MESA LABORATORIES INC CO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Mesa Laboratories, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Mesa Laboratories, Inc. (the Company) as of March 31, 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for the year ended March 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2024, based on criteria established inInternal Control—* Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated June 28, 2024 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of March 31, 2024, based on criteria established inInternal Control—* Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Intangible Assets Acquired in the GKE Business Combination

As described in Note 4 to the financial statements, the Company acquired 100% of the outstanding shares of GKE for consideration of $87.2M during the year ended March 31, 2024. The transaction was accounted for as a business combination using the acquisition method of accounting. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including intangible assets acquired primarily related to customer relationships and trademarks and trade name. The customer relationships were valued using a multi-period excess earnings income approach (a form of the income approach) that discounted expected future cash flows to fair value which utilize assumptions related to revenue projections, free cash flows and discount rates. The trademarks and trade name were valued using a relief from royalty method which utilizes assumptions related to revenue projections and royalty rates.

We identified the fair value of these intangible assets as a critical audit matter because auditing management's significant assumptions, including revenue projections, free cash flows, royalty rates, attrition rates and discount rates, in developing the estimates required a high degree of auditor judgment and increased audit effort, including the use of valuation specialists to assist in performing related procedures and evaluating the audit evidence obtained.

Our audit procedures related to the significant assumptions used by management in estimating the fair value of certain intangible assets included the following, among others:

Goodwill and Intangible Asset Impairments

As described in Notes 1 and 6 to the financial statements, the Company recognized impairment losses on goodwill and intangible assets of $156.9M and $117.6M, respectively, during the year ended March 31, 2024.

Management tests for goodwill impairment at the reporting unit level on an annual basis during the last quarter of its fiscal year as of January 1 st, or more frequently if facts, events and circumstance indicate it is more likely than not that the fair value of a given reporting unit is less than its carrying value. Management estimates fair values in connection with quantitative impairment evaluations based on discounted cash flow and market multiple models which utilize assumptions related to revenue projections, estimated gross margins, discount rates and market multiples. Based on management’s testing, the Company recognized $118.7M and $38.2M of goodwill impairment within the Company’s Clinical Genomics reporting unit and within reporting units within the Biopharmaceutical Development segment, respectively.

Impairment assessments of finite-lived intangible assets are conducted if events or conditions indicate that the asset groups carrying amounts may not be recoverable. If impairment indicators are present, management determines whether the carrying value of the asset group is recoverable through undiscounted estimated future cash flows. If the asset group is determined not to be recoverable, management estimates the asset groups and individual assets fair value based on discounted cash flow and market multiples which utilize assumptions related to revenue projections, estimated gross margins, discount rates, attrition rates and royalty rates. Based on management’s testing, the Company identified $117.6M of intangible asset impairment within the Clinical Genomics segment.

We identified goodwill and intangible asset impairment assessments as a critical audit matter because auditing management's assessments, including the significant assumptions, involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists to assist in performing related procedures and evaluating the audit evidence obtained.

Our audit procedures related the goodwill and intangible asset impairment assessments included the following, among others:

/s/ RSM US LLP

We have served as the Company’s auditor since 2023.

Los Angeles, California

June 28, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Mesa Laboratories, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited Mesa Laboratories, Inc.’s (the Company) internal control over financial reporting as of March 31, 2024, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of March 31, 2024, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheet of Mesa Laboratories, Inc. as of March 31, 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year ended March 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements) of the Company, and our report dated June 28, 2024, expressed an unqualified opinion.

As described in Management's Annual Report on Internal Control Over Financial Reporting, management has excluded GKE GmbH, SAL GmbH, and Beijing GKE Science & Technology Co. Ltd. (together, “GKE”) from its assessment of internal control over financial reporting as of March 31, 2024 because GKE was acquired by the Company in a business combination in the third quarter of fiscal year 2024. We have also excluded GKE from our audit of internal control over financial reporting. GKE consists of wholly owned subsidiaries whose total assets and net income represent approximately 25% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2024.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s assessment.

Management did not have adequate supervision and review controls over the complex accounting for significant and unusual transactions. Specifically, the supervision and review of the accounting for goodwill impairment and acquisitions, including the work performed by external advisors, was not designed to operate at a sufficient level of precision.

Management did not have adequate supervision and review controls over the determination of the useful lives of recently acquired intangible assets. Specifically, management selected a useful life for an acquired asset that was not consistent with the economic life used to value the asset.

Certain controls regarding user access and change management to the Company’s enterprise resource planning tool, a part of the information technology general controls (“ITGC”), were not operating effectively. This material weakness extended to automated and manual business process controls across the financial reporting and business transaction cycles which rely upon the affected ITGCs.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated June 28, 2024 on those financial statements.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Los Angeles, California

June 28, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Mesa Laboratories, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Mesa Laboratories, Inc. (the “Company”) as of March 31, 2023, the related consolidated statements of operations, comprehensive (loss), stockholders' equity, and cash flows for each of the years in the two-year period ended March 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Plante & Moran, PLLC

We served as the Company’s auditor from 1986 to 2023.

Denver, Colorado

May 30, 2023

Consolidated****Balance Sheets

(In thousands, except share amounts)

Consolidated****Statements of Operations

(In thousands, except per share data)

Consolidated Statements of Comprehensive (Loss)

(In thousands)

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

*Accumulated Other Comprehensive (Loss) Income.

ConsolidatedStatements of Cash Flows

(In thousands)

Notes toConsolidatedFinancial Statements

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

Note*1.* Description of Business andSummary of****Significant Accounting Policies

Description of Business

In this Annual Report on Form10-K, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company,” or "Mesa."

We are a global leader in the design and manufacture of life sciences tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare, and medical device industries. We offer products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world. 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* March 31, 2024*, we managed our operations infour reportable segments, or divisions:

Unallocated corporate expenses and other business activities are reported within Corporate and Other.

Principles of Consolidation and****Basis of Presentation

Our Consolidated Financial Statements are 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 (“GAAP”), and include our accounts and those of our wholly owned subsidiaries after elimination of all intercompany accounts and transactions.

Management Estimates

The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our Consolidated Financial Statements and accompanying notes. Actual results could differ from our estimates under different assumptions or conditions.

Summary of Significant Accounting Policies

Foreign Currency

Exchange rate adjustments resulting from foreign currency transactions are recognized in net earnings, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income within stockholders’ equity. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than the U.S. dollar are translated into U.S. dollars at period end exchange rates, and revenue and expense accounts are translated at weighted average period rates.

Fair Value Measurements

Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. We determine fair value based on the following input hierarchy:

Level1: Quoted prices for identical assets or liabilities in active markets.

Level2: Observable inputs other than prices included in Level1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that arenot active, or other inputs that are observable or that can be corroborated with observable market data.

Level3: Unobservable inputs supported by little orno market activity. Pricing models, discounted cash flow methodologies, and other similar techniques involving significant management judgment or estimation typically require unobservable inputs.

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Assets recognized or disclosed at fair value in the Consolidated Financial Statements on a nonrecurring basis are measured at fair value if determined to be impaired or if purchased pursuant to our acquisition of a business, including items such as inventory, property and equipment, operating lease assets, goodwill, and other intangible assets. Fair values assigned to assets acquired and liabilities assumed in acquisitions, except deferred revenues and certain other exceptions as defined by applicable accounting guidance, are measured using Level3 inputs.

Revenue Recognition

Our revenues come from product sales, which include consumables and hardware, and services, which include discrete and ongoing maintenance, calibration, and testing services. Revenues are recognized when or as we satisfy our performance obligations under the terms of a contract, which occurs when control of the promised products or services transfers to our customers. We recognize the amount of consideration we expect to receive in exchange for transferring products or services to our customers (the transaction price) as revenue. For all revenue contracts, prices are fixed at the time of purchase andno price protections or variables are offered. The significant majority of our revenues and related receivables are generated from contracts with customers that are12 months or less in duration.

We generally recognize revenues as follows:

Product sales:* *Our performance obligations related to product sales generally consist of the promise to sell tangible goods to distributors or end users. Control of these goods is typically transferred upon shipment, at which time our obligation to the customer is satisfied and revenue is recognized. Purchase orders typically provide evidence of an arrangement for product sales. Products sold include an assurance-type warranty which is accounted for as part of accrued warranty expense.

Services:We generate service revenues from discrete and ongoing maintenance, calibration, and testing services performed with respect to our physical products. For discrete services, our obligation to complete specified work is satisfied and revenue is recognized upon performance of the service. Obligations arising from ongoing service contracts in which we promise to stand ready to provide maintenance or other services on an as-needed basis for a certain period of time are satisfied by completing any services that are contractually required during the contract period, if requested by the customer, or simply by the passage of time ifno services are requested. For ongoing service contracts, revenue is recognized on a straight-line basis over the life of the contract in a faithful depiction of our obligation to provide services over the contract period. Evidence of a service arrangement* may*be in the form of a formal contract or a purchase order.

Collectability is reasonably assured through our customer review process, and payment is typically due within60 days or less.

We expense commission costs (typically our only significant incremental cost to obtain a contract) as incurred and to account for shipping and handling costs as fulfillment costs. The substantial majority of our contracts have original durations ofone year or less, and we have electednot to disclose the expected timing or allocated transaction prices of future performance obligations such as obligations to perform maintenance and repair services. Additionally, we have elected tonot assess whether a significant financing component exists when the period between when we perform our performance obligation and when the customer remits payment isone year or less.None of our contracts contained financing components as of or for the fiscal years ended* March 31, 2024* or2023.

Contracts with customers* maycontain multiple obligations. For such arrangements, the transaction price is allocated to each obligation based on the estimated relative standalone selling prices of the promised products or services underlying each obligation. Standalone selling prices are based on the price at which the product or service would be sold separately. If the standalone selling price isnot* observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines. In limited circumstances, for obligations with highly variable or unobservable standalone selling prices, we* mayassign standalone prices to obligations based on the residual transaction price after all observable standalone selling prices have been determined. Discounts may*be approved at the time of purchase and are included within a contract’s fixed transaction price. Discounts are typically allocated to obligations included in the contract based on the standalone values of such obligations. All expected and actual consideration from customers is included in the transaction price.

Shipping and Handling

Payments made by customers to us for shipping and handling costs are included in revenues on the Consolidated Statements of Operations, and our expenses are included in cost of revenues. We account for shipping and handling costs arising from contracts with customers as fulfillment costs. Shipping and handling for inventory and materials we purchase is included as a component of inventory on the Consolidated Balance Sheets and is expensed to cost of revenues when products are sold.

Unearned Revenues

Certain of our products* maybe sold with associated time-based service contracts whereby we provide repairs, technical support, parts, and various analytical or maintenance services. In the event these contracts are paid in advance by the customer, the associated amounts are recorded as an unearned revenue liability and recognized as revenue ratably over the term of the service period, generallyone* year. Prepayments from customers with respect to other products and services are likewise recorded as unearned revenue liabilities and are recognized to revenue when earned.

Accrued Warranty Expense

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

Accounts Receivable*** and Allowance for Credit Losses***

All trade accounts receivable are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for any write-offs and net of allowances for credit losses. Allowances for credit losses represent our best estimate and current expectation of future credit losses from trade accounts. We estimate credit losses based on historical information, current and expected future economic and market conditions, and reviews of the current status of customers’ trade accounts receivable. In circumstances in which we become aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. To mitigate credit risk, we consider the creditworthiness of new and existing customers, establish credit limits, and regularly review outstanding balances and payment histories. We* mayrequire pre-payments from customers under certain circumstances and may*limit future purchases until payments are made on past due amounts.

We donot believe our trade accounts receivable represent significant concentrations of credit risk due to our diversified portfolio of individual customers and geographical areas.

Differences* mayarise between estimated and actual losses, which could materially affect the provision for credit losses and, therefore, net earnings. We recorded $790, $736, $304 and of expense associated with credit losses for the years ended March 31, 2024,*2023, and2022, respectively.

Cash Equivalents

We classify any highly liquid investments with maturities ofthree months or less at the date of purchase as cash equivalents;no cash equivalents are included on our Consolidated Balance Sheets as of* March 31, 2024or2023.*

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Inventories

Inventories are stated at the lower of cost or net realizable value. Inventory is recorded to cost of products upon sale using a weighted average costing methodology. Inventories purchased as part of a business combination are recorded at fair value. Our work in process and finished goods inventories include the costs of raw materials, labor and overhead, which are estimated based on trailingtwelve months of expense and standard labor hours for each product. We evaluate labor and overhead costs annually unless specific circumstances necessitate a mid-year evaluation for specific items.

We monitor inventory costs relative to selling prices and perform physical cycle count procedures on inventories throughout the year to determine if a lower of cost or net realizable value reserve is necessary. We estimate and maintain an inventory reserve as needed for such matters as excess or obsolete inventory, shrinkage, and scrap. This reserve* mayfluctuate as our assumptions change due to new information, discrete events, or changes in our business such as entering new markets or discontinuing a specific product; however, once inventory is written down, a new cost basis is established that isnot* subsequently written back up in future fiscal years.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, less accumulated depreciation, except for assets acquired in acquisitions, which are recorded at fair value. Expenditures for major renewals and improvements that extend the life of the asset are capitalized, while expenditures for minor replacements, maintenance, and repairs are expensed as incurred.

Depreciation is calculated using the straight-line method over the assets’ estimated useful lives. Upon asset retirement or disposal, accounts are relieved of cost and accumulated depreciation, and any related gain or loss is reflected in our results of operations. In some cases, particularly with respect to business consolidation or closure activities, accelerated depreciation* may*be required for the revised remaining useful lives of assets designated to be abandoned in the future.

At least annually, we evaluate and adjust as necessary the estimated useful lives of property, plant and equipment. Any changes in estimated useful lives are recorded prospectively. Estimated useful lives of significant classes of depreciable assets are as follows:

Land isnot depreciated and construction in progress isnot depreciated until placed in service, at which time it is assigned a useful life consistent with the nature of the asset.

Leases

We determine whether contractual arrangements contain a lease at the inception of the arrangement. If a lease is identified in an arrangement, we recognize a right-of-use asset ("ROU") and liability on our Consolidated Balance Sheets and determine whether the lease should be classified as a finance or operating lease. We donot have any finance leases; our operating leases have remaining terms betweentwo months andtwelve years as of* March 31, 2024.We donot* recognize assets or liabilities for leases with original durations of less than12 months, and our short-term leases arenot material.

A contract is a lease or containsone when (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease paymentsnot yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the calculation of operating lease liabilities, adjusted for prepayments. Adjustments would also be made for accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets,none of which are present in any of our current lease contracts. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease, otherwise we use our incremental borrowing rate based on the information available at lease commencement. When we acquire a business, we generally retain the acquiree's classification of its leases, and we evaluate ROU assets and liabilities in accordance with ASC842.

Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Lease expense is recorded in cost of revenues or selling, general and administrative, or research and development expense on our Consolidated Statements of Operations, depending on the nature of use of the underlying asset. Many of our leases includeone or more renewal or termination options exercisable at our discretion, which are included in the determination of the lease term if we are reasonably certain to exercise the option. Renewal terms typically allow us to extend lease terms between1 and3 years. We have also entered into lease agreements that have variable payments related to certain indexes. Variable lease payments are recognized in the period in which those payments are incurred. All non-lease components are readily identifiable in our lease contract. We account for non-lease components separately from the lease component to which it is related.

Acquired Intangible Assets, Impairment Testing

Our goodwill and other intangible assets result from acquisitions of existing businesses. Intangible assets affect the amount of future amortization expense and possible impairment losses we* may*incur.

Intangible assets with finite lives are amortized over their useful lives using the straight-line method, and amortization expense is recorded within cost of revenues or general and administrative expense in the Consolidated Statements of Operations. Impairment assessments are conducted if events or conditions indicate that the carrying value of an asset or asset group* may**not* be recoverable. Events or conditions indicating potential impairment include but arenot limited to changes in the competitive landscape, any internal decisions to pursue new or different technology strategies, losses of significant customers, or significant changes in business performance or in the markets and industries we serve, including adverse changes in the prices paid for our products or changes in the size of the markets for our products. If impairment indicators are present, we determine whether the carrying value of the underlying intangible asset or asset group is recoverable through undiscounted estimated future cash flows. If the asset or asset group isnot found to be recoverable, we estimate the asset's fair value using Level3 inputs and discounted cash flow models and recognize impairment losses as necessary. If the estimate of an intangible asset’s remaining useful life is changed in response to impairment testing, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.

Acquired intangible assets deemed to have finite lives are amortized on a straight-line basis over their useful lives, generally ranging from three tofifteen years. We determine the useful lives of finite intangible assets based on the specific facts and circumstances related to each asset, and we evaluate the appropriateness of assigned useful lives at least annually. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and economic factors such as competition or specific market conditions.

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Goodwill isnot subject to amortization. We test goodwill for impairment as of* January**1st* each year, or more frequently if events and circumstances indicate it is more likely thannot that the fair value of a given goodwill reporting unit is less than its carrying value. Events that could indicate impairment and that would trigger interim impairment testing include but arenot limited to: adverse current or expected economic, market, or industry-specific conditions, including a decline in our market capitalization; sustained adverse changes or expected changes in business climate or in the operational performance of the business; adverse changes in legal factors; and adverse actions or assessments by a regulator. We monitor for indications of impairment throughout the year and perform qualitative and quantitative impairment tests as necessary based on quarterly preliminary assessments of our performance. Our annual impairment tests typically begin with a qualitative assessment, and further quantitative assessments are performed if we determine it is more likely thannot that the fair value of a reporting unit is greater than the carrying amount. We also perform quantitative assessments of reporting units at least everyfive years, irrespective of whether any indicators exist that suggest a reporting unit* may*be impaired.

The fair value measurements used in testing intangible assets for impairment are typically based on discounted cash flow projection and market multiple models, using Level3 inputs. See “Fair Value Measurements” for a description of input levels. Significant assumptions include, among others, the weighted average cost of capital, expected revenues growth, expected cash outflows, and terminal growth rates. In certain cases, management uses other market information when available to estimate fair value. Impairment losses are recognized through earnings and represent excess carrying value over estimated fair value.

During thefourth quarter of fiscal2024, we recorded impairment losses related to goodwill and intangible assets totaling $274,533 in our Clinical Genomics and Biopharmaceutical Development divisions. See Note6. “Goodwill and Intangible Assets, Net.”

Research & Development Costs

We conduct research and development activities for the purpose of developing new products and enhancing the functionality, effectiveness, reliability, and accuracy of existing products. Research and development costs are expensed as incurred. Research and development expense is predominantly comprised of labor costs andthird-party consultants, but we* may*from time to time purchase in-process research and development with the intention of developing a saleable product.

Convertible Debt

Our convertible 1.375% Convertible Senior Notes due2025 (the*"2025* Notes") donot have material embedded derivatives and are recorded as long-term liabilities in our Consolidated Balance Sheets as of* March 31, 2024.When the2025* Notes are withinone year of maturity, or when the criteria necessary for conversion as described in Note8. “Indebtedness” have been met, the2025 Notes will be reclassified as short-term liabilities. We* maysettle the2025* Notes in shares of common stock or in cash, as the case* maybe. We apply the if-converted method to calculate the potentially dilutive impact of the2025* Notes on net (loss) earnings per share. Debt issuance costs are amortized to bring the carrying value of the2025 Notes to face using the effective interest method over the life of the indenture governing the2025 Notes.

Stock-based Compensation

We issue shares in the form of stock options and full-value awards as part of employee and non-employee director compensation pursuant the Amended and Restated Mesa Laboratories, Inc.2021 Equity Incentive Plan (the*"2021* Equity Plan"). Our shareholders approved an amendment to the2021 Equity Plan during fiscal year2024, increasing the number of shares that can be issued under the plan from330 shares to660 shares. Some shares are fully vested and outstanding under our Mesa Laboratories, Inc.2014 Equity Plan.

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

For purposes of counting the shares remaining under the2021 Equity Plan, each share underlying a stock option or a full value award counts asone share used. We issue new shares of common stock upon the exercise of stock options and the vesting of time-based restricted stock units ("RSUs") and performance-based RSUs ("PSUs").

Stock options and service-based stock awards generally vest equally over athree year term and stock options generally expire aftersix years. Awards granted to non-employee directors generally vestone year from the grant date. We recognize stock-based compensation expense based on the fair value of stock awards at the grant date and recognize the expense over the related service period using a straight-line vesting expense schedule. The2021 Equity Plan includes retiree provisions which result in the acceleration of stock-based compensation for expense for retiree-eligible participants. Compensation expense related to employees eligible to retire at grant date or during the award term is recognized on a straight-line basis between the grant date and the date of retirement eligibility, and the applicable retirees retain full rights to the awards upon retirement as per the plan provisions.

Expense for PSUs is recognized, net of estimated forfeitures, over the related service period using a straight-line vesting schedule when it is probable that performance goals will be achieved. Performance goals are determined by the Board of Directors and* mayinclude measures such as revenues growth and profitability targets. A portion of the PSUs include a market condition in the form of a relative total shareholder return "TSR" modifier, which adjusts the quantity of shares earned up or down by a maximum of20%* pursuant to a market-based measure of performance comparing Mesa's share price to a peer group over athree year period. Compensation expense on stock awards subject to performance conditions is recognized over the longer of the estimated performance goal attainment period or time vesting period. As of each reporting period, we estimate the number of PSUs expected to vest based on our current estimate of performance compared to the target metrics in the award documents and adjust for the relative TSR percentage, and if necessary, a cumulative-effect adjustment is recorded.

The grant date fair value of the PSUs with a relative TSR modifier is determined using the Monte Carlo simulation valuation model.

The fair value of RSUs and performance-based RSUs without a market condition are based on the closing price of Mesa's common stock on the award date, less the present value of expected dividendsnot received during the vesting period. RSUs we issue are equivalent to nonvested shares under the applicable accounting guidance.

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The fair value of each granted stock option is estimated on the grant date using the Black-Scholes option pricing model. The assumptions used to calculate the fair value of granted options reflect market conditions and our historical experience. We estimate expected forfeitures using a dynamic forfeiture model based on company specific historical data when determining the amount of stock-based compensation costs to recognize each period. The expected life of options represents the estimated period of time until exercise and is based on historical experience of similar awards for similar subsets of our employee population, giving consideration to the contractual terms, vesting schedules, and expectations of future employee behavior. Expected stock price volatility is based on the historical volatility of our own stock price over the period of time commensurate with the expected life of the award. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. The dividend yield assumption is based on our anticipated cash dividend payouts. To date, we have identifiedno instances in which an adjustment to our observable market price would be required compared to the closing price of Mesa's common stock on the award date as an input to our fair value calculations.

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

Net (Loss) Earnings Per Share

Basic net (loss) earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted (loss) earnings per share (“diluted EPS”) is computed similarly to basic EPS, except it includes the effects of potential dilution that could occur if dilutive securities vested, were exercised or converted. Potentially dilutive securities include stock options, RSUs and PSUs (collectively “stock awards”), as well as common shares underlying the2025 Notes. Potentially dilutive securities are excluded from the calculation of diluted EPS in the event they are subject to performance conditions that havenot yet been achieved or if they would otherwise be antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss; in such cases the inclusion of the potential common shares would have an antidilutive effect. See Note10. “Net (Loss) Earnings per Share” for EPS calculations for the years ended* March 31, 2024,*2023 and2022.

Income tax expense includes U.S., state, local and international income taxes. Deferred tax assets and liabilities are recognized and reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax basis of existing assets and liabilities used for income tax purposes. The tax rate used to determine the deferred tax assets and liabilities is based on the enacted tax rate for the year and the manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely thannot be realized.

From time to time, we engage in transactions in which the tax consequences* maybe subject to uncertainty, such as acquisitions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We prepare and file tax returns based on interpretation of tax laws and regulations. In the normal course of business, our tax returns are subject to examination by various taxing authorities. Such examinations mayresult in future tax, interest and penalty assessments by these taxing authorities. In determining our income tax provision for financial reporting purposes, we establish a reserve for uncertain tax income positions unless we determine it isnot* more likely thannot that such positions would be sustained upon examination, based on their technical merits. That is, for financial reporting purposes, we only recognize tax benefits taken on the tax return that we believe are more likely thannot of being sustained. There is considerable judgment involved in determining whether positions taken on the tax return are more likely thannot of being sustained. We adjust our tax reserve estimates periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations. The consolidated income tax provision of any given year includes adjustments to prior year income tax accruals that are considered appropriate and any related estimated interest. Our policy is to recognize, when applicable, interest and penalties on uncertain income tax positions as part of general administrative expense. (See Note12. “Income Taxes”).

Acquisition Related Contingent Consideration Liabilities

Acquisition related contingent consideration liabilities consist of estimated amounts due under various acquisition agreements and* maybe based on revenues growth, specified profitability growth metrics, or the attainment of milestones such as patent approvals. At each reporting period, we evaluate the expected future payments and any associated discount rates to determine the fair value of the contingent consideration. We adjust contingent consideration to fair value at each reporting period through general and administrative expenses in the Consolidated Statements of Operations. See Note13.* “Commitments and Contingencies” for information regarding existing contingent consideration liabilities as of* March 31, 2024*.

In addition to contingent consideration liabilities, we* mayhold back a portion of the purchase price related to an acquisition as security against potential indemnification losses. Such holdbacks relate to circumstances that existed as of the date of acquisition, and as such they arenot* considered contingencies; however, amounts ultimately paid related to holdbacks* may*differ from the estimates management makes upon acquisition, depending upon whether pre-acquisition liabilities are identified during the holdback period.

LegalContingencies

We are party to various claims and legal proceedings that arise in the normal course of business. We record an accrual for legal contingencies when we determine it is probable we have incurred a liability and can reasonably estimate the amount of the loss (See Note13. “Commitments and Contingencies”).

Purchase Accounting for Acquisitions

We account for all business combinations in which we obtain control over another entity using the acquisition method of accounting, which requires most assets (both tangible and intangible) and liabilities to be recorded at fair value at the date of acquisition. The excess of the purchase price over the fair value of acquired assets less liabilities is recognized as goodwill. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses, which rely heavily on Level3 inputs. These types of analyses require us to make and monitor assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. For all material acquisitions, we engage external valuation specialists to aid management in preparing our fair value models. Certain adjustments to the assessed fair values of acquired assets or liabilities made subsequent to the acquisition date but within the measurement period are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded within earnings. We expense all acquisition related costs, such as legal and advisory fees, as incurred in general, and administrative expenses in the Consolidated Statements of Operations.

Results of operations of acquired companies are included in our Consolidated Financial Statements from the date of the acquisition forward. If actual results arenot consistent with our assumptions and estimates, or if our assumptions and estimates change due to new information, we* maybe exposed to additional losses. For the years ended March 31, 2024,*2023 and2022, we acquired businesses for total net purchase prices of $87,187, $6,140, and $300,793, respectively.

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Business Consolidation Costs

We estimate liabilities for business closure activities by gathering detailed estimates of costs and, if applicable, asset sale proceeds, for each business consolidation initiative. For a typical business consolidation initiative, we estimate costs of employee severance, impairment of property and equipment and other assets including estimating net realizable value, if necessary, accelerated depreciation, termination payments for contracts and leases, and any other qualifying costs related to an exit plan. Such charges represent our best estimates; however, they require assumptions about plans that* may*change over time. The estimated costs are grouped by specific projects within the overall exit plan and are monitored at each reporting period. Any subsequent changes to the original estimates are recorded in current earnings.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. It isnot possible to accurately predict the future impact of such events and circumstances. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected in the near term:

We donot believe that there are any significant risks that havenot already been disclosed in the Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In* November 2023,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")No. 2023-07, "Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures." ASUNo. 2023-07 requires all annual disclosures currently required by Topic280 to be included in interim periods and requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and applicable additional measures of segment profit or loss used by the CODM when allocating resources and assessing business performance. The ASU is effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024*on a retrospective basis. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statements.

In* December 2023,the FASB issued ASUNo.* 2023-09, "Income Taxes (Topic740): Improvements to Income Tax Disclosures." ASUNo. 2023-09, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for fiscal years beginning after* December 15, 2024 (our fiscal year2026*), with early adoption permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statements.

We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described above, they are eithernot applicable to us or arenot expected to have a significant impact on our consolidated financial statements.

RecentlyAdopted*** Accounting Pronouncements***

There have beenno accounting pronouncements applicable to us that we were required to adopt or that we have elected to adopt during fiscal year2024.

Note2**. Revenue**

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

Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, data loggers, and process challenge devices. Hardware* may*be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.

Consumables are typically used on aone-time basis and require frequent replacement in our customers' operating cycles. Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, 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 sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Revenues from hardware and consumables are recognized upon transfer to the customer, typically at the point of shipment.

We also offer maintenance, calibration, and testing service contracts. These contracts result in revenues recognized over time, for example, when we are obligated to perform labor and replace parts on an as-needed basis over a contractually specified period, or at a point in time, upon completion of a specific, discrete service. In many cases, our contracts contain both revenues recognized over time and revenues recognized at a point in time.

We evaluate our revenues internally based on business division and the nature of goods and services provided.

The following tables present disaggregated revenues from contracts with customers for the years ended* March 31, 2024,*2023 and2022:

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(1) Beginning* October 16, 2023,revenues of $8,214 from GKE GmbH and SAL GmbH are included in the Sterilization and Disinfection Control division. Revenues of $1,075 from GKE China are included in the Sterilization and Disinfection Control division beginning on January 1, 2024.*

(2) Revenues in the Clinical Genomics division represent transactions subsequent to the acquisition of Agena Bioscience, Inc. on* October 20, 2021**.*

Contract Balances

Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in either unearned revenues or customer deposits, called contract liabilities. Short-term contract liabilities are included within unearned revenues in the accompanying Consolidated Balance Sheets, and long-term contract liabilities are included within other long-term liabilities in the accompanying Consolidated Balance Sheets. The significant majority of our revenues and related receivables and contract liabilities are generated from contracts with customers with original expected durations of12 months or less. Contract liabilities will be recognized to revenue as we satisfy our obligations under the terms of the contracts.

A summary of contract liabilities is as follows:

Note3. Fair Value Measurements

Our financial instruments generally consist of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values of cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value; they are classified within Level1 of the fair value hierarchy.

The financial instruments that subject us to the highest concentration of credit risk are cash and accounts receivable. We maintain relationships and cash deposits at multiple banking institutions across the world in an effort to diversify and reduce risk of loss. Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales. No customers accounted for more than10% of total trade receivables as of* March 31, 2024*.

As of* March 31, 2024,we had outstanding $172,500 aggregate principal of 1.375% convertible senior notes due August 15, 2025,which we refer to as our2025* Notes. We estimate the fair value of the2025 Notes using Level2 inputs based on the last actively traded price or observable market input preceding the end of the reporting period. The estimated fair value and carrying value of the2025 Notes were as follows:

See Note15. "Subsequent Events" for information related to our partial repurchase of the2025 Notes in* April 2024.*

The Belyntic acquisition obligates us to pay contingent consideration of up to $1,500 cash upon regulatory approval of certain patent applications (see Note13. "Commitments and Contingencies"). We estimate the fair value of the remaining contingent consideration using Level3 inputs and a probability-weighted outcome analysis based on our expectations of patent approval leveraging our historical experience and expert input, and we adjust the estimated fair value at each reporting period through earnings. The fair value of the remaining contingent consideration was $571 as of* March 31, 2024,*of which $436 is recorded in Other accrued expenses and $135 is recorded in acquisition-related holdbacks on the accompanying Consolidated Balance Sheets.

Amounts recognized or disclosed at fair value in the consolidated financial statements on a nonrecurring basis include the initial recognition and disclosure of most assets and liabilities purchased in business acquisitions and any related measurement period adjustments (see Note4. "Significant Transactions"). Additionally, assets such as property and equipment, operating lease assets, goodwill and other intangible assets are adjusted to fair value if determined to be impaired. We recorded $274,533 of non-cash impairment losses to goodwill and other intangible assets during the fiscal year ended* March 31, 2024 (see Note6.* "Goodwill and Intangible Assets, Net" for further information);no impairment losses were recorded during the years ended* March 31, 2023or March 31, 2022.Fair values of such assets and liabilities require measurement using Level3* inputs.

There wereno transfers between the levels of the fair value hierarchy during the fiscal years ended* March 31, 2024and2023*.

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Note4. Significant Transactions

Acquisition of GKE

We acquired 100% of the outstanding shares of GKE GmbH and SAL GmbH effective* October 16, 2023,on which date we began including the entities as wholly owned subsidiaries in our consolidated financial statements. Upon approval by applicable Chinese regulators, we acquired 100% of the outstanding shares of Beijing GKE Science & Technology Co. Ltd. (“GKE China,” and, together with GKE GmbH and SAL GmbH, “GKE”), effective December 31, 2023**(the "GKE acquisition"). GKE China is included as a wholly owned subsidiary in our Consolidated Balance Sheets as of December 31, 2023,and we began consolidating the results of its operations on January 1, 2024.*

GKE develops, manufactures and sells a highly competitive portfolio of chemical sterilization indicators, biologics, and process challenge devices to protect patient safety across global healthcare markets. GKE is included in our Sterilization and Disinfection Control ("SDC") division, and GKE's strengths in chemical indictors are complementary to SDC's strengths in biologic indicators, as chemical and biologic indicators are used in the same sterility validation workflows. Additionally, GKE’s healthcare-focused commercial capabilities in Europe and Asia greatly expand our reach in the healthcare markets in those geographies. We are working to obtain regulatory510(k) clearance on certain GKE products for sale in the United States, which would further expand organic revenues growth opportunities from the GKE business.

Total consideration for the GKE acquisition was $87,187, net of cash and financial liabilities and inclusive of working capital adjustments*.* Of the total acquisition price, approximately $9,300 at* March 31, 2024exchange rates is being held back for a period of18* months from acquisition closing as security against potential indemnification losses. We funded the acquisition through a combination of cash on-hand and a total of $71,000 borrowed under our line of credit (See Note8**. "Indebtedness").

Allocation of Purchase Price

We accounted for the GKE acquisition as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the acquiree's identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values and are consolidated with those of the acquirer. The multi-period excess earnings method, a form of the income approach, was used to value acquired customer relationships, while the relief from royalty method was used to value acquired intellectual property and trade names. The non-compete agreements were valued using a probability-weighted estimate of the expected economic impact that would occur in the absence of the agreements. Significant judgments and estimates are required when performing valuations, including, among other assumptions, internal rates of return, revenue growth rates, customer attrition rates, and royalty rates, all of which are considered Level3 inputs. We worked with external valuation experts to prepare the valuation using information obtained during due diligence and from professional valuation databases and other sources. These estimates were based on assumptions that we believe to be reasonable; however, actual results* may*differ from these estimates.

The following table summarizes the allocation of the purchase price as of acquisition:

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Acquisition related costs such as legal and advisory fees were approximately $835 during fiscal year2024; these costs arenot included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred and are reflected on the Consolidated Statements of Operations in general and administrative expenses.

GKE's operations contributed $9,289 to revenues and $1,046 of net income (including $2,271 of non-cash amortization expense related to acquired intangible assets and $1,229 of non-cash inventory step up expense) to our consolidated results during thetwelve months ended* March 31, 2024**.*

Supplemental unaudited pro-forma information

Combined revenues from Mesa and GKE for fiscal years2024 and2023 would have been approximately $229,260 and $241,360, respectively, had the GKE acquisition occurred at the beginning of our prior fiscal year on* April 1, 2022.*

It is impracticable for us to disclose pro-forma net earnings information regarding the combined results of the operations of Mesa and GKE as if the acquisition had occurred at an earlier date. Prior to acquisition, GKE was a privately owned company with financial statements prepared on a statutory, rather than GAAP, basis, using a different fiscal year end than Mesa's. Certain financial information cannot be recreated for accurate financial results. For example, prior to Mesa's ownership, GKE accounted for inventory at an unburdened rate and performed only annual inventory counts, such that we cannot accurately estimate cost of goods sold. Additionally, all transactions occurring between thethree GKE entities, which are substantial, were accounted for at arms-length prior to acquisition; we eliminated intercompany transactions from a revenue perspective above, but we donot have sufficient historical detail to eliminate intercompany cost of revenues accurately. As presentation of pro-forma net earnings information would require extensive estimation and couldnot be sourced from sufficiently factual information reasonably aligned with GAAP, it is impracticable for us to disclose pro-forma net earnings information.

Belyntic, GmbH

On* November 17, 2022,we acquired substantially all of the assets and certain liabilities of Belyntic GmbH’s peptide purification business (“the Belyntic acquisition”) for a total cash price of $6,450, of which $4,950 was paid on the date of acquisition. The remaining $1,500 becomes due to the Belyntic sellers as patent applications are approved (see Note13**.* "Commitments and Contingencies"). The business complements our existing peptide synthesis business, part of the Biopharmaceutical Development segment, by adding a new consumables line that can be used with the instruments we sell. The new PurePep® EasyClean products are an environmentally conscious chemistry solution to purify peptides. During thetwelve months ended* March 31, 2024,we recorded certain measurement period adjustments to reclassify amounts from intangible assets into goodwill. Our preliminary purchase price allocation was finalized as of December 31, 2023.*

Agena Bioscience, Inc.

On* October 20, 2021,we completed the acquisition of100%* of the outstanding shares of Agena Bioscience, Inc. (“Agena” or “the Agena acquisition”) for adjusted cash consideration of $300,793. Agena is a leading clinical genomics tools company that develops, manufactures, markets and supports proprietary instruments and related consumables that enable genetic analysis for a broad range of research applications. The acquisition of Agena moved our business toward the life sciences tools sector and expanded our market opportunities, particularly in Asia. Agena’s operations comprise our Clinical Genomics segment.

Note5. Leases

We have operating leases for buildings and office equipment used in manufacturing and distribution, engineering, research and development, sales and marketing, and administration activities. The following table presents the lease balances within the Consolidated Balance Sheets related to our operating leases:

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

Supplemental cash flow information related to leases was as follows:

Increases in operating lease right of use assets and lease liabilities are primarily due to the acquisition of GKE.

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As of* March 31, 2024maturities of lease liabilities are as follows for future years ending March 31:*

The maturity schedule above doesnot include discounted future minimum lease payments for leasesnot yet commenced of approximately $7,633 for manufacturing, office and warehouse facilities used by our Biopharmaceutical Development division in Uppsala, Sweden. The lease has a term of 10 years and is expected to commence during thefirst quarter of fiscal year2025.

Note*6***.Goodwill andIntangible**** **Assets, Net

Goodwill

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

Changes in the carrying amount of goodwill were as follows:

In thethird quarter of fiscal year2024, we completed the acquisition of GKE. See Note4. “Significant Transactions” for further information.

During thefourth quarter of our fiscal year ended* March 31, 2024,*we recorded consolidated goodwill impairment losses of $156,892 related to our Clinical Genomics and Biopharmaceutical Development divisions.

For reporting units associated with our Clinical Genomics and Biopharmaceutical Development divisions, we performed quantitative impairment analyses over goodwill because declining revenues growth in both divisions indicated that the fair values of the businesses might have declined below their carrying values. We also performed quantitative impairment analyses on finite-lived intangible assets within those divisions. More information on the impairment losses is included in the “Impairment Losses” section below. We performed qualitative impairment tests over reporting units in our Sterilization and Disinfection Control and Calibration Solutions divisions and concluded that it wasnot more likely thannot that the fair values of those businesses had declined below their carrying values.

Finite-Lived Intangible Assets

Other intangible assets were as follows:

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Amortization expense for finite-lived intangible assets acquired in a business combination was as follows:

Other than amortization expense, the changes in finite-lived intangible assets from* March 31, 2023to March 31, 2024primarily reflect impairment losses totaling $117,641 as further described below, additions of $44,071 related to purchase accounting for GKE as of the acquisition date, and foreign currency impacts. See Note4.* “Significant Transactions” for additional information related to our acquisition of GKE. All impairment losses related to finite-lived intangible assets were recorded in our Clinical Genomics division. Of the $117,641 impairment losses, $79,116 related to customer relationships, $28,531 related to patents and other technology-related propriety information, and $9,994 related to trademarks and trade names.

In addition to testing definite-lived intangible assets for impairment in our Clinical Genomics and Biopharmaceutical Development divisions, we also quantitatively tested trademarks and trade names which were previously identified as indefinite-lived intangible assets in our Biopharmaceutical Development division. We concluded the trademarks and trade names werenot impaired; however, as of our impairment testing date on* January 1, 2024,we have assigned a useful life of 10 years from the original acquisition date to these assets in response to increased pressures and risks in the biopharmaceutical industry resulting from macroeconomic influences. The trademarks and trade names will now amortize through October 2029,resulting in additional expected non-cash amortization expense of approximately $700 per year. We reassessed the remaining useful lives of our intangible assets in conjunction with our impairment testing and madeno* further material changes to our expectations of the remaining useful lives of our intangible assets because, while the value of certain assets has diminished since acquisition, the expected duration of their usefulness hasnot changed in response to the macroeconomic and other factors leading to the impairment losses.

The range of useful lives and weighted-average remaining useful lives of amortizable intangible assets as of* March 31, 2024* were as follows:

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

Impairment Losses

In conjunction with our annual impairment testing, we engaged external valuation specialists to aid in performing recoverability tests, and ultimately fair value tests, over intangible assets in our Clinical Genomics division and both reporting units (Immunoassays and Peptides) of our Biopharmaceutical Development division. Fair value testing was performed by weighting Gordon Growth and Exit Multiple discounted cash flow models and guideline public company models (one-year forward multiples), relying on unobservable Level3 inputs, including butnot limited to, discount rates, expected useful lives, applicable competitors, and anticipated revenues growth and margins. Inputs were established through discussions between Management and our valuation specialists and are based on internal expectations for future performance, market indicators, and reputable valuation research resources. Impairment losses are recorded in either Impairment of finite-lived intangible assets or Impairment of goodwill in the accompanying Consolidated Statements of Operations. As of the date of our annual goodwill impairment testing,* January 1, 2024,the total fair values of the Clinical Genomics and Biopharmaceutical Development divisions were$58,900 and $119,000, respectively. Impairment losses resulted in a0%* cushion between the fair and carrying values of our Clinical Genomics division and the Immunoassays reporting unit within our Biopharmaceutical Development division as of our* January 1, 2024impairment testing date. The fair value of the Peptides reporting unit within our Biopharmaceutical Development division exceeded carrying value by approximately 36% as of our testing date, andno* impairment losses were recorded for this reporting unit. The goodwill associated with each of Clinical Genomics, Immunoassays, and Peptides reporting units as of* March 31, 2024was $16,940, $32,807, and $13,708, respectively. As such, the Clinical Genomics and Biopharmaceutical Development divisions are susceptible to further impairment losses in the future if actual results differ significantly from our estimates. Assumptions used in goodwill and intangible asset impairment tests include unobservable Level3* inputs and estimates that are subject to uncertainty, such that there is a reasonable possibility that further impairment losses, which could be material to our consolidated financial statements, will occur in the Clinical Genomics and Biopharmaceutical Development divisions in the future.

We monitor each of our divisions for indicators of impairment on a quarterly basis. Several changes to the Clinical Genomics division occurred during thefourth quarter of fiscal year2024 that were incorporated into our impairment analyses and contributed to the recognized impairment loss. First, we enacted changes in our management structure, whereby a new General Manager was assigned to lead the division. Immediately, the new manager began restructuring the division, eliminating17 positions. Additionally, new division management began to implement an updated business strategy, which resulted in a downward revision of financial expectations for the coming years, particularly the next1.5 –2 years, but which will better position the division to achieve sustainable long-term growth. Additionally, in thefourth quarter of2024, we losttwo individually immaterial customer contracts as continued economic difficulties resulted in their bankruptcy. These internal changes, coupled with difficult macroeconomic conditions described further below ultimately contributed to the impairment losses recorded related to the Clinical Genomics division.

Throughout fiscal year2024, we performed regular analyses comparing the results of the Biopharmaceutical Development division with our expectations at the time of purchase. Our analyses in thefirst three quarters of fiscal2024 indicated that reporting units associated with the Biopharmaceutical Development division more likely thannot werenot impaired, in part because actual operating costs to date had been lower than were expected at acquisition. However, in thefourth quarter of fiscal year2024, persistent difficult macroeconomic trends resulted in a downward revision of financial expectations for the coming years compared to when the division was acquired, ultimately resulting in a downward revision of previous forecasts of the division’s results, particularly after the division failed to meet our revenue expectations during thefourth quarter.

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Conditions that negatively impacted both the Clinical Genomics and the Biopharmaceutical Development division included:

The nature of our Sterilization and Disinfection Control and Calibration Solutions divisions makes them less sensitive to existing macroeconomic conditions, particularly since the product lines offered by these divisions donot require our customers to initially invest in high-dollar capital equipment to the same degree as in our Clinical Genomics and Biopharmaceutical Development divisions.

Note7. Supplemental Balance Sheet Information

Significant changes in balance sheet amounts below are primarily attributable to the acquisition of GKE and related step-up amounts under purchase accounting. See Note4. "Significant Transactions" for details.

Inventories consisted of the following:

In addition to sales of existing inventories, higher non-cash scrap expense in fiscal year 2024 contributed to the overall decrease in inventories, partially offset by the GKE acquisition and inventory purchases to meet current production needs.

Prepaid expenses and other consisted of the following:

Property, plant and equipment consisted of the following:

Depreciation expense was as follows:

Accrued payroll and benefits consisted of the following:

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Other accrued expenses consisted of the following:

Note*8***. Indebtedness**

Credit Facility

On* March 5, 2021,we entered into afour-year senior secured credit agreement that included1*) a revolving credit facility in an aggregate principal amount of up to $75,000 (the "Revolver"),2) a swingline loan in an aggregate principal amountnot exceeding $5,000, and3) letters of credit in an aggregate stated amountnot exceeding $2,500 at any time. The agreement also provided 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. On* October 5, 2023,we amended the terms of ourfour*-year senior credit facility to increase the maximum principal amount available to us under the Revolver from $75,000 to $125,000. We refer to the agreement in whole as the “Credit Facility.”

Subsequent to the end of fiscal year2024, on* April 5, 2024,*we further amended and restated the terms of the Credit Facility. The amended Credit Facility has been modified to:

Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate plus an applicable spread ranging from 1.5% to 3.5%, depending on our total net leverage ratio. The interest rate on borrowings under our line of credit as of* March 31, 2024*was 7.2%.

We are obligated to pay quarterly unused commitment fees of between 0.20% and 0.35% of the Revolver’s aggregate principal amount, based on our leverage ratio. We incurred unused commitment fees of $164 and $107 for the years ended* March 31, 2024,and March 31, 2023,respectively. The balance of unamortized customary lender fees was $321 and $312 as of March 31, 2024and2023,* respectively.

During thesecond quarter of fiscal year2024, we borrowed a total of $71,000 under the Revolver to fund the majority of the GKE acquisition, and repaid $20,500 against that outstanding balance during thethird andfourth quarters of fiscal year2024. As of* March 31, 2024,the outstanding balance under our Credit Facility was $50,500. Subsequent to March 31, 2024,we repaid an additional $7,500 on our line of credit. We borrowed $75,000 under the Term Loan on April 5, 2024at a rate of 8.4% as of the borrowing date, largely to fund the repurchase of a portion of the2025* Notes. See Note15. "Subsequent Events."

The financial covenants in the Credit Facility as amended include a maximum leverage ratio of 4.50 to1.00 for thefirst five testing dates on which the line of credit is outstanding;4.0 to1.0 on each of the sixth, seventh, eighth, andninth testing dates; and 3.5 to1.0 on each testing date following theninth testing date. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to1.0 and a minimum senior net leverage ratio of 3.5 to1. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales. As of* March 31, 2024,*we were in compliance with all required covenants under the terms of the Credit Facility, both before and after the amendment and restatement.

Convertible Notes

On* August 12, 2019,we issued an aggregate principal amount of $172,500 of2025* Notes. The2025 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 15and August 15each year beginning on February 15, 2020.The2025* Notes are initially convertible at a conversion rate of 3.5273 shares of common stock per*$1,000* principal amount of Notes, which is equivalent to an initial conversion price of approximately $283.50 per share of common stock. Noteholders* mayconvert their2025* Notes at their option only in the following circumstances:

Upon conversion, we will pay or deliver, as the case* maybe, cash, shares of our common stock, or a combination of cash and shares of our common stock. The if-converted value of the2025* Notes didnot exceed the principal balance as of* March 31, 2024.*

Immediately following completion of the amendment of the Credit Facility, on* April 5, 2024,we entered into separate, privately negotiated purchase agreements (the “Purchase Agreements”) with a limited number of holders of our outstanding2025* Notes. Pursuant to the Purchase Agreements, we purchased $75,000 in aggregate principal amount of the2025 Notes for an aggregate cash purchase price of approximately $71,410, including accrued and unpaid interest. See Note15. "Subsequent Events."

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Debt issuance costs related to the2025 Notes are comprised of commissions payable to the initial purchasers of $5,175 andthird party offering costs of $255. The debt issuance costs are being amortized to interest expense using the effective interest method over thesix-year contractual term of the2025 Notes.

The net carrying amount of the2025 Notes was as follows:

We recognized interest expense on the2025 Notes as follows:

The effective interest rate of the liability component of the2025 Notes is approximately 1.9%.

As of* March 31, 2024,the2025* Notes, net of unamortized debt issuance costs are classified as a long-term liability on our Consolidated Balance Sheets as the circumstances necessary for conversion werenot satisfied as of the end of the period and the private repurchases contemplated by the Purchase Agreements hadnot yet occurred. The circumstances necessary for voluntary conversion werenot met during fiscal year2024.

Note*9***.Stock Transactions and Stock-Based Compensation**

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

Stock-Based Compensation

We issue shares in the form of stock options, RSUs and PSUs to employees and non-employee directors pursuant to the2021 Equity Plan, and we have awards outstanding under the2014 Equity Plan. The2021 Equity Plan authorizes the issuance of 660 shares of common stock to eligible participants, and there were 373 shares available for future grants under the plan as of* March 31, 2024.Under the2014* Equity Plan,1,100 shares of common stock were authorized and reserved for eligible participants, all of which have been issued and 77 of which remain outstanding as of* March 31, 2024.*

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

Stock Options

We use the Black-Scholes option-pricing model to estimate the fair value of stock option awards granted. The weighted average assumptions utilized in the model were as follows:

Using the assumptions in the tables above, the weighted-average Black-Scholes fair value per share at grant date for the years ended* March 31, 2024,*2023 and2022 were $42.76, $58.94 and $76.02, respectively. These fair values are before the estimated effect of forfeitures, which reduces the amount of expense recorded in our Consolidated Statements of Operations.

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Stock option activity under the2021 Equity Plan and2014 Equity Plan as of* March 31, 2024*, and changes for the year then ended, are presented below (shares and dollars in thousands, except per-share data):

The total intrinsic value of stock options exercised during the years ended* March 2023and March 2022was $6,902, and $15,209, respectively. Unrecognized stock-based compensation expense for stock options expected to vest as of March 31, 2024* was $2,388 and is expected to be recognized over a weighted average period of 1.8 years. The total fair value of options vested was $2,749, $2,763, and $2,856 during the years ended* March 31, 2024,*2023 and2022, respectively.

Time-Based Restricted Stock Units (RSUs)

RSU activity under the2021 Equity Plan was as follows (shares and dollars in thousands, except per-share data):

For the years ended* March 31, 2023and2022,* the weighted average fair values per RSU granted were $187.21 and $274.55, respectively. Unrecognized stock-based compensation expense for RSUs that we have determined are probable of vesting was $6,317 as of* March 31, 2024* and is expected to be recognized over a weighted average period of 1.7 years. The total fair value of RSUs vested was $5,881, $6,751, and $5,320 during the years ended* March 31, 2024,2023 and2022, respectively. The total intrinsic value of time-based RSUs distributed during the years ended March 31, 2023and March 2022*was $5,004 and $5,320, respectively.

Performance-Based Restricted Stock Units (PSUs)

We grant performance-based RSUs to certain key employees. Vesting of the awards is contingent upon meeting certain service conditions, as well as meeting certain performance and/or market conditions.

PSU activity under the2021 Equity Plan was as follows (shares and dollars in thousands, except per-share data):

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For the years ended* March 31, 2023and2022,* the average fair value per PSU granted was $182.14 and $302.15, respectively. Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $5,703 as of* March 31, 2024and is expected to be recognized over a weighted average period of 2.4 years. Total fair value of PSUs vested was $1,926 and $5,671 during the years ended March 31, 2023and2022,* respectively. There wereno PSUs vested or distributed during the year ended* March 31, 2024.The total intrinsic value of PSUs distributed during the years ended March 31,*2023 and2022 was $1,776 and $7,549, respectively.

During the year ended* March 31, 2024,the Compensation Committee of the Board of Directors created a plan to award to eligible employees 32 PSUs (the"FY24* PSUs") at target that are subject to service, performance, and market conditions. The performance period for theFY24 PSUs is from* April 1, 2023through March 31, 2024,and the service period is from June21,* 2023 through* June 21, 2026.* Based on actual performance during the performance period,15 of theFY24 PSUs are expected to vest, net of estimated forfeitures. In addition, the quantity of shares earned based on company performance will be adjusted up or down by a maximum of20% pursuant to a market-based measure of performance comparing Mesa’s share price to a peer group over the period from* April 1, 2023until March 31, 2026.*

On* October 28, 2021,the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of performance stock units covering a target of 40 shares that is subject to both performance and service conditions to our Chief Executive Officer. The performance period of the award was thethree-year period from April 1, 2021through March 31, 2024.The service periods commence on October 28, 2021and end on each of October 27, 2024,** October 27, 2025,and October 27, 2026,on which dates eligible PSUs will vest and be distributed. The performance metrics are cumulative GAAP revenues over the performance period and cumulative adjusted operating income over the performance period. Based on actual performance through the period ended March 31, 2024*,35 shares are expected to vest.

During the year ended* March 31, 2024**,* we adjusted our estimate of PSUs expected to vest under all outstanding plans based on actual results achieved through applicable performance periods. We recorded a cumulative effect release of ($812) during the period (approximately $640, net of estimated tax as well as $0.12 per basic and diluted share), which is recorded in general and administrative expense on our Consolidated Statements of Operations. In the future, we expect non-cash stock-based compensation expense of approximately $934 per quarter related to outstanding PSUs following our new estimate of performance share units expected to vest.

In* November 2005,our Board of Directors approved a program to repurchase up to 300 shares of our outstanding common stock. Under the program, shares of common stock maybe purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares of common stock repurchased will be cancelled and repurchases of shares of common stock will be funded through existing cash reserves. There wereno repurchases of our shares of common stock under this plan during the years ended March 31, 2024,2023 or2022. As of March 31, 2024*, we have repurchased 162 shares under this plan.

Under applicable law, Colorado corporations arenot permitted to retain treasury stock. The price paid for repurchased shares is allocated between common stock and retained earnings based on management’s estimate of the original sales price of the underlying shares.

Note*10***. Net (Loss)EarningsPer Share**

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

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

The impact of the assumed conversion of the2025 Notes calculated under the if-converted method was anti-dilutive, and as such shares underlying the2025 Notes were excluded from the diluted EPS calculation for the fiscal years ended* March 31, 2024,*2023, and2022.

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

Note*11***. Employee Benefit Plan****s**

We adopted the Mesa Laboratories, Inc.401(K) Retirement Plan effective* January 1, 2000.Under this plan, we match 100% of thefirst* 4% of eligible pay contributed by each eligible employee, and contributions vest immediately. Participation is voluntary, and employees are eligible on thefirst day of the month following their start date. Our contribution obligations to the Mesa Laboratories, Inc.401(K) retirement plan were $2,078, $1,768 and $1,185 during the years ended* March 31, 2024,*2023 and2022, respectively.

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Note*12***. Income Taxes**

Provision for Income Taxes

Earnings before income taxes were as follows:

The components of our provision for income taxes were as follows:

A reconciliation of our income tax provision and the amounts computed by applying statutory rates to earnings before income taxes was as follows (percentages* may**not* perfectly sum due to rounding):

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Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets (liabilities) were as follows:

Valuation Allowance

In assessing the realizability of deferred tax assets, management considers whether it is more likely thannot that some portion or all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account various factors, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. Based on this evaluation, the Company has concluded that a valuation allowance is necessary on its U.S. and certain German operations and donot expect to fully realize its deferred tax assets as of* March 31, 2024.*

The following table summarizes the changes in our valuation allowance for deferred tax assets:

Net Operating Loss Credit and Carryforwards

As of* March 31, 2024,*the Company had U.S. and Foreign net operating loss (“NOL”) carryforwards consisting of the following:

As of* March 31, 2024,*the Company had U.S. tax credit carryforwards consisting of the following:

Undistributed earnings in foreign subsidiaries

For the year ended* March 31, 2024,provisions havenot* been made for income taxes on*$55,794* of undistributed earnings that were deemed permanently reinvested in foreign subsidiaries at* March 31, 2024.Determination of the amount of unrecognized deferred income tax liabilities on these earnings isnot* practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Companyno longer plans to permanently reinvest these undistributed earnings.

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Uncertain Tax Positions

Uncertain tax positions, if ever recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax provision. A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest and penalties, included in the deferred tax liability on the accompanying Consolidated Balance Sheets of the Company is as follows:

As of* March 31, 2024,the Company hasnot recorded any gross unrecognized tax benefits. The Company recognizes interest and penalties accrued on uncertain income tax positions in other expense and general and administrative expense, respectively. Interest and penalties included in other long-term liabilities on the accompanying Consolidated Balance Sheets of the Company were $0 for each of the years ended March 31, 2024,*2023 and2022. The Company doesnot expect a material change in unrecognized tax benefits or interest in the next12 months.

The Company files income tax returns in the U.S. various states and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The following tax years remain subject to examination:

Note13. Commitments and Contingencies

We are party to various legal proceedings arising in the ordinary course of business. As of* March 31, 2024*, we arenot party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

As part of the Belyntic acquisition, we agreed to pay the sellers a contingency based upon approval of contractually specified patents. The estimated fair value of the probable remaining contingent consideration was $571 as of* March 31, 2024.*

As part of the GKE acquisition*,* we have agreed to pay the GKE sellers approximately $9,300 (at* March 31, 2024exchange rates)18 months following the acquisition date, pending adjustments for potential indemnification losses that may*arise.

See Note15. "Subsequent Events" for further information on debt commitments incurred subsequent to the end of fiscal year2024.

Note14. Segment Data

Segment information is prepared on the same basis that our chief operating decision maker, our CEO, uses to manage our segments, evaluate financial results, and make key operating decisions. Ourfour reportable segments are organized primarily by the nature of the goods and services they sell. We evaluate the performance of our operating segments based on revenues, organic revenues growth, and gross profit. The accounting policies of the operating segments are the same as those described in Note1**. "Description of Business and Summary of Significant Accounting Policies."

The following tables set forth our segment information:

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The following table sets forth depreciation and amortization expense recorded in costs of revenues and included in the determination of gross profit above. Increases in the Sterilization and Disinfection Control division are primarily attributable to the GKE acquisition.

The following table sets forth net inventories by reportable segment. Our chief operating decision maker isnot provided with any other segment asset information. The increase in inventories in our Sterilization and Disinfection Control division is primarily due to the GKE acquisition.

The following table sets forth a summary of long-lived assets by geographic area. Long-lived assets exclude goodwill and intangible assets acquired in a business combination and deferred tax assets. The increase in long-lived assets in Germany is primarily due to the GKE acquisition.

Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows:

Increases in revenues from countries other than the United States and China are primarily attributable to the acquisition of GKE.No customer accounts for10% or more of our consolidated revenues.No foreign country other than China exceeds10% of total revenues.

Note15**. Subsequent Events**

On* April 5, 2024,we entered into separate, privately negotiated purchase agreements with a limited number of holders of our outstanding2025* Notes. Pursuant to these purchase agreements, on* April 11, 2024,we repurchased $75,000 in aggregate principal amount of the2025* Notes for an aggregate cash purchase price of approximately $71,250, plus accrued and unpaid interest of $160. We are currently evaluating the appropriate accounting treatments for the repurchase, which will be recorded and disclosed in our upcoming Condensed Consolidated Financial Statements and the Notes thereto for the period ended* June 30, 2024.*

Under terms of our Credit Facility as amended on* April 5, 2024, (see Note.8 "Indebtedness"), we borrowed $75,000 under the Term Loan effective April 5, 2024at a rate of 8.4% as of the borrowing date, largely to fund the repurchase of a portion of our2025* Notes as described above. We will be required to make quarterly principal payments on the*$75,000* term loan borrowings as follows: $938 each quarter from* June 30, 2024to March 31, 2026;$1,406 each quarter from June 30, 2026to March 31, 2028;and $1,875 from June 30, 2028to March 31, 2029.The remaining unpaid balance of $48,750 will be due at maturity in April 2029;*however, we anticipate that we will have the ability to refinance the debt at that time if necessary.