31, 2022 ascompared with a weighted average balance of $17,993 for the ~~USD strengthened against the SEK and the euro resulting in realized and unrealized gains that~~nine months ended December 31, 2021, partially offset ~~interest expense~~by net foreign currency gains in the three and ~~amortization of debt discount on the Notes and the Credit Facility.~~nine months ended December 31, 2021.

Income Taxes

Three Months Ended June 30,

Percentage

2022

2021

Change

Income tax provision (benefit)
$ (3,974 ) $ (577 ) 589 %
Effective tax rate
73.4 % (40.7 %) 114 %

Three Months Ended December 31,

Percentage

Nine Months Ended December 31,

Percentage

2022

2021

Change

2022

2021

Change

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

Our effective income tax rate was ~~(73.4%~~76.5% and 384.8% for the three and nine months ended December 31, 2022, respectively, and 12.0% and (1.0%) for the three and nine months ended ~~June 30, 2022 and (40.7%) for the three months ended June 30, 2021.~~December 31, 2021, respectively. The effective tax rate for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 differed from the statutory federal rate of 21% primarily due to the share-based payment awards for employees and the effect of income generated in foreign ~~jurisdictions~~jurisdictions. The effective tax rate for the ~~first quarter of our fiscal year 2023~~nine months ended December 31, 2022 was higher than the same period in fiscal year 2022 primarily due to the ~~share based~~share-based compensation and the effect of income in foreign jurisdictions.

Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly.

Net Income (Loss)
Net income ~~for the three months ended June 30, 2022 varied~~(loss) varies with ~~the~~ changes in revenues, gross profit, and operating expenses (and included ~~$7,320~~$21,573 and ~~$3,432~~$9,859 of non-cash amortization of intangible assets acquired in a business ~~combination~~combinations and stock-based compensation expense, ~~respectively)~~respectively, for the nine months ended December 31, 2022).

Liquidity and Capital Resources

Our sources of liquidity include cash generated from operations, cash and cash equivalents on hand, cash available from our Credit Facility and ~~our~~the Open Market Sale Agreement^SM, described below, working capital, and potential additional equity and debt offerings. We believe that cash flows from operating activities and potential cash provided by borrowings from our Credit Facility or funds from our Open Market Sale Agreement^SM, when necessary, will be sufficient to meet our ongoing operating requirements, scheduled interest payments on debt, dividend payments, and anticipated capital expenditures. We currently expect to settle the Notes in shares of our common stock, but we may re-finance the debt, depending on conditions in the market and the share price of our common stock.

Our more significant uses of resources have historically included acquisitions, payments of debt and interest obligations, long-term capital expenditures, and quarterly dividends to shareholders. Working capital is the amount by which current assets exceed current liabilities. We had working capital of ~~$84,000~~$72,568 and $76,263 as of ~~June 30,~~December 31, 2022 and March 31, 2022, respectively. As of ~~June 30,~~December 31, 2022, and March 31, 2022, we had ~~$43,747~~$26,101 and $49,346, respectively, of cash and cash equivalents. We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

As of ~~June 30,~~December 31, 2022, $172,500 in aggregate principal Notes was outstanding and ~~$47,000~~$19,000 was ~~outstanding under the Credit Facility. In July 2022, we repaid $12,000 of the amount~~ outstanding under the Credit Facility.

In April 2022, we entered into an Open Market Sale Agreement^SM pursuant to which we may issue and sell, from time to time, shares of our common stock with an aggregate value of up to ~~$150 million.~~$150,000.

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

We may from time to time repurchase or take other steps to reduce our debt. These actions may include retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise. The amount of debt that may be retired, if any, could be material and would be decided at the sole discretion of our Board of Directors and would depend on market conditions, our cash position, and other considerations.

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Dividends

We have paid regular quarterly dividends since 2003. We declared and paid dividends of $0.16 per share during each of the ~~quarter~~quarters ended June 30, 2022, September 30, 2022, and December 31, 2022, as well as each quarter of fiscal year 2022.

In ~~July 2022,~~January 2023, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on ~~September~~March 15, ~~2022,~~2023, to shareholders of record at the close of business on ~~August 31, 2022.~~February 28, 2023.

Cash Flows

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

Three Months Ended June 30,

Nine Months Ended December 31,

2022

2021

2022

2021

Net cash (used in) provided by operating activities
$ (2,811 ) $ 9,589
Net cash provided by operating activities
$ 15,464 $ 29,921
Net cash (used in) investing activities
(225 ) (653 ) (8,468 ) (304,443 )
Net cash (used in) provided by financing activities
(1,407 ) 265 (28,936 ) 62,623

Cash flows from operating activities for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 ~~used $2,811. Of~~provided $15,464. Net income and non-cash adjustments totaled $34,588 for the ~~amount of cash used, $10,233 related~~nine months ended December 31, 2022 compared to ~~net decreases~~$32,838 for the nine months ended December 31, 2021. Adjustments to working capital accounts ~~$4,972 represented net loss for~~used $16,207 more cash in the ~~first quarter of 2023, partially offset by amortization~~nine months ended December 31, 2022 as compared to the nine months ended December 31, 2021, primarily due to lower collections on trade receivables and ~~stock-based compensation expense. Cash used in working capital during the first quarter of fiscal year 2023 included: payment of bonuses accrued at year end,~~ higher spend on inventory as we ~~work~~built supplies to ~~manage~~mitigate supply chain constraints by increasing our stock of raw materials inventory, as well as payments made for prepaid insurance policies and other annual renewals.  In the first quarter of fiscal year 2022, changes in operating assets and liabilities represented $1,430 as our cash bonus paid was smaller, and more receivables were collected during the quarter.risk. Cash used in investing activities was lower ~~during~~for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 compared to the ~~three~~nine months ended ~~June 30,~~December 31, 2021, due to ~~less purchases of property, plant, and equipment~~the Agena acquisition during fiscal year 2022, partially offset by the ~~period.~~Belyntic acquisition in fiscal year 2023. Cash used by financing activities primarily resulted from ~~$2,000~~$30,000 repaid on our Credit Facility during the ~~quarter.~~nine months ended December 31, 2022.

Contractual Obligations and Other Commercial Commitments

We are party to many contractual obligations that involve commitments to make payments to third parties in the ordinary course of business. For a description of our contractual obligations and other commercial commitments as of March 31, 2022, see our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the Securities and Exchange Commission on May 31, 2022.

On a consolidated basis, ~~at June 30,~~as of December 31, 2022, we had contractual obligations for open purchase orders of approximately ~~$24,081~~$19,441 for routine purchases of supplies and inventory, which are payable in less than one year. Open purchase orders ~~continue~~have decreased, in part, due to ~~increase as we take proactive~~our previously taken steps to mitigate risks in supply by increasing our ~~orders~~stock of certain critical raw materials.

~~Off-Balance Sheet Arrangements~~
As part of ~~June 30, 2022,~~the Belyntic acquisition, we ~~had no off-balance sheet arrangements or obligations.~~have agreed to pay $1,500 to the sellers if contractually specified patents related to the technology purchased are issued. We believe that it is probable that the patents will be issued and we will pay the sellers in full within the next 36 months. The liability is recorded in other long-term liabilities on the accompanying Condensed Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our reporting currency is U.S. dollars, and the functional currency of each of our material foreign subsidiaries is its respective local currency. Our operations include activities outside of the U.S. and we have currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar. We face currency exposures in our global operations as a result of various factors including intercompany currency denominated loans, selling our products in various currencies, purchasing raw materials and equipment in various currencies, and tax exposures not denominated in the functional currency. These exposures have increased as we have continued to expand internationally, including the acquisition of Gyros Protein Technologies Holding AB, which ~~conducts~~incurs a substantial portion of its business expenses in Swedish Krona, and the acquisition of Agena, which conducts a portion of its business in euros and a portion in Chinese ~~Yuan.~~Yuan Renminbi. Fluctuations in exchange rates have and may continue to adversely affect our results of operations, financial position, and cash flows. We do not hedge exposure to exchange rates.

Our Credit Facility bears interest at either a base rate or a ~~Eurodollar~~SOFR rate, plus an applicable spread. Based on the balance currently outstanding against our line of credit, if interest rates increased by 75 basis points, we would incur approximately ~~$353~~$143 of additional interest expense per year.

We have no derivative instruments. We have minimal exposure to commodity market risks.

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Item 4. Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As of ~~June 30,~~December 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

The Agena Acquisition was completed on October 20, 2021, and the financial results of Agena are included in our Condensed Consolidated Financial Statements as of March 31, 2022 and for the period then ended, and as of ~~June 30,~~December 31, 2022 and for the ~~three~~nine months then ended. During the time since acquisition, we have assessed the control environment of Agena and made certain changes to Agena's internal controls over financial reporting, including design changes that were required as we brought Agena onto our enterprise resource planning tool. We now consider Agena to be included in the scope of our assessment of internal controls over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

See Note 11. “Commitments and Contingencies” within Item 1. Financial Statements for information regarding any legal proceedings in which we may be involved.

Item 1A. Risk factors

During the ~~first quarter of fiscal year 2023,~~nine months ended December 31, 2022, there were no material changes from the risk factors described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended March 31, 2022.

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

~~On November 7, 2005, our Board~~Issuer Purchases of ~~Directors adopted a share repurchase plan which allows~~Equity Securities
The following table provides information about the Company's purchases of equity securities for the repurchase of up to 300,000 of our common shares, of which 162,486 have been purchased to date; however, no shares have been purchased under the plan in the last three fiscal years. This plan will continue until the maximum is reached or the plan is terminated by further action of the Board of Directors. During the three months ended June 30, 2022, 2,187 shares with a weighted average price paid per share of $188.67 were retained by the Company to settle employee withholding tax liabilities.periods indicated:

Total Number of Shares Purchased(1)

Average Price Paid Per Share

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

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

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

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Item 6. Exhibits

Exhibit No.
Description of Exhibit
3.1 Articles of Incorporation and Amendments to Articles of Incorporation (incorporated by reference from exhibit 3.1 to Mesa Laboratories, Inc.’s report on Form 10-Q filed on July 31, 2018 (Commission File Number: 000-11740)).
3.2 Amended and Restated Bylaws of Mesa Laboratories, Inc. (incorporated by reference from exhibit 3.1 to the Current Report on Form 8-K filed on May 10, 2019 (Commission File Number: 000-11740)).
~~10.1 α+~~10.1+ ~~Form~~Amendment No. 1 to Credit Agreement dated as of ~~2023 Performance Share Unit Agreement, issued under~~December 22, 2022 among the ~~2021 Equity Plan~~Company, the lenders party thereto, and JPMorgan Chase Bank, NA., as administrative agent.
31.1+
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+ XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+ Inline XBRL Taxonomy Extension Schema Document.
101.CAL+ Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+ Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB+ Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+ Inline XBRL Taxonomy Extension Presentation Linkbase Document
104+
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

~~α Indicates a compensatory arrangement~~
+ Filed herewith
* Furnished herewith

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Signatures

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

MESA LABORATORIES, INC.
(Registrant)

DATED: ~~August 4, 2022~~February 6, 2023 BY:
/s/ Gary M. Owens.
Gary M. Owens
Chief Executive Officer

DATED: ~~August 4, 2022~~February 6, 2023 BY:
/s/ John V. Sakys
John V. Sakys
Chief Financial Officer

Page 2425

	Three Months Ended June 30,					Percentage			Three Months Ended December 31,					Percentage			Nine Months Ended December 31,				Percentage
	2022			2021		Change			2022		2021			Change			2022		2021		Change
Revenues	$	50,453		$	34,920		44	%	$	54,287	$	54,696			(1	%)	$	163,489	$	125,456		30	%
Gross profit		31,341			22,211		41	%		32,765		28,627			14	%		100,492		73,978		36	%
Operating expenses		35,935			19,088		88	%		29,363		31,139			(6	%)		97,689		69,166		41	%
Operating (loss) income		(4,594	)		3,123		(247	%)
Net (loss) income	$	(1,438	)	$	1,995		(172	%)
Operating income (loss)										3,402		(2,512	)		(¤)			2,803		4,812		(42	%)
Net income (loss)									$	451	$	(2,060	)		(¤)		$	319	$	3,655		(91	%)

	Total Number of Shares Purchased(1)			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)		Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
October 2022		-			-		-		162,486
November 2022		(1,757	)		188.96		-		162,486
December 2022		-			-		-		162,486
Total		(1,757	)		188.84		-		162,486

Exhibit No.	Description of Exhibit
3.1	Articles of Incorporation and Amendments to Articles of Incorporation (incorporated by reference from exhibit 3.1 to Mesa Laboratories, Inc.’s report on Form 10-Q filed on July 31, 2018 (Commission File Number: 000-11740)).
3.2	Amended and Restated Bylaws of Mesa Laboratories, Inc. (incorporated by reference from exhibit 3.1 to the Current Report on Form 8-K filed on May 10, 2019 (Commission File Number: 000-11740)).
~~10.1 α+~~10.1+	~~Form~~Amendment No. 1 to Credit Agreement dated as of ~~2023 Performance Share Unit Agreement, issued under~~December 22, 2022 among the ~~2021 Equity Plan~~Company, the lenders party thereto, and JPMorgan Chase Bank, NA., as administrative agent.
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+	Inline XBRL Taxonomy Extension Schema Document.
101.CAL+	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+	Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB+	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104+	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

DATED: ~~August 4, 2022~~February 6, 2023	BY:	/s/ Gary M. Owens. Gary M. Owens Chief Executive Officer


DATED: ~~August 4, 2022~~February 6, 2023	BY:	/s/ John V. Sakys John V. Sakys Chief Financial Officer