{"url_path":"/sec/mlab/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-03","source_url":"https://www.sec.gov/Archives/edgar/data/724004/0000724004-26-000047-index.html","accession_number":"0000724004-26-000047","cik":"0000724004","ticker":"MLAB","issuer_name":"MESA LABORATORIES INC /CO/","edgar_url":"https://www.sec.gov/Archives/edgar/data/724004/0000724004-26-000047-index.html","primary_entity_key":"0000724004","primary_entity_name":"MESA LABORATORIES INC /CO/"},"word_count":15424,"has_tables":true,"body_markdown":"**Item 8. Financial Statements and Supplementary Data**\n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\n \n\nTo the Stockholders and the Board of Directors of Mesa Laboratories, Inc.\n\n \n\n**Opinions on the Financial Statements and Internal Control over Financial Reporting**\n\n \n\nWe have audited the accompanying consolidated balance sheets of Mesa Laboratories, Inc. (and subsidiaries) (the “Company”) as of March 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31, 2026, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).\n\n \n\nIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2026 and 2025, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by COSO.\n\n \n\n**Basis for Opinions**\n\n \n\nThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management's Annual Report on Internal Control Over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.\n\n \n\nOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated 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 consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.\n\n \n\n**Definition and Limitations of Internal Control Over Financial Reporting**\n\n \n\nA 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.\n\n \n\nPage 37\n\n[Table of Contents](#toc)\n\n \n\nBecause 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.\n\n \n\n**Critical Audit Matter**\n\n \n\nThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated 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 consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\n**Fair Value of the Reporting Units for Goodwill Impairment Assessment**\n\n \n\n*Critical Audit Matter Description*\n\n \n\nAs described in Notes 1 and 6 to the consolidated financial statements the Company performs an annual impairment test for goodwill as of January 1, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company performs a quantitative assessment, the Company compares the fair value of a reporting unit with its carrying value and recognizes an impairment charge for the amount the carrying value exceeds the reporting unit’s fair value. During the annual goodwill impairment assessment, management performed a quantitative impairment analysis of the Clinical Genomics reporting unit goodwill and concluded the goodwill was not impaired. Management estimates the fair value of a reporting unit based on a combination of an income approach, that utilizes discounted cash flows specific to each reporting unit, and a market approach, that considers guideline public company market multiples. The Company’s consolidated goodwill balance was $186.9 million as of March 31, 2026.\n\n \n\nThe principal considerations for our determination that performing procedures relating to the goodwill impairment of the Clinical Genomics reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate; (ii) a high degree of audit effort and especially challenging and subjective auditor judgment in performing and evaluating management’s significant assumptions related to the forecasted results and the discount rate; and (iii) the audit effort involved the use of valuation professionals with specialized skill and knowledge.\n\n \n\n*How We Addressed the Matter in Our Audit*\n\n \n\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included evaluating the design and testing the operating effectiveness of internal controls related to the Company’s goodwill impairment assessment, including those relevant to the determination of the fair value of the reporting unit. Our audit procedures related to the Company’s goodwill impairment assessment for its Clinical Genomics reporting unit included the following, among others:\n\n \n\n \n●\nTesting the Company’s process used to develop the estimates.\n\n ●Evaluating the appropriateness of the methodologies used, and evaluating the relative weight assigned to the various methodologies used in the analysis.\n\n ●Evaluating the significant assumptions used, including the reasonableness of:\n\n \n●\nmanagement’s forecasted results by comparing the future revenue growth rates and cost assumptions to historical company data and evaluating consistency with external market and industry data.\n\n \n●\nmanagement’s selection of comparable entities.\n\n ●management’s selection of the discount rate and market multiples of comparable companies by comparing the underlying source information to publicly available market data.\n\n ●Testing the completeness, accuracy, and reliability of underlying data used in the Company’s analysis.\n\n ●Utilizing our valuation professionals with specialized skill and knowledge to assist in evaluating the methodologies used and the reasonableness of certain significant assumptions.\n\n \n\n/s/ Baker Tilly LLP\n\n \n\nLos Angeles, California\n\n \n\nJune 2, 2026\n\n \n\nWe have served as the Company's auditor since 2024.\n\n \n\nPage 38\n\n[Table of Contents](#toc)\n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\n \n\nTo the Stockholders and the Board of Directors of Mesa Laboratories, Inc.\n\n \n\n**Opinion on the Financial Statements**\n\nWe have audited the accompanying consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows of Mesa Laboratories, Inc. and subsidiaries (the Company) for the year ended March 31, 2024, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the results of the Company’s 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.\n\n \n\n**Basis for Opinion**\n\nThese 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.\n\n \n\nWe 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.\n\n \n\nOur 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.\n\n \n\n \n\n/s/ RSM US LLP\n\n \n\nWe served as the Company’s auditor from 2023 to 2024.\n\n \n\nLos Angeles, California\n\nJune 28, 2024\n\n \n\nPage 39\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Mesa Laboratories, Inc.**\n\n**Consolidated****Balance Sheets**\n\n(In thousands, except share amounts)\n\n \n\n  \n**March 31,**\n  \n**March 31,**\n \n\n  \n**2026**\n  \n**2025**\n \n\n**ASSETS**\n   ** **   ** **\n\nCurrent assets\n        \n\nCash and cash equivalents\n $26,928  $27,321 \n\nAccounts receivable, less allowances for credit losses of $2,569 and $1,186, respectively\n  44,099   41,970 \n\nInventories\n  26,373   25,365 \n\nPrepaid expenses and other current assets\n  8,868   8,029 \n\nTotal current assets\n  106,268   102,685 \n\nNoncurrent assets\n        \n\nProperty, plant and equipment, net\n  30,613   32,333 \n\nDeferred tax asset\n  1,501   1,371 \n\nOther assets\n  19,155   18,324 \n\nCustomer relationships, net\n  63,211   72,880 \n\nOther intangibles, net\n  20,136   23,995 \n\nGoodwill\n  186,863   181,760 \n\nTotal assets\n $427,747  $433,348 \n\n         \n\n**LIABILITIES AND STOCKHOLDERS’ EQUITY**\n   ** **   ** **\n\nCurrent liabilities\n        \n\nAccounts payable\n $4,928  $5,747 \n\nAccrued payroll and benefits\n  19,006   17,858 \n\nUnearned revenues\n  14,723   14,710 \n\nOther accrued expenses\n  17,616   24,601 \n\nTerm loan, current portion\n  5,625   3,750 \n\nConvertible senior notes, current portion, net of debt issuance costs\n  -   97,297 \n\nTotal current liabilities\n  61,898   163,963 \n\nNoncurrent liabilities\n        \n\nDeferred tax liability\n  20,085   20,181 \n\nOther noncurrent liabilities\n  13,662   12,472 \n\nTerm loan, noncurrent portion, net of debt issuance costs\n  61,357   66,902 \n\nRevolving line of credit\n  84,500   10,000 \n\nTotal liabilities\n  241,502   273,518 \n\nCommitments and Contingencies (Note 13)          \n\nStockholders’ equity\n        \n\nCommon stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,524,931 and 5,455,421 shares, respectively\n  375,348   358,541 \n\n(Accumulated deficit)\n  (185,747)  (188,936)\n\nAccumulated other comprehensive (loss)\n  (3,356)  (9,775)\n\nTotal stockholders’ equity\n  186,245   159,830 \n\nTotal liabilities and stockholders’ equity\n $427,747  $433,348 \n\n \n\nSee accompanying notes to consolidated financial statements.\n\n \n\nPage 40\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Mesa Laboratories, Inc.**\n\n**Consolidated****Statements of Operations**\n\n(In thousands, except per share data)\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\n             \n\nRevenues:\n            \n\nProducts\n $203,392  $198,395  $176,796 \n\nServices\n  45,738   42,583   39,391 \n\nTotal revenues\n  249,130   240,978   216,187 \n\nCost of revenues:\n            \n\nCost of products\n  64,612   60,441   57,200 \n\nCost of services\n  26,248   29,667   25,737 \n\nTotal cost of revenues\n  90,860   90,108   82,937 \n\nGross profit\n  158,270   150,870   133,250 \n\nOperating expense:\n            \n\nSelling\n  40,793   41,683   38,625 \n\nGeneral and administrative, other than impairment of finite-lived intangible assets and goodwill\n  78,658   73,333   72,867 \n\nResearch and development\n  20,308   19,518   19,300 \n\nImpairment of finite-lived intangible assets\n  -   -   117,641 \n\nImpairment of goodwill\n  -   -   156,892 \n\nTotal operating expense\n  139,759   134,534   405,325 \n\nOperating income (loss)\n  18,511   16,336   (272,075)\n\nNonoperating expense (income):\n            \n\nInterest expense and amortization of debt issuance costs\n  10,692   11,859   5,697 \n\nGain on extinguishment of convertible senior notes\n  -   (2,887)  - \n\nOther (income) expense, net\n  (4,195)  1,403   (2,124)\n\nTotal nonoperating expense, net\n  6,497   10,375   3,573 \n\nEarnings (loss) before income taxes\n  12,014   5,961   (275,648)\n\nIncome tax expense (benefit)\n  5,302   7,935   (21,402)\n\nNet income (loss)\n $6,712  $(1,974) $(254,246)\n\n             \n\nNet earnings (loss) per share\n            \n\nBasic\n $1.22  $(0.36) $(47.20)\n\nDiluted\n $1.21  $(0.36) $(47.20)\n\n             \n\nWeighted-average common shares outstanding\n            \n\nBasic\n  5,514   5,421   5,386 \n\nDiluted\n  5,565   5,421   5,386 \n\n \n\nSee accompanying notes to consolidated financial statements.\n\n \n\nPage 41\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Mesa Laboratories, Inc.**\n\n**Consolidated Statements of Comprehensive Income (Loss)**\n\n(In thousands)\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\n             \n\nNet income (loss)\n $6,712  $(1,974) $(254,246)\n\nOther comprehensive income (loss)\n            \n\nForeign currency translation adjustments\n  6,419   4,980   (1,960)\n\nComprehensive income (loss)\n $13,131  $3,006  $(256,206)\n\n \n\nSee accompanying notes to consolidated financial statements.\n\n \n\nPage 42\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Mesa Laboratories, Inc.**\n\n**Consolidated Statements of Stockholders’ Equity**\n\n(In thousands, except share amounts)\n\n \n\n  \n**Common Stock**\n   * *** **  * *** **  * *** **\n\n  \n**Number of Shares**\n  \n**Amount**\n  \n**(Accumulated Deficit) Retained Earnings**\n  \n**AOCI***\n  \n**Total**\n \n\n**March 31, 2023**\n  5,369,466  $332,076  $74,199  $(12,795) $393,480 \n\nVesting of restricted stock units and exercise of stock options\n  30,418   358   -   -   358 \n\nTax withholding on restricted stock units\n  (5,393)  (728)  -   -   (728)\n\nDividends paid, $0.64 per share\n  *-*   -   (3,447)  -   (3,447)\n\nStock-based compensation expense\n  *-*   11,936   *-*   *-*   11,936 \n\nForeign currency translation\n  *-*   -   -   (1,960)  (1,960)\n\nNet (loss)\n  *-*   -   (254,246)  -   (254,246)\n\n**March 31, 2024**\n  5,394,491  $343,642  $(183,494) $(14,755) $145,393 \n\nVesting of restricted stock units and exercise of stock options\n  69,526   2,644   -   -   2,644 \n\nTax withholding on restricted stock units\n  (8,596)  (887)  -   -   (887)\n\nDividends paid, $0.64 per share\n  *-*   -   (3,468)  -   (3,468)\n\nStock-based compensation expense\n  *-*   13,142   *-*   *-*   13,142 \n\nForeign currency translation\n  *-*   -   -   4,980   4,980 \n\nNet (loss)\n  *-*   -   (1,974)  -   (1,974)\n\n**March 31, 2025**\n  5,455,421  $358,541  $(188,936) $(9,775) $159,830 \n\nVesting of restricted stock units\n  80,825   -   -   -   - \n\nTax withholding on restricted stock units\n  (11,315)  (1,061)  -   -   (1,061)\n\nDividends paid, $0.64 per share\n  *-*   -   (3,523)  -   (3,523)\n\nStock-based compensation expense\n  *-*   17,868   -   -   17,868 \n\nForeign currency translation\n  *-*   -   -   6,419   6,419 \n\nNet income\n  *-*   -   6,712   -   6,712 \n\n**March 31, 2026**\n  5,524,931  $375,348  $(185,747) $(3,356) $186,245 \n\n** **\n\n*Accumulated Other Comprehensive (Loss) Income.\n\n \n\nSee accompanying notes to consolidated financial statements.\n\n \n\nPage 43\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Mesa Laboratories, Inc.**\n\n**Consolidated****Statements****of Cash Flows**\n\n(In thousands)\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\n**Cash flows from operating activities:**\n   ** **   ** **   ** **\n\nNet income (loss)\n $6,712  $(1,974) $(254,246)\n\nAdjustments to reconcile net income (loss) to net cash provided by operating activities:\n            \n\nDepreciation of property, plant and equipment\n  5,254   5,382   4,233 \n\nAmortization of acquisition-related intangibles\n  18,017   19,145   27,341 \n\nStock-based compensation expense\n  17,868   13,142   11,936 \n\nNon-cash interest expense and debt issuance cost amortization\n  682   990   926 \n\nGain on extinguishment of convertible senior notes\n  -   (2,887)  - \n\nAmortization of step-up in inventory basis\n  -   1,232   1,229 \n\nDeferred taxes\n  (1,292)  (72)  (28,421)\n\nImpairment loss on goodwill and finite-lived intangible assets\n  -   -   274,533 \n\nOther\n  577   4,946   629 \n\nCash from changes in operating assets and liabilities:\n            \n\nAccounts receivable\n  (3,206)  (2,925)  4,940 \n\nInventories\n  (4,434)  1,153   2,563 \n\nPrepaid expenses and other assets\n  608   498   211 \n\nAccounts payable\n  (1,197)  (388)  (97)\n\nAccrued liabilities and taxes payable\n  3,497   9,504   (1,236)\n\nUnearned revenues\n  (255)  (938)  (408)\n\nNet cash provided by operating activities\n  42,831   46,808   44,133 \n\n**Cash flows from investing activities:**\n   ** **   ** **   ** **\n\nPurchases of property, plant and equipment\n  (3,250)  (4,249)  (2,567)\n\nAcquisition of customer lists\n  -   (250)  - \n\nAcquisition of businesses, net of cash acquired and holdback liabilities\n  -   -   (78,739)\n\nNet cash (used in) investing activities\n  (3,250)  (4,499)  (81,306)\n\n**Cash flows from financing activities:**\n   ** **   ** **   ** **\n\nProceeds from debt borrowings\n  107,500   73,465   71,000 \n\nRepurchase of convertible note debt\n  (97,500)  (71,560)  - \n\nOther debt principal repayments\n  (36,749)  (44,251)  (33,500)\n\nGKE acquisition holdback payment\n  (9,555)  -   - \n\nDividends paid\n  (3,523)  (3,468)  (3,447)\n\nPayment of tax withholding obligation on vesting of restricted stock\n  (1,061)  (887)  (728)\n\nProceeds from the exercise of stock options\n  -   2,644   358 \n\nOther financing, net\n  (966)  (452)  (847)\n\nNet cash (used in) provided by financing activities\n  (41,854)  (44,509)  32,836 \n\nEffect of exchange rate changes on cash and cash equivalents\n  1,880   1,307   (359)\n\nNet (decrease) in cash and cash equivalents\n  (393)  (893)  (4,696)\n\nCash and cash equivalents at beginning of period\n  27,321   28,214   32,910 \n\nCash and cash equivalents at end of period\n $26,928  $27,321  $28,214 \n\n \n\n**Cash paid for:**\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nIncome taxes\n\n \n$\n1,870\n \n \n$\n5,731\n \n \n$\n4,591\n \n\nInterest\n\n \n$\n10,017\n \n \n$\n11,077\n \n \n$\n4,648\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n\nSee accompanying notes to consolidated financial statements.\n\n \n\nPage 44\n\n[Table of Contents](#toc)\n\n \n\n**Mesa Laboratories, Inc.**\n\n**Notes to****Consolidated****Financial Statements**\n\n(dollar and share amounts in thousands, unless otherwise specified)\n\n \n\n \n\n**Note****1.****Basis of Presentation and****Summary of****Significant Accounting Policies**\n\n \n\n**Nature of Operations**\n\n \n\nIn this Annual Report on Form *10*-K, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company,” or \"Mesa.\"\n\n \n\nWe 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 APAC, and by independent distributors throughout the world. \n\n \n\nAs of *March 31, 2026*, we managed our operations in *four* reportable segments, or divisions:\n\n \n\n \n●\n \n*Sterilization and Disinfection Control* - manufactures and sells biological, chemical and cleaning indicators used to assess the effectiveness of sterilization, decontamination, disinfection and cleaning processes in the pharmaceutical, medical device and healthcare industries. The division also provides sterility assurance testing and laboratory services, primarily to dental and pharmaceutical customers.\n\n \n\n \n●\n *Biopharmaceutical Development* - develops, manufactures, sells and services automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development and manufacture of biologic therapies, among other applications.\n\n \n\n ● *Calibration Solutions* - develops, manufactures, sells and services quality control products using principles of advanced metrology to enable customers to measure and calibrate critical parameters in applications such as renal care, gas flow, environmental and process monitoring and torque testing.\n\n \n\n \n●\n *Clinical Genomics* - develops, manufactures and sells highly sensitive high-throughput genetic analysis instruments, consumables and related services that enable clinical research labs and contract research organizations to perform genomic testing across a broad range of non-diagnostic applications in several therapeutic areas, including hereditary disease screenings, pharmacogenetics, oncology related applications and toxicology research.\n\n \n\nUnallocated corporate expenses and other business activities are reported within Corporate and Other.\n\n \n\n****\n\n**Principles of Consolidation and****Basis of Presentation**\n\n \n\nOur 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. \n\n \n\nPage\n*45*\n\n[Table of Contents](#toc)\n\n \n\n****\n\n**Management Estimates**\n\n \n\nThe 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.\n\n \n\n**Summary of Significant Accounting Policies**\n\n \n\n******\n\n***Foreign Currency***\n\nExchange rate adjustments resulting from foreign currency transactions are recognized in net income (loss), while the effects of translating the financial statements of foreign subsidiaries into U.S. dollars are reflected as a component of accumulated other comprehensive income within stockholders’ equity. Assets and liabilities of subsidiaries operating outside the United States with functional currencies other than the U.S. dollar are translated into U.S. dollars at period end exchange rates, and results of operations are translated using weighted average exchange rates for the period. \n\n \n\n******\n\n***Fair Value Measurements***\n\nFair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. We determine fair value based on the following input hierarchy:\n\n \n\nLevel *1:* Quoted prices for identical assets or liabilities in active markets.\n\n \n\nLevel *2:* Observable inputs other than prices included in Level *1,* such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are *not* active, or other inputs that are observable or that can be corroborated with observable market data.\n\n \n\nLevel *3:* Unobservable inputs supported by little or *no* market activity. Pricing models, discounted cash flow methodologies, and other similar techniques involving significant management judgment or estimation typically require unobservable inputs.\n\n \n\nMost assets and liabilities purchased in business acquisitions are measured, recognized and disclosed at fair value in the Consolidated Financial Statements on a non-recurring basis upon acquisition, or as applicable, during the measurement period. Additionally, assets such as property and equipment, operating lease assets, and goodwill and other intangible assets are measured and presented at fair value on a nonrecurring basis if impaired. Such fair value measurements require the use of *Level 3 inputs.*\n\n \n\nSee Note *3.* “Fair Value Measurements” for further information.\n\n \n\n****\n\n**Revenue Recognition**\n\nOur revenues are derived from sales of products and services. Product sales consist primarily of consumables and hardware, while services consist primarily of maintenance, calibration and testing services.\n\n \n\nRevenues 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 the customer. We recognize revenue in an amount that reflects the consideration we expect to receive in exchange for those products and services (the transaction price). For our revenue contracts, prices are fixed at the time of purchase, and price protections or other forms of variable consideration are *not* typically offered.\n\n \n\n*Product sales:* Our performance obligations related to product sales generally consist of the promise to sell tangible goods to distributors or end customers. Revenues from consumables and hardware are recognized at the point in time when control transfers to the customer. Control of products sold in the United States and APAC typically transfers upon shipment, whereas control of products sold in Europe more typically transfers upon delivery to the customer site or when customers collect the good from our warehouse.\n\n \n\nPage\n*46*\n\n[Table of Contents](#toc)\n\n \n\n*Services: *We generate service revenues from discrete and ongoing maintenance, calibration and testing services related 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 over a specified contract period, are satisfied by completing any services that are contractually required during the contract period, if requested by the customer, or by the passage of time if *no* services are requested. For ongoing service contracts, revenue is recognized on a straight-line basis over the contract term in a faithful depiction of our obligation to provide services over the contract period. \n\n \n\nPurchase orders or formal contracts typically provide evidence of the existence and key terms of arrangements with customers with respect to sales of our products and services. Collectability is assessed through our customer review process and is considered reasonably assured. Payment terms typically require settlement within *60* days or less.\n\n \n\nWe expense commission costs, which are typically our only significant incremental cost to obtain a contract, as incurred. The substantial majority of our contracts have original durations of *one* year or less, and we have elected *not* to disclose the expected timing or allocated transaction prices of remaining performance obligations. Additionally, we have elected to *not* assess whether a significant financing component exists when the period between satisfaction of a performance obligation and customer payment is *one* year or less. *None* of our contracts contained significant financing components as of or for the fiscal years ended *March 31, 2026*, *2025* or *2024.*\n\n \n\nContracts with customers *may*contain multiple performance obligations. In such arrangements, the contract transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services. Standalone selling prices represent the price at which a product or service would be sold separately. If a standalone selling price is *not* directly observable, we estimate the standalone selling price using available information, including market conditions and internally approved pricing guidelines. In limited circumstances, for performance obligations with highly variable or unobservable standalone selling prices, we *may*assign 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.\n\n \n\nSee Note *2.* “Revenue” for further information.\n\n \n\n****\n\n**Shipping and Handling**\n\nPayments we receive from customers for shipping and handling are included in revenues in our Consolidated Statements of Operations, and the related shipping and handling 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 costs associated with inventory and materials we purchase are capitalized as a component of inventory on the Consolidated Balance Sheets and are expensed to cost of revenues when the related products are sold. \n\n \n\n****\n\n**Unearned Revenues**\n\nCertain of our products *may*be sold with associated service contracts that require us to provide repairs, technical support, parts, and various analytical or maintenance services over a specified period of time, generally *one* year. When these contracts are paid in advance, the contract consideration is recorded as an unearned revenue liability and is recognized as revenue ratably over the service period. Customer prepayments related to other products and services are also recorded as unearned revenue liabilities and are recognized as revenue when earned. \n\n \n\n****\n\n**Accrued Warranty Expense**\n\nWe typically provide assurance-type limited product warranties on our products and, accordingly, accrue for estimates of related warranty expenses.\n\n** **\n\n****\n\n**Accounts Receivable****and Allowance for Credit Losses**\n\nTrade accounts receivable are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for allowances for credit losses and write-offs. Allowances for credit losses represent our best estimate of expected credit losses from trade accounts receivable. We estimate expected credit losses based on historical experience, current and expected economic and market conditions, and evaluations of the status of our customers’ outstanding receivable balances. When we become aware that a specific customer *may*be unable to meet its financial obligations, we record a specific allowance to reduce the carrying amount of the receivable to the amount reasonably expected to be collected. To mitigate credit risk, we assess the creditworthiness of new and existing customers, establish credit limits, and regularly review outstanding balances and payment histories. In certain circumstances, we *may*require customer prepayments or limit future purchases until past due amounts are settled.\n\n \n\nPage\n*47*\n\n[Table of Contents](#toc)\n\n \n\nWe do *not* believe our trade accounts receivable represent significant concentrations of credit risk due to our diversified customer base and geographic presence. Actual credit losses *may*differ from estimated amounts, which could materially affect the provision for credit losses and, therefore, net income (loss). We recorded $1,495, $218, and $790 of expense associated with credit losses for the years ended *March 31, 2026*, *2025*, and *2024*, respectively. \n\n \n\n****\n\n**Cash Equivalents**\n\nWe classify highly liquid investments with original maturities of *three* 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, 2026* or *2025*. \n\n \n\n****\n\n**Inventories**\n\nInventories are stated at the lower of cost or net realizable value. Inventories are expensed to cost of revenues upon sale to customers using a weighted-average costing methodology. Inventories acquired in business combinations are recorded at acquisition date fair value. Our work-in-process and finished goods inventories include the costs of raw materials, labor and overhead. Labor and overhead costs involve estimates based on historical and budgeted costs, expected inflation, expected labor costs and expected standard productivity rates as inputs. The rates are evaluated annually unless specific circumstances require a more frequent review for particular items.\n\n \n\nWe monitor inventory costs relative to selling prices and perform physical cycle counts throughout the year to assess whether a lower of cost or net realizable value adjustment is necessary. We estimate and maintain inventory reserves for excess or obsolete inventory, shrinkage and scrap. These reserves *may*fluctuate as assumptions change due to new information, discrete events, or changes in our business, such as entering new markets or discontinuing specific products. Once inventory is written down, the reduced amount becomes the new cost basis and is *not* subsequently increased in future fiscal years.\n\n \n\n****\n\n**Property, Plant and Equipment**\n\nProperty, plant and equipment are recorded at cost, net of accumulated depreciation, except for assets acquired in business acquisitions, which are recorded at acquisition-date fair value. Expenditures for major enhancements and improvements that extend the life of assets are capitalized, while expenditures for minor replacements, maintenance and repairs are expensed as incurred.\n\n \n\nDepreciation is calculated using the straight-line method over our assets’ estimated useful lives. Upon asset retirement or disposal, the related gross carrying amount and accumulated depreciation are derecognized, and any related gain or loss is recognized in our results of operations. In certain circumstances, including business consolidation or facility closure activities, impairment losses or accelerated depreciation *may*be recorded to reflect revised estimates of remaining useful lives for assets designated to be retired from service.\n\n \n\nWe periodically 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:\n\n \n\n**Category**\n\n**Useful Lives in Years**\n\nBuildings and building improvements40 (or less)\n\nManufacturing equipment10 (or less)\n\nOffice, lab and other equipment, furniture and fixtures\n7 (or less)\n\nComputer equipment \n3 (or less)\n\nLeasehold improvements *Lesser of the economic life or the remaining term in the respective lease*\n\n \n\nLand is *not* depreciated. Construction in progress is *not* depreciated until placed in service, at which time it is assigned a useful life consistent with the applicable asset category. \n\n \n\n****\n\n**Leases**\n\nWe determine whether an arrangement is or contains a lease at contract inception. If a lease is identified, we classify the lease as either a finance or operating lease. We did *not* have any finance leases during any fiscal year presented herein. As of *March 31, 2026*, our operating leases have remaining terms ranging from one month to 11 years. \n\n \n\nPage\n*48*\n\n[Table of Contents](#toc)\n\n \n\nA lease exists when a contract conveys the right to control the use of, and obtain substantially all the economic benefits from, use of an identified asset for a period of time in exchange for consideration. For our operating leases, we have elected to account for non-lease components together with the lease components to which they relate. Operating lease right-of-use (\"ROU\") assets and lease liabilities are recognized at lease commencement. We do *not* recognize ROU assets or lease liabilities for leases with original durations of less than *12* months, and our short-term leases are *not* material.\n\n \n\nOperating lease liabilities represent the present value of capitalized lease payments *not* yet paid, discounted using the rate implicit in the lease when readily determinable or, otherwise, our incremental borrowing rate based on information available at lease commencement. ROU assets represent our right to use the underlying leased asset and are measured based on the related operating lease liability, adjusted for payments made prior to commencement, any initial direct costs incurred, and other such items as applicable. Adjustments to ROU assets would also be made for impairment losses, if necessary. In connection with business acquisitions, we generally retain the acquiree's classification of leases, and recognize ROU assets and liabilities in accordance with ASC *842.*\n\n \n\nSeveral of our leases contain fixed rent escalations over the lease term, which are recognized as lease expense 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 in our Consolidated Statements of Operations, depending on the nature of use of the underlying asset.\n\n \n\nCertain leases include *one* or more renewal or termination options exercisable at our discretion. Renewal periods are included in the lease term when we are reasonably certain to exercise the option. Renewal terms typically allow us to extend lease terms between *one* and *three* years.\n\n \n\nWe also have leases that include variable payments based on, for example, a pro-rata portion of actual maintenance costs incurred by the lessor. Such variable lease payments are recognized in the period in which those payments are incurred as lease costs. \n\n \n\nSee Note *5.* “Leases” for further information.\n\n \n\n****\n\n**Intangible Assets, Impairment Testing **\n\nOur goodwill and other intangible assets result primarily from business acquisitions. Intangible assets with finite lives affect future amortization expense. We could incur impairment losses associated with goodwill and other intangible assets. \n\n \n\nWe amortize finite-lived intangible assets, which generally have estimated useful lives ranging from three to fifteen years at the time of acquisition, using the straight-line method over their estimated useful lives. We estimate useful lives based on the specific facts and circumstances related to each asset, and we evaluate the appropriateness of assigned useful lives at least annually. Changes to remaining useful lives, if necessary, are accounted for prospectively. In determining useful lives, we consider factors such as contractual terms, historical performance, our long-term strategy for using the asset, applicable legal or regulatory constraints, and economic factors such as competition or specific market conditions. Amortization expense is recorded within cost of revenues or general and administrative expense in the Consolidated Statements of Operations.\n\n \n\nFinite-lived intangibles are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group *may**not* be recoverable. Events or conditions indicating potential impairment include, but are *not* limited to, adverse changes in business or market conditions, changes in the extent or manner in which the assets are used, internal strategic decisions, loss of significant customers, declines in business performance, adverse regulatory changes, or other events that could materially impact future cash flows. If impairment indicators are present, we assess recoverability by comparing the carrying value of the asset or asset group to the undiscounted estimated future cash flows expected to be generated from use of the asset or asset group. If the carrying value is *not* recoverable, we estimate fair value using discounted cash flow models and other valuation techniques utilizing Level *3* inputs. We recognize impairment losses for the excess of carrying value over estimated fair value as necessary.\n\n \n\nPage\n*49*\n\n[Table of Contents](#toc)\n\n \n\nGoodwill is *not* amortized. We test goodwill for impairment at least annually as of *January**1st,* or more frequently if events or circumstances indicate it is more likely than *not* that the fair value of a goodwill reporting unit is less than its carrying value. Events that could indicate impairment and that could trigger interim impairment testing include, but are *not* limited to, adverse current or expected economic, market, or industry-specific conditions; sustained declines in our market capitalization; sustained adverse changes or expected changes in business climate or in the operating performance of the business; adverse legal or regulatory actions; or other factors that could adversely affect the fair value of a reporting unit. We monitor for indicators of impairment throughout the year. Our annual impairment tests *may*begin with a qualitative assessment, and quantitative testing is performed i) if we determine it is more likely than *not* that the fair value of a reporting unit is less than the carrying amount, ii) at least every *five* years, or iii) if we otherwise elect to perform quantitative assessments. \n\n \n\nThe fair value measurements used in testing goodwill and other intangible assets for impairment are estimated using a combination of income and market approaches, using Level *3* inputs. See “Fair Value Measurements” for a description of input levels. Significant assumptions include, among others, discount rates, forecasted results including EBITDA, revenue growth rates, cost assumptions, terminal growth rates, customer attrition rates (for customer relationships), royalty rates and technology obsolescence rates (for patents, tradenames and other intellectual property), the selection of comparable public entities, and applied market multiples. In certain cases, management uses other market information when available to estimate fair value. Impairment losses, when recognized, represent the excess of the carrying amount over estimated fair value and are recorded in earnings. \n\n \n\nBased on qualitative and quantitative testing performed as of *January 1, 2026,*we do *not* believe our goodwill or other intangible assets were impaired as of *March 31, 2026.* During fiscal year *2024,* we recorded impairment losses of $156,892 and $117,641 related to goodwill and long-lived intangible assets, respectively. \n\n \n\nSee Footnote *6.* “Goodwill and Intangibles” for further information.\n\n \n\n****\n\n**Research & Development Costs**\n\nWe conduct research and development activities for the purpose of enhancing the functionality, effectiveness, reliability and accuracy of existing products and to develop new products. Research and development costs are expensed as incurred. Research and development expense is predominantly comprised of labor, *third*-party consultant costs, and project-related materials. From time to time, we *may*acquire in-process research and development with the intention of developing a saleable product.\n\n \n\n****\n\n**Stock-based Compensation**\n\nWe issue stock‑based awards in the form of full‑value awards and, in prior periods, stock options (collectively, “stock awards”) to employees and non‑employee directors pursuant to the Amended and Restated Mesa Laboratories, Inc.\n*2021* Equity Incentive Plan (the\n*“2021* Equity Plan”).\n\n \n\nThe *2021* Equity Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to grant equity awards, or to delegate its authority under the plan to make grants (subject to certain legal and regulatory restrictions), including the authority to determine award recipients, the type and timing of awards to be granted, the number of shares underlying each award, vesting schedules and all other terms and conditions of the awards.\n\n \n\nUnder the *2021* Equity Plan, each share underlying a full value time-based award or stock option counts as *one* share against shares available for issuance. Performance-based awards count against shares available for issuance based on the maximum number of shares achievable under the award agreement unless or until a lower quantity is finalized. We issue new shares of common stock upon the vesting of time-based restricted stock units (\"RSUs\") and performance-based RSUs (\"PSUs\"), and upon exercise of stock options. \n\n \n\nPage\n*50*\n\n[Table of Contents](#toc)\n\n \n\nRSUs and stock options generally vest in equal installments on the first, second, and third anniversaries of the grant date. Stock options generally expire after six years. PSUs vest upon achievement of specified performance conditions and completion of a requisite service period, generally three years. Awards granted to non‑employee directors generally vest one year from the grant date.\n\n \n\nStock‑based compensation expense is measured based on the grant‑date fair value of the award and is recognized over the longer of any requisite service or performance period using a straight‑line method, net of estimated forfeitures. We estimate expected forfeitures using a dynamic forfeiture model based on company-specific historical data. The *2021* Equity Plan includes retiree provisions which result in the acceleration of stock-based compensation expense. For retirement-eligible participants, compensation expense is recognized on a straight-line basis from the grant date through the date the participant becomes retirement-eligible, at which time the participant retains full rights to the awards in accordance with plan provisions. We record stock-based compensation expense in cost of revenues, selling, research and development, and general and administrative expense in the Consolidated Statements of Operations.\n\n \n\nCertain PSUs include a total shareholder return (\"TSR\") market condition, which compares Mesa's share price to a peer group, generally over a *three*-year period. Achievement under the plan affects the number of awards that will vest. The TSR condition *may*function either as a standalone performance metric or as a modifier that adjusts the quantity of shares earned for company performance up or down by a maximum of *20%.* The grant‑date fair value of these awards incorporates the effect of the market condition and is estimated using a Monte Carlo simulation valuation model utilizing Level *3* inputs. Compensation expense for TSR awards is *not* subsequently adjusted for changes in estimated performance outcomes, provided requisite service is rendered. \n\n \n\n \n\nThe fair values of RSUs and PSUs other than those that include a TSR condition are based on the closing price of Mesa's common stock on the award date, less the present value of expected dividends\n*not* received during the vesting period. RSUs and PSUs we issue are equivalent to nonvested shares under applicable accounting guidance. Expense for PSUs with non-TSR performance conditions, such as cumulative revenues growth or profitability targets determined by the Board of Directors, is adjusted at each reporting period. At each reporting date, we estimate the number of non-TSR PSUs expected to vest based on our current estimate of the probable achievement of applicable performance targets specified in the award documents, and if necessary, we record a cumulative-effect adjustment. \n\n \n\nStock options, when granted, are valued using the Black-Scholes option pricing model.\nNo stock options were awarded in fiscal year\n*2026* or fiscal year\n*2025.*\n\n \n\nSee Note\n*9.* “Stock Transactions and Stock-Based Compensation” for further information.\n\n \n\n****\n\n**Income Taxes **\n\nIncome 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 than *not* be realized.\n\n \n\nFrom time to time, we engage in transactions in which the tax consequences *may*be 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 *may*result in future tax, interest and penalty assessments by these taxing authorities. In determining our income tax provision for financial reporting purposes, we establish allowances for uncertain tax income positions unless we determine it is *not* more likely than *not* 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 than *not* to be sustained. There is considerable judgment involved in determining whether positions taken on the tax return are more likely than *not* to be 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 in 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.\n\n \n\nPage\n*51*\n\n[Table of Contents](#toc)\n\n \n\nSee Note *12.* “Income Taxes” for further information. \n\n \n\n****\n\n**Net Earnings** **(Loss) Per Share**\n\nBasic net earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings (loss) 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 were converted. Potentially dilutive securities in fiscal year *2026* include unvested RSUs and PSUs and outstanding stock options. In prior fiscal years, common shares underlying the Notes were also potentially dilutive. Potentially dilutive securities are excluded from the calculation of diluted EPS in the event they are subject to performance conditions that have *not* yet been achieved as of the reporting date or if they would otherwise be antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a net loss; in such cases the inclusion of the potential common shares would have an antidilutive effect. See Note *10.* “Net Earnings (Loss) per Share” for EPS calculations for the years ended *March 31, 2026,**2025* and *2024*.\n\n \n\nWeighted average outstanding shares includes awards that have *not* yet vested and are *not* yet legally outstanding, but for which all vesting criteria other than the passage of time have been satisfied. For example, this includes RSUs granted to retirement-eligible employees that are *not* subject to continued service requirements but have *not* yet vested. \n\n \n\n****\n\n**Legal****Contingencies**\n\nWe 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.\n\n \n\nSee Note *13.* “Commitments and Contingencies” for further information.\n\n \n\n******\n\n******\n\n***Purchase Accounting for Acquisitions***\n\nWe 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 identifiable acquired assets less liabilities is recognized as goodwill. We determine fair value using widely accepted income and market valuation techniques, which rely heavily on Level *3* inputs. These types of analyses require us to make assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flows. For all material acquisitions, we engage external valuation specialists to aid management in preparing fair value models. Certain adjustments to the assessed fair values of acquired assets or liabilities made subsequent to the acquisition date, but within a measurement period *not* to exceed *one* year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded within earnings. We expense acquisition-related costs, such as legal and advisory fees, as incurred in general, and administrative expenses in the Consolidated Statements of Operations.\n\n \n\nResults of operations of acquired companies are included in our Consolidated Financial Statements from the date of the acquisition forward. If actual results are *not* consistent with our assumptions and estimates, or if our assumptions and estimates change due to new information, we *may*be exposed to losses. We did *not* acquire any businesses in fiscal year *2026* or *2025*. In the year ended *March 31,**2024,* we acquired businesses for total net purchase prices of $87,187.\n\n \n\nSee Note *4.* “Significant Transactions” for further information.\n\n \n\n****\n\n****\n\n**Risks and Uncertainties**\n\nThe 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 are based on management’s judgment regarding future events and circumstances, the outcomes of which are inherently uncertain. Actual results *may*differ from those estimates.\n\n \n\nWe have evaluated the estimates used in preparing the consolidated financial statements and identified the following areas for which there is a reasonable possibility that estimates could be materially affected in the near term:\n\n \n\n ●Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions.\n\n \n●\n\nEstimates regarding future financial performance and other assumptions used in fair value measurements for goodwill and intangible asset impairment testing, which could result in future impairment losses. \n\n \n●\n\nEstimates of the net realizable value of inventory and accounts receivable. \n\n \n\nWe do *not* believe that there are any significant risks that have *not* already been disclosed in the accompanying Consolidated Financial Statements.\n\n \n\nPage\n*52*\n\n[Table of Contents](#toc)\n\n \n\n****\n\n****\n\n**Recently****Adopted****Accounting Pronouncements**\n\nFor the year ended *March 31, 2026,*we adopted Accounting Standards Update (“ASU”) *2023‑09,* *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*. This ASU requires public business entities to provide enhanced disclosures related to the reconciliation of the effective tax rate to the statutory federal, state, and foreign income tax rates, including disaggregation of individual reconciling items when their impact exceeds specified quantitative thresholds. The ASU also requires disaggregated disclosure of income taxes paid (net of refunds received) by federal, state, and foreign jurisdictions, and further disaggregation for specific jurisdictions when amounts exceed defined thresholds. In addition, certain reconciling items must be disaggregated based on their nature, determined by reference to the item’s fundamental characteristics, including the underlying transaction or event that gave rise to the reconciling item and the activity with which it is associated. ASU *2023‑09* eliminates the previous requirement to disclose information about unrecognized tax benefits that have a reasonable possibility of significantly increasing or decreasing within the *12* months following the reporting date. We adopted ASU *2023*-*09* on a prospective basis, which resulted in the new disclosure requirements presented in Note *12,* *Income Taxes*.\n\n \n\n**Recently Issued Accounting Pronouncements**\n\nIn *November 2024, *the FASB issued ASU *2024*-*03,* \"Expense Disaggregation Disclosures (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses.\" ASU *2024*-*03* requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for fiscal years beginning after *December 15, 2026 (*our fiscal year *2028* for annual periods) and interim periods within fiscal years beginning after *December 15, 2027 (*our fiscal year *2029* for interim periods), with early adoption and prospective or retrospective application permitted. We intend to adopt the standard on a prospective basis and are currently assessing the effect the adoption will have on our consolidated financial statement disclosures.\n\n \n\nIn *July 2025,*the FASB issued ASU *2025*-*05,* *Financial Instruments*—*Credit Losses (Topic 326): Improvements to the Measurement of Credit Losses for Receivables and Contract Assets*. ASU *2025*-*05* introduces a practical expedient that removes the requirement to incorporate macroeconomic forecasts into the**estimation of expected credit losses. The guidance is effective for fiscal years beginning after *December 15, 2025,*including interim periods within those fiscal**years. Prospective adoption is required, and early adoption is permitted. We intend to early adopt ASU *2025*-*05* for our fiscal year beginning *April 1, 2026,***including interim periods. Upon adoption, we plan to elect the practical expedient allowing us to assume conditions at the balance sheet date will remain**unchanged for the remaining life of the asset. We do *not* expect adoption to have a material impact on our consolidated financial statements or related**disclosures.\n\n \n\nIn *September 2025,*the FASB issued ASU *2025*-*06,* *Intangibles*—*Goodwill and Other (Topic 350): Internal-Use Software*. ASU *2025*-*06* modernizes accounting for costs incurred in the development of internal-use software by eliminating the requirement to evaluate distinct development stages. The guidance is effective for fiscal years beginning after *December 15, 2027,*including interim periods within those fiscal years. ASU *2025*-*06* permits prospective, retrospective or modified retrospective adoption. Early adoption is permitted as of the beginning of an entity's annual reporting period. We intend to early adopt ASU *2025*-*06* prospectively for our fiscal year beginning *April 1, 2026,*including interim periods. We do *not* expect the guidance to have a material impact on our consolidated financial statements or related disclosures\n\n \n\nWe have reviewed all recently issued accounting pronouncements and have concluded that, other than as described above, they are either *not* applicable to us or are *not* expected to have a significant impact on our consolidated financial statements.\n\n \n\n**Note 2. Revenue**\n\n \n\nWe develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables.\n\n \n\nHardware 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.\n\n \n\nConsumables are single-use products requiring 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 and chemical indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.\n\n \n\nPage\n*53*\n\n[Table of Contents](#toc)\n\n \n\nWe also offer maintenance, calibration and testing service contracts. \n\n \n\nWe disclose revenues consistently with how management evaluates the business, i.e., based on business unit and the nature of goods and services provided.\n\n \n\nThe following tables present disaggregated revenues from contracts with customers for the years ended *March 31, 2026,**2025* and *2024*:\n\n \n\n  \n**Year Ended March 31, 2026**\n \n\n  \n**Sterilization and Disinfection Control (1)**\n  \n**Biopharmaceutical Development**\n  \n**Calibration Solutions**\n  \n**Clinical Genomics**\n  \n**Total**\n \n\nConsumables\n $90,521  $16,869  $2,737  $35,815  $145,942 \n\nHardware and Software\n  505   19,170   32,479   5,296   57,450 \n\nServices\n  10,541   12,587   18,335   4,275   45,738 \n\nTotal revenues\n $101,567  $48,626  $53,551  $45,386  $249,130 \n\n \n\n  \n**Year Ended March 31, 2025**\n \n\n  \n**Sterilization and Disinfection Control (1)**\n  \n**Biopharmaceutical Development**\n  \n**Calibration Solutions**\n  \n**Clinical Genomics**\n  \n**Total**\n \n\nConsumables\n $82,736  $17,287  $3,039  $35,672  $138,734 \n\nHardware and Software\n  496   19,649   31,827   7,689   59,661 \n\nServices\n  10,186   11,794   16,883   3,720   42,583 \n\nTotal revenues\n $93,418  $48,730  $51,749  $47,081  $240,978 \n\n \n\n  \n**Year Ended March 31, 2024**\n \n\n  \n**Sterilization and Disinfection Control(1)**\n  \n**Biopharmaceutical Development**\n  \n**Calibration Solutions**\n  \n**Clinical Genomics**\n  \n**Total**\n \n\nConsumables\n $65,459  $17,086  $2,345  $36,086  $120,976 \n\nHardware and Software\n  549   12,993   30,024   12,254   55,820 \n\nServices\n  9,116   10,633   15,394   4,248   39,391 \n\nTotal revenues\n $75,124  $40,712  $47,763  $52,588  $216,187 \n\n \n\n(*1*)Revenues of $9,289 from GKE are included in the Sterilization and Disinfection Control division during the year ended *March 31, 2024*and represent sales of consumables made beginning from the acquisition date.\n\n \n\n**Contract Balances**\n\nOur 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 of *twelve* months or less. Contract liabilities will be recognized to revenue as we satisfy our obligations under the terms of the contracts. \n\n \n\nA summary of contract liabilities is as follows:\n\n \n\nContract liabilities as of March 31, 2025\n $14,803 \n\nPrior year liabilities recognized in revenues during the year ended March 31, 2026\n  (10,155)\n\nContract liabilities added during the year ended March 31, 2026, net of revenues recognized\n  10,075 \n\nContract liabilities balance as of March 31, 2026\n $14,723 \n\n \n\n \n\nPage\n*54*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Note 3. Fair Value Measurements**\n\n \n\nOur 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 Level *1* of the fair value hierarchy. \n\n \n\nThe financial instruments that subject us to the highest concentrations 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 than *10%* of total trade receivables as of *March 31, 2026*.\n\n \n\nThe carrying amounts of our Credit Facility on the Consolidated Balance Sheets approximate fair value due to the variable interest rate pricing on the debt, with the principal balances bearing an interest rate approximating current market rates.\n\n \n\nOn *August 15, 2025, *our outstanding 1.375% convertible notes matured. No balances remained outstanding related to the Notes as of *March 31, 2026.*See Note *8**.* \"Indebtedness\" for further information. While outstanding, we estimated the fair value of the Notes using Level *2* inputs based on the last actively traded price or observable market input preceding the end of the reporting period. The fair value of the Notes was approximately correlated to our stock price.\n\n \n\n  \n**March 31, 2025**\n \n\n  \n**Carrying Value**\n  \n**Fair Value (Level 2)**\n \n\nNotes\n $97,297  $95,063 \n\n \n\nThere were *no* nonrecurring fair value adjustments or transfers between the levels of the fair value hierarchy during the fiscal years ended *March 31, 2026*and *2025*.\n\n \n\n \n\n**Note 4. Significant Transactions**\n\n \n\n***Acquisition of GKE, Fiscal year 2024***\n\nWe acquired 100% of the outstanding shares of GKE GmbH and SAL GmbH effective *October 16, 2023, *and effective *December 31, 2023, *we acquired 100% of the outstanding shares of Beijing GKE Science & Technology Co. Ltd.\n\n \n\nGKE develops, manufactures and sells a portfolio of chemical sterilization indicators, biologics and process challenge devices to support sterility validation and protect patient safety across global healthcare markets. GKE is included in our Sterilization and Disinfection Control (\"SDC\") division. GKE's strengths in chemical indicators complement SDC's portfolio of biological indicators, as chemical and biological indicators *may*be used in the same sterility validation workflows. Additionally, GKE’s healthcare-focused commercial capabilities in Europe and APAC expand our reach in those markets. \n\n \n\nWe finalized our purchase price accounting of GKE during fiscal year *2024**.* Total cash consideration for the GKE acquisition was $87,187, net of cash acquired and financial liabilities assumed and inclusive of working capital adjustments. We funded the acquisition through a combination of cash on hand and a total of $71,000 borrowed under our line of credit.\n\n \n\nDuring fiscal year *2026,* we paid the GKE sellers $9,555 to settle an acquisition-related holdback.\n\n \n\nGKE'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 the *twelve* months ended *March 31, 2024.*\n\n \n\nPage\n*55*\n\n[Table of Contents](#toc)\n\n \n\n*Supplemental unaudited pro-forma information*\n\nCombined revenues from Mesa and GKE for fiscal year *2024* would have been approximately $229,260 had the GKE acquisition occurred at the beginning of the earliest period presented, on *April 1, 2023.*\n\n \n\nIt 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 the *three* 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 do *not* have sufficient historical detail to eliminate intercompany cost of revenues accurately. As presentation of pro-forma net earnings information would require extensive estimation and could *not* be sourced from sufficiently factual information reasonably aligned with GAAP, it is impracticable for us to disclose pro-forma net earnings information.\n\n \n\n \n\n**Note 5. Leases**\n\n \n\nWe 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:\n\n \n\n**Lease Assets and Liabilities**\n\n**Balance Sheet Location**\n \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nOperating lease ROU asset\n\n*Other assets*\n $17,500  $16,382 \n\nCurrent operating lease liabilities\n\n*Other accrued expenses*\n  3,687   3,523 \n\nNoncurrent operating lease liabilities\n\n*Other noncurrent liabilities*\n  13,662   12,380 \n\n \n\nThe components of lease costs, the weighted average remaining lease term and the weighted average discount rate were as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nOperating lease expense\n $4,990  $4,025  $3,453 \n\nVariable lease expense\n  1,781   1,316   1,039 \n\nShort term lease expense\n  388   571   423 \n\nTotal lease expense\n $7,159  $5,912  $4,915 \n\nWeighted average remaining lease term in years\n  7.6   6.8   4.6 \n\nWeighted average discount rate\n  6.7%  6.2%  4.1%\n\n \n\nSupplemental cash flow information related to leases was as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nCash paid for amounts included in the measurements of lease liabilities\n $5,041  $4,534  $3,392 \n\nOperating lease assets obtained in exchange for operating lease liabilities\n  4,151   9,863   4,265 \n\n \n\nAs of *March 31, 2026* maturities of lease liabilities are as follows for future years ending *March 31:*\n\n \n\n2027\n $4,732 \n\n2028\n  1,702 \n\n2029\n  2,385 \n\n2030\n  2,284 \n\n2031\n  2,269 \n\nThereafter\n  9,125 \n\nFuture value of lease liabilities\n  22,497 \n\nLess: imputed interest\n  (5,148)\n\nPresent value of lease liabilities\n $17,349 \n\n \n\nPage\n*56*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Note 6. Goodwill and****Intangible********Assets, Net**\n\n \n\n***Goodwill***\n\n \n\nGoodwill 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:\n\n \n\n  \n**Sterilization and Disinfection Control**\n  \n**Biopharmaceutical Development**\n  \n**Calibration Solutions**\n  \n**Clinical Genomics**\n  \n**Total**\n \n\nMarch 31, 2024\n $79,430  $46,515  $37,211  $16,940  $180,096 \n\nEffect of foreign currency translation\n  (22)  1,696   2   (12)  1,664 \n\nMarch 31, 2025\n $79,408  $48,211  $37,213  $16,928  $181,760 \n\nEffect of foreign currency translation\n  3,402   1,455   53   193   5,103 \n\nMarch 31, 2026\n $82,810  $49,666  $37,266  $17,123  $186,863 \n\n \n\n***Finite-Lived Intangible Assets***\n\n \n\nIntangible assets other than goodwill consisted of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\n  \n**Gross Carrying Amount**\n  \n**Accumulated Amortization**\n  \n**Net Carrying Amount**\n  \n**Gross Carrying Amount**\n  \n**Accumulated Amortization**\n  \n**Net Carrying Amount**\n \n\nCustomer relationships\n $188,192  $(124,981) $63,211  $190,069  $(117,189) $72,880 \n\nOther intangibles\n  60,308   (40,172)  20,136   61,192   (37,197)  23,995 \n\nTotal finite-lived intangible assets\n $248,500  $(165,153) $83,347  $251,261  $(154,386) $96,875 \n\n \n\nAmortization expense for intangible assets was as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nAmortization in cost of revenues\n $2,803  $2,641  $6,052 \n\nAmortization in general and administrative\n  15,214   16,504   21,289 \n\nTotal\n $18,017  $19,145  $27,341 \n\n \n\nPage\n*57*\n\n[Table of Contents](#toc)\n\n \n\nThe range of useful lives and weighted-average remaining useful lives of amortizable intangible assets as of *March 31, 2026* were as follows: \n\n \n\n  \n**Approx. Est. Useful**\n \n**Weighted Avg.**\n\n  \n**Life**\n \n**Remaining Life**\n\n**Description**\n \n**(Years)**\n \n**(Years)**\n\nCustomer Relationships\n \n5 - 12\n \n6.6\n\nOther Intangibles\n \n7 - 12\n \n5.0\n\n \n\nEstimated future amortization expense for the fiscal years ending *March 31*is presented below, based on foreign currency exchange rates in effect as of *March 31, 2026*:\n\n \n\n**Fiscal Year**\n \n**Amortization Expense**\n \n\n2027\n $17,182 \n\n2028\n  16,553 \n\n2029\n  15,993 \n\n2030\n  11,316 \n\n2031\n  4,854 \n\n \n\nDuring fiscal year *2024,* we recorded goodwill impairment losses totaling $156,892, consisting of $118,741 in our Clinical Genomics division and $38,151 in our Biopharmaceutical Development division. In addition, we recorded impairments of other intangible assets in our Clinical Genomics division totaling $117,641. These impairment losses were primarily driven by increases in the weighted average cost of capital, which reduced the estimated fair value of the related businesses, as well as downward revisions to expected future financial performance during fiscal year *2024.*\n\n \n\n**Note 7. Supplemental Information**\n\n \n\nInventories consisted of the following: \n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nRaw materials\n $14,873  $14,775 \n\nWork in process\n  925   560 \n\nFinished goods\n  10,575   10,030 \n\nTotal inventories\n $26,373  $25,365 \n\n \n\nPrepaid expenses and other consisted of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nPrepaid expenses\n $2,785  $2,364 \n\nDeposits\n  1,644   1,752 \n\nPrepaid income taxes\n  819   1,040 \n\nOther current assets\n  3,620   2,873 \n\nTotal prepaid expenses and other\n $8,868  $8,029 \n\n \n\nPage\n*58*\n\n[Table of Contents](#toc)\n\n \n\nProperty, plant and equipment consisted of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nLand\n $889  $889 \n\nBuildings and building improvements\n  23,368   23,280 \n\nManufacturing equipment\n  23,424   22,694 \n\nComputer equipment\n  3,658   3,093 \n\nOther\n  7,922   7,188 \n\nConstruction in progress\n  1,467   1,610 \n\nGross total\n  60,728   58,754 \n\nAccumulated depreciation\n  (30,115)  (26,421)\n\nTotal property, plant and equipment, net\n $30,613  $32,333 \n\n \n\nDepreciation expense was as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nDepreciation expense in cost of revenues\n $3,113  $3,160  $3,031 \n\nDepreciation expense in operating expense\n  2,141   2,222   1,202 \n\nTotal depreciation expense\n $5,254  $5,382  $4,233 \n\n \n\nAccrued payroll and benefits consisted of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nBonus payable\n $10,509  $10,891 \n\nWages and paid-time-off payable\n  3,333   3,672 \n\nPayroll related taxes\n  2,317   2,475 \n\nSeverance\n  2,294   273 \n\nOther benefits payable\n  553   547 \n\nTotal accrued payroll and benefits\n $19,006  $17,858 \n\n \n\nOther accrued expenses consisted of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**March 31, 2025**\n \n\nAccrued business taxes\n $6,950  $5,996 \n\nCurrent operating lease liabilities\n  3,687   3,523 \n\nIncome taxes payable\n  4,745   2,157 \n\nGKE acquisition holdback\n  -   9,315 \n\nOther\n  2,234   3,610 \n\nTotal other accrued expenses\n $17,616  $24,601 \n\n \n\nPage\n*59*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**Note 8****. Indebtedness**\n\n \n\n**Credit Facility**\n\n \n\nOur secured credit agreement matures in *April 2029 *and includes:\n\n \n\n(i)\n\nA revolving credit facility with an aggregate principal amount of up to $125,000 (the \"Revolver\"),\n\n(ii)\n\nA term loan with a maximum principal amount of $75,000, which is subject to escalating quarterly principal payments (the \"Term Loan\"),\n\n(iii)\n\nA swingline loan with an aggregate principal amount *not* exceeding $5,000, and,\n\n(iv)\n\nLetters of credit with an aggregate stated amount *not* exceeding $2,500 at any time. \n\n \n\nWe refer to the agreement in whole as the “Credit Facility.”\n\n \n\nBorrowings under our Credit Facility bear interest at a SOFR rate or a base rate, plus an applicable spread that varies with our total net leverage ratio. On *October 10, 2025 *we amended the Credit Facility to reduce the range of the spread from 1.5% - 3.0% to 1.25% - 2.50%. \n\n \n\nThe weighted average interest rate on borrowings under the Credit Facility as of *March 31, 2026* was 5.9%.\n\n \n\nThe financial covenants in the Credit Facility include a maximum leverage ratio of 4.00 to *1.00* on each of the quarterly testing dates between *March 31, 2025 *and *March 31, 2026 *and 3.5 to *1.0* on each testing date thereafter. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to *1.0.* Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of *March 31, 2026,*we were in compliance with all required covenants under the terms of the Credit Facility.\n\n \n\n***Term Loan ***\n\n \n\nWe are required to make quarterly principal payments on the Term Loan. During the year ended *March 31, 2026,*we made required principal payments on the Term Loan of $3,750. For the fiscal years ending *March 31,*required future principal debt payments on the Term Loan are as follows:\n\n \n\n**Fiscal Year**\n \n**Amount**\n \n\n2027\n $5,625 \n\n2028\n  5,625 \n\n2029\n  7,500 \n\n2030\n  48,750 \n\nTotal principal remaining\n $67,500 \n\n \n\nUnamortized debt issuance costs related to the Term Loan are reflected as a discount to the debt’s carrying value in our Consolidated Balance Sheets and are being amortized to interest expense through maturity. The net carrying amount of the Term Loan was as follows:\n\n \n\n  \n**March 31,2026**\n  \n**March 31, 2025**\n \n\nTerm Loan (5.9% and 7.2% as of March 31, 2026 and 2025, respectively)\n $67,500  $71,250 \n\nLess: debt issuance costs\n  (518)  (598)\n\nLess: current portion\n  (5,625)  (3,750)\n\nNoncurrent portion\n $61,357  $66,902 \n\n \n\nPage\n*60*\n\n[Table of Contents](#toc)\n\n \n\n***Revolver***\n\nAs of *March 31, 2026*, the outstanding balance under our Revolver was $84,500, and $40,500 was available for borrowing. \n\n \n\nWe 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 $157 and $269 for the years ended *March 31, 2026*, and *March 31, 2025*, respectively.\n\n \n\nThe balance of unamortized customary lender fees related to the Revolver was $1,018 and $1,203 as of *March 31, 2026*and *2025,* respectively. The lender fees are being amortized to interest expense through maturity. \n\n \n\n**Convertible Notes**\n\nOn *August 12, 2019, *we issued an aggregate principal amount of $172,500 of Notes bearing interest at a rate of 1.375%. Debt issuance costs related to the Notes, consisting of $2,925 of commissions payable to the initial purchasers and $152 of *third*-party offering costs, were recorded as a reduction to the carrying amount of the Notes and amortized to interest expense over the life of the Notes. \n\n \n\nDuring fiscal year *2025,* we repurchased $75,000 principal amount of the Notes in privately negotiated transactions, which resulted in the recognition of a gain on extinguishment of $2,887 recorded in other income for the year ended *March 31, 2025.*\n\n \n\nThe Notes matured on *August 15, 2025.*Upon maturity, we settled the remaining aggregate principal balance of $97,500, as well as $670 of accrued interest, in cash by drawing $97,000 under our Revolver and using $1,170 of cash on hand. \n\n \n\nThe historical net carrying amount of the Notes was as follows:\n\n \n\n  \n**March 31, 2025**\n \n\nPrincipal outstanding\n $97,500 \n\nUnamortized debt issuance costs\n  (203)\n\nNet carrying value\n $97,297 \n\n \n\nWe recognized interest expense on the Notes as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nCoupon interest expense at 1.375%\n $503  $1,372  $2,372 \n\nAmortization of debt issuance costs\n  203   546   926 \n\nTotal interest on the Notes\n $706  $1,918  $3,298 \n\n \n\n \n\n**Note 9****.****Stock****Transactions and Stock-Based Compensation**\n\n*(dollars and shares in thousands, except per share values)*\n\n \n\n*Stock-Based Compensation*\n\nOn *August 22, 2025,*our shareholders approved an amendment to the *2021* Equity Plan that increased the number of shares authorized for issuance from 660 shares to 1,156 shares, an increase of 496 shares. There were 537 shares available for future grants under the *2021* Equity Plan as of *March 31, 2026*. \n\n \n\nStock-based compensation expense recognized in the Consolidated Financial Statements was as follows: \n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nStock-based compensation expense\n $17,868  $13,142  $11,936 \n\nAmount of income tax expense recognized in earnings\n  2,616   2,068   2,718 \n\nStock-based compensation expense, net of tax\n $20,484  $15,210  $14,654 \n\n \n\nPage\n*61*\n\n[Table of Contents](#toc)\n\n \n\n*Time-Based Restricted Stock Units (RSUs)*\n\nRSU activity under the *2021* Equity Plan was as follows (shares and dollars in thousands, except per-share data):\n\n \n\n  \n**Time-Based Restricted Stock Units**\n \n\n  \n**Number of Shares**\n  \n**Weighted- Average Grant Date Fair Value per Share**\n  \n**Aggregate Intrinsic Value**\n \n\nNonvested at March 31, 2025\n  145  $106.54  $17,197 \n\nAwards granted\n  122   90.91   * * \n\nAwards forfeited or expired\n  (15)  97.38   * * \n\nAwards distributed\n  (65)  117.13   5,808 \n\nNonvested as of March 31, 2026\n  187  $93.39  $16,503 \n\nExpected to vest\n  165  $93.13  $14,558 \n\n \n\nFor the years ended *March 31, 2025*and *2024,* the weighted average fair values per RSU granted was $94.30 and $133.30, respectively. Unrecognized stock-based compensation expense for RSUs that we have determined are probable of vesting was $6,749 as of *March 31, 2026* and is expected to be recognized over a weighted average period of 1.9 years. \n\n \n\nThe following table summarizes RSU valuation information: \n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nFair value of awards vested\n $7,575  $6,173  $5,881 \n\nIntrinsic value of awards vested\n $5,808  $3,928  $3,658 \n\nWeighted average fair value of awards granted, per share\n $90.91  $94.30  $133.30 \n\n \n\n*Performance-Based Restricted Stock Units (PSUs)*\n\nWe 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.\n\n \n\nPSU activity under the *2021* Equity Plan was as follows (shares and dollars in thousands, except per-share data):\n\n \n\n  \n**Performance-Based Restricted Stock Units**\n \n\n  \n**Number of Shares**\n  \n**Weighted- Average Grant Date Fair Value per Share**\n  \n**Aggregate Intrinsic Value**\n \n\nNonvested at March 31, 2025\n  85  $166.31  $10,101 \n\nAwards granted\n  44   99.56   * * \n\nPerformance adjustment(1)\n  (3)  132.29   * * \n\nAwards forfeited or expired\n  -   -   * * \n\nAwards distributed\n  (16)  265.32   *1,336* \n\nNonvested as of March 31, 2026\n  110  $126.18  $9,966 \n\nExpected to vest\n  101  $128.47  $8,970 \n\n \n\n(*1*) \nDuring fiscal year *2026,* the performance period for the market-based portion of PSUs granted in fiscal *2024* concluded. Based on actual performance during the performance period, 13 of these PSUs are expected to vest, net of estimated forfeitures.\n\n \n\nFor the years ended *March 31, 2025* and *2024*, the average fair value per PSU granted was $102.57 and $132.29, respectively. Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $2,200 as of *March 31, 2026* and is expected to be recognized over a weighted average period of 1.8 years. The total fair value of PSUs vested was $4,289 and $3,492 during the years ended *March 31, 2026*and *2025,* respectively. There were no PSUs vested or distributed during the fiscal year *2024.* \n\n \n\nPage\n*62*\n\n[Table of Contents](#toc)\n\n \n\nDuring the year ended *March 31, 2026*, the Compensation Committee of the Board of Directors created a plan to award 44 PSUs at target (“the *FY26* PSUs”) to eligible employees. The *FY26* PSUs are subject to market-based performance conditions measured relative to a selected peer index and service conditions. The market performance measurement period and service period is from *June **15,* *2025* through *June 15, 2028. *The number of shares that will be earned is based on market performance and will range from 0% to 200% of the target number of shares. If defined minimum targets are *not* met, *no* shares will vest.\n\n \n\nIn *October **2021,* the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of performance stock units subject to both performance and service conditions to our former CEO. Based on actual achievement of the performance metrics as of the performance period ended *March 31, 2024, *23 shares were distributed in fiscal years *2026* and *2025.* The remaining 12 shares will vest on *October 27, 2026.*The unamortized expense associated with the remaining awards was recorded in full in fiscal year *2026* in conjunction with our former CEO’s departure. \n\n \n\n*Stock Options*\n\nDuring the years ended *March 31, 2026*and *2025* there were no options granted. We used the Black-Scholes option-pricing model to estimate the fair value of stock option awards granted in the year ended *March 31, 2024. *Our weighted‑average assumptions included an expected life of 3.52 years, expected volatility of 37.8%, a risk‑free interest rate of 4.16%, and an expected dividend yield of 0.07%. The weighted‑average Black-Scholes grant date fair value per option granted in fiscal *2024* was $42.76. \n\n \n\nStock option activity was as follows (shares and dollars in thousands, except per-share data):\n\n \n\n  \n**Stock Options**\n \n\n  \n**Shares Subject to Options**\n  \n**Weighted- Average Exercise Price per Share**\n  \n**Weighted-Average Remaining Contractual Life (Years)**\n  \n**Aggregate Intrinsic Value**\n \n\nOutstanding as of March 31, 2025\n  155  $192.92   2.7  $52 \n\nAwards granted\n  -   -   * *   *-* \n\nAwards forfeited or expired\n  (23)  202.30   * *   *-* \n\nAwards exercised or distributed\n  -   -   * *   - \n\nOutstanding as of March 31, 2026\n  132  $191.22   1.7  $- \n\nExercisable awards as of March, 31, 2026\n  117  $199.04   1.5  $- \n\nExercisable awards and awards expected to vest, March 31, 2026\n  131  $191.35   1.7  $- \n\n \n\nThe total intrinsic value of stock options exercised was $24 during each of the years ended *March 31, 2025* and *2024.* Unrecognized stock-based compensation expense for stock options expected to vest as of *March 31, 2026* was $104 and is expected to be recognized over a weighted average period of 0.5 years. The total fair value of options vested was zero, $2,168, and $2,749 during the years ended *March 31, 2026,**2025* and *2024*, respectively.\n\n \n\n*Repurchases and Treasury Stock*\n\nIn *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 *may*be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares of common stock repurchased will be cancelled and repurchases of shares of common stock will be funded through existing cash reserves. There were no repurchases of our shares of common stock under this plan during the years ended *March 31, 2026*, *2025* or *2024*. As of *March 31, 2026*, we have repurchased 162 shares under this plan.\n\n \n\nPage\n*63*\n\n[Table of Contents](#toc)\n\n \n\nUnder applicable law, Colorado corporations are *not* permitted to retain treasury stock. The price paid for repurchased shares is allocated between common stock and retained earnings based on management’s estimate of the original sales price of the underlying shares.\n\n \n\n*CEO Transition and Retention Awards*\n\nOn *March 9, 2026,*we announced the departure of our former CEO. As a result, we recognized approximately $3,700 of incremental stock‑based compensation expense in *March 2026,*consisting of accelerated recognition of previously unrecognized expense for awards that were *no* longer subject to service conditions, partially offset by forfeitures.\n\n \n\nIn connection with the CEO departure, we granted retention RSUs to certain key executives during fiscal year *2026.* These awards are subject to service conditions and will vest in equal installments on the first, *second* and *third* anniversaries of the grant date. The effects of our former CEO's departure and the retention awards are reflected in the tables above. \n\n \n\nSubsequent to our fiscal year end, we awarded our new CEO a sign-on equity award consisting of 35 RSUs. The total grant-date fair value of the award was approximately $3,000. The award is subject to service conditions and will vest evenly on the first, *second* and *third* anniversaries of the grant date.\n\n[Table of Contents](#toc)\n\n \n\n \n\n \n\n**Note 10. Net Earnings (Loss) Per Share**\n\n*(dollars and shares in thousands, except per share values)*\n\n \n\nThe following table presents a reconciliation of the denominators used in the computation of basic and diluted net (loss) earnings per share:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nNet earnings (loss) available for shareholders\n $6,712  $(1,974) $(254,246)\n\nWeighted average outstanding shares of common stock(1)\n  5,514   5,421   5,386 \n\nDilutive effect of stock options\n  -   -   - \n\nDilutive effect of unvested stock awards\n  51   -   - \n\nFully diluted shares\n  5,565   5,421   5,386 \n\n             \n\nBasic earnings (loss) per share\n $1.22  $(0.36) $(47.20)\n\nDiluted earnings (loss) per share\n $1.21  $(0.36) $(47.20)\n\n \n\n(*1*)Weighted average outstanding shares includes awards that have *not* yet vested and are *not* yet legally outstanding, but for which all vesting criteria other than the passage of time have been satisfied. For example, this includes unvested RSUs granted to retirement-eligible employees and certain awards granted to our former CEO that are *not* subject to continued service or other performance requirements.\n\n \n\nPage\n*64*\n\n[Table of Contents](#toc)\n\n \n\nThe following contingently issuable stock awards were excluded from the calculation of diluted EPS as their inclusion would be anti-dilutive:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nAssumed conversion of convertible debt\n  128   351   608 \n\nStock awards that were anti-dilutive\n  206   386   268 \n\nTotal stock awards excluded from diluted EPS\n  334   737   876 \n\n \n\nStock awards are potentially dilutive securities and as such are excluded from the calculation of diluted EPS if their inclusion would be antidilutive, or if achievement of performance-based thresholds as of our reporting date would *not* result in the awards vesting. Shares underlying the Notes were also potentially dilutive until maturity on *August 15, 2025;*however, these shares have been excluded from the diluted EPS calculation for the years ended *March 31, 2026,**2025* and *2024* as the impact of the assumed conversion of the Notes calculated under the if-converted method was anti-dilutive in each period.\n\n \n\n**Note 11****. Employee Benefit Plan****s**\n\n \n\nWe adopted the Mesa Laboratories, Inc. *401*(k) Retirement Plan effective *January 1, 2000.*Under this plan, we match 100% of the *first* 4% of eligible pay contributed by each eligible employee, and contributions vest immediately. Participation is voluntary, and employees are eligible on the *first* day of the month following their start date. Our contributions to the Mesa Laboratories, Inc. *401*(k) retirement plan were $1,711, $1,645 and $2,078 during the years ended *March 31, 2026,**2025* and *2024*, respectively. \n\n \n\n**Note 12****. Income Taxes**\n\n \n\n***Provision for Income Taxes***\n\n \n\nEarnings (loss) before income taxes was as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nDomestic\n $6,856  $12,615  $(233,853)\n\nForeign\n  5,158   (6,654)  (41,795)\n\nTotal earnings (loss) before income taxes\n $12,014  $5,961  $(275,648)\n\n \n\nThe components of our provision for income taxes were as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nCurrent tax provision:\n            \n\nU.S. Federal\n $753  $3,994  $3,002 \n\nU.S. State\n  502   1,212   1,678 \n\nForeign\n  5,328   2,790   2,330 \n\nTotal current tax expense\n  6,583   7,996   7,010 \n\nDeferred tax provision:\n            \n\nU.S. Federal\n  1,450   63   (20,387)\n\nU.S. State\n  443   13   (1,853)\n\nForeign\n  (3,174)  (137)  (6,172)\n\nTotal deferred tax (benefit)\n  (1,281)  (61)  (28,412)\n\nTotal income tax expense (benefit)\n $5,302  $7,935  $(21,402)\n\n \n\nPage\n*65*\n\n[Table of Contents](#toc)\n\n \n\nThe reconciliation of the U.S. federal statutory rate of 21% to the effective income tax rate for the year ended *March 31, 2026,*following the adoption of ASU *2023*-*09* is as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n \n\n  \n**Amount**\n  \n**%**\n \n\nEarnings Before Income Taxes\n $12,014   * * \n\nU.S. Federal Statutory Tax Rate\n  2,523   21.0%\n\nState and Local Income Taxes, Net of Federal Income Tax Effect(1)\n  746   6.2%\n\n*Foreign Tax Effects:*\n ** **** **** ** ** **** **** **\n\nGermany:\n ** **** **** ** ** **** **** **\n\nFederal statutory rate difference\n  (492)  (4.1%)\n\nSurcharge/trade tax charge\n  2,022   16.8%\n\nDeferred tax rate change\n  (304)  (2.5%)\n\nChanges in valuation allowance\n  (171)  (1.4%)\n\nOther\n  65   0.5%\n\nOther foreign jurisdictions\n  10   0.1%\n\nEffect of Changes in Tax Laws or Rates Enacted in the Current Period\n  -   -%\n\n*Effect of Cross-Border Tax Laws:*\n ** **** **** ** ** **** **** **\n\nGILTI\n  375   3.1%\n\nSubpart F Income\n  259   2.2%\n\nOther\n  48   0.4%\n\nChanges in valuation allowance\n  (2,259)  (18.8%)\n\nTax Credits\n  (580)  (4.8%)\n\n*Nontaxable or Nondeductible Items:*\n ** **** **** ** ** **** **** **\n\nCompensation adjustments\n  2,808   23.4%\n\nChanges in Unrecognized Tax Benefits\n  -   -%\n\n*Other Adjustments:*\n ** **** **** ** ** **** **** **\n\nDeferred charges on intercompany profit\n  139   1.2%\n\nOther\n  113   0.9%\n\nEffective Tax Rate\n $5,302   44.1%\n\n \n\n(*1*) State income taxes in Montana, Maryland and Minnesota comprised the majority (greater than *50%*) of the tax effect in this category. \n\n \n\nPage\n*66*\n\n[Table of Contents](#toc)\n\n \n\nThe reconciliation of the U.S. federal statutory rate of 21% to the effective income tax rate for the years ended *March 31, 2025 *and *2024,* prior to the adoption of ASU *2023*-*09* is as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**Amount**\n  \n**%**\n  \n**Amount**\n  \n**%**\n \n\nEarnings (loss) before income taxes\n $5,961   * *  $(275,648)  * * \n\nFederal income taxes at statutory rates\n  1,251   21.0%  (57,886)  21.0%\n\nState income taxes, net of federal benefit\n  317   5.3%  (2,508)  0.9%\n\nCompensation adjustments\n  2,283   38.3%  2,738   (1.0%)\n\nResearch and development credit\n  (1,054)  (17.7%)  (1,093)  0.4%\n\nReturn to provision adjustment\n  516   8.7%  (182)  0.1%\n\nSubpart F, GILTI, & FDII\n  (484)  (8.1%)  (412)  0.1%\n\nForeign rate differential\n  2,047   34.3%  (566)  0.2%\n\nPermanent difference\n  47   0.8%  479   (0.2%)\n\nGoodwill impairment\n  -   -%  32,594   (11.8%)\n\nValuation allowance\n  3,019   50.6%  5,398   (2.0%)\n\nOther\n  (7)  (0.1%)  36   -%\n\nTotal income tax expense (benefit)\n $7,935   133.1% $(21,402)  7.8%\n\nEffective income tax rate\n  133.12%  * *   7.76%  * * \n\n \n\n***Cash Paid for Income Taxes***\n\n \n\nWe made income tax payments, net of refunds received, during the year ended *March 31, 2026*as follows:\n\n \n\n**Year ended March 31, 2026**\n \n\nFederal\n $- \n\n*State:*\n ** **** **** **\n\nMontana\n  97 \n\nU.S. States, Other\n  633 \n\n*Foreign:*\n ** **** **** **\n\nGermany\n  430 \n\nFrance\n  477 \n\nChina\n  233 \n\n**Income taxes paid, net of amounts refunded**\n $1,870 \n\n \n\nFor fiscal year *2026,* Montana, Germany, France and China cash taxes paid equaled or exceeded *5%* of total income taxes paid. *No* other jurisdiction comprised *5%* or more of total income taxes paid.  \n\n \n\nPage\n*67*\n\n[Table of Contents](#toc)\n\n \n\n**Deferred Tax Assets and Liabilities**\n\n \n\nDeferred 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 our deferred tax assets (liabilities) were as follows:\n\n \n\n  \n**2026**\n  \n**2025**\n \n\n**Deferred tax assets:**\n   ** **   ** **\n\nCapitalized research expenditures\n $4,041  $8,148 \n\nIncome tax credits\n  2,618   2,774 \n\nAllowances and reserves\n  3,317   2,687 \n\nStock compensation deductible differences\n  1,890   1,632 \n\nOperating lease liabilities\n  1,972   1,860 \n\nInventories\n  1,058   1,153 \n\nNet operating loss carryforwards\n  3,660   3,219 \n\nOther temporary differences\n  615   265 \n\n**Net deferred tax assets, gross**\n  **19,171**   **21,738** \n\nValuation allowance\n  (6,408)  (8,999)\n\n**Net deferred tax assets, net**\n  **12,763**   **12,739** \n\n**Deferred tax liabilities:**\n   ** **   ** **\n\nOperating lease right-of-use assets\n  (2,051)  (1,843)\n\nGoodwill and intangible assets\n  (25,275)  (26,854)\n\nProperty, plant and equipment\n  (2,268)  (2,273)\n\nOther temporary differences\n  (1,753)  (579)\n\n**Total deferred tax liabilities**\n  **(31,347****)**  **(31,549****)**\n\n**Net deferred tax assets/(liabilities)**\n  **(18,584****)**  **(18,810****)**\n\n \n\n*Valuation Allowance*\n\n \n\nIn assessing the realizability of deferred tax assets, management considers whether it is more likely than *not* 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, we have concluded that a valuation allowance is necessary on our U.S. and certain German operations and we do *not* expect to fully realize our deferred tax assets as of *March 31, 2026*.\n\n \n\nThe following table summarizes the changes in our valuation allowance for deferred tax assets: \n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n \n\nBeginning balance\n $8,999  $5,975 \n\n(Reductions) Additions charged to income tax expense and other accounts\n  (2,648)  3,657 \n\nDeductions from reserves\n  -   (637)\n\nCumulative translation adjustment\n  57   4 \n\nEnding balance\n $6,408  $8,999 \n\n \n\nPage\n*68*\n\n[Table of Contents](#toc)\n\n \n\n*Net Operating Loss Credit and Carryforwards*\n\n \n\nAs of *March 31, 2026*, we had U.S. and Foreign net operating loss (“NOL”) carryforwards consisting of the following: \n\n \n\n  \n**March 31, 2026**\n  \n**Expiration Date**\n \n\nPre-2018 federal NOL carryforwards\n $-   *N/A* \n\nPost-2018 federal NOL carryforwards\n  -  \n*Indefinite*\n \n\nState NOL carryforwards\n  9,690  \n*March 31, 2035*\n \n\nForeign NOL carryforwards\n  13,846  \n*Indefinite*\n \n\n \n\nAs of *March 31, 2026*, we had U.S. tax credit carryforwards consisting of the following:\n\n \n\n  \n**March 31, 2026**\n  \n**Expiration Date**\n \n\nFederal research tax credit carryforwards\n $-   *N/A* \n\nState research tax credits carryforwards\n  3,295  \nMarch 31, 2039\n \n\nFederal foreign tax credit carryforwards\n  15  \nMarch 31, 2037\n \n\n \n\n*Undistributed earnings in foreign subsidiaries*\n\n \n\nFor the year ended *March 31, 2026*, provisions have *not* been made for income taxes on undistributed earnings that were deemed permanently reinvested in foreign subsidiaries at *March 31, 2026*. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is *not* 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 we *no* longer plan to permanently reinvest these undistributed earnings.\n\n \n\n***Uncertain Tax Positions***\n\n \n\nAs of *March 31, 2026*, we had no gross unrecognized tax benefits. We recognize any 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 our accompanying Consolidated Balance Sheets were $0 for each of the years ended *March 31, 2026,**2025* and *2024*. We do *not* expect a material change in unrecognized tax benefits or interest in the next *12* months.\n\n \n\nPage\n*69*\n\n[Table of Contents](#toc)\n\n \n\n**Income Tax Examinations**\n\nWe file income tax returns in the U.S. various states and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. The tax year ended *March **31,* *2024* for Mesa Laboratories, Inc. is under review by the U.S. Internal Revenue Service.\n\n \n\nThe following tax years remain subject to examination:\n\n \n\n**Significant Jurisdictions**\n  **Open Years** \n\nU.S. Federal\n  2022-*2024* \n\nMontana\n  2022-*2024* \n\nU.S. States, Other\n  2021-*2024* \n\nForeign\n  2019-*2024* \n\n \n\n \n\n**Note 13. Commitments and Contingencies**\n\n \n\nWe are party to various legal proceedings arising in the ordinary course of business.\n\n \n\nDuring fiscal *2026,* a civil complaint was filed against Mesa in the United States District Court for the Northern District of Ohio alleging, among other things, misappropriation of trade secrets and tortious interference with a contract in connection with the departure of a former executive of a *third* party and that individual’s subsequent employment with Mesa. The complaint seeks injunctive relief, monetary damages, attorneys’ fees, and other remedies. Mesa denies the allegations and intends to vigorously defend itself. Due to the early stage of the proceedings, we are unable to predict the outcome of this matter or reasonably estimate the amount of any potential loss, if any. While it is reasonably possible that the resolution of this matter could result in a loss to Mesa, which *may*be material, we have *not* recorded an accrual as of *March **31,* *2026,* as any such loss cannot be reasonably estimated at this time. \n\n \n\nOther than as described above, as of *March 31, 2026*, we are *not* party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations, or cash flows. \n\n \n\n \n\n**Note 14. Segment Data**\n\n \n\nSegment information is prepared on the same basis that our chief operating decision maker, our CEO, uses to assess performance, allocate resources, evaluate financial results, and make key operating decisions. Our four reportable segments are organized primarily by the nature of the goods and services they sell. Our CODM regularly reviews segment-level U.S. GAAP revenues and gross profit relative to forecasted and prior period amounts, as well as non-GAAP adjusted operating expense compared to budgeted amounts. Our CODM also reviews non-GAAP organic revenues growth and non-GAAP adjusted operating income to support strategic planning and resource development. The accounting policies of our operating segments are the same as those described in Note *1**.* \"Description of Business and Summary of Significant Accounting Policies.\n\n \n\nEffective *April 13, 2026,*Dr. Siddhartha Kadia began his tenure as Mesa’s CEO and CODM. The presentation of segment information below is consistent with the manner in which our segments were evaluated and operated throughout fiscal year *2026.*\n\n \n\nPage\n*70*\n\n[Table of Contents](#toc)\n\n \n\nThe following tables set forth our segment information:\n\n \n\n  \n**Sterilization and Disinfection Control (d)**\n  \n**Biopharmaceutical Development**\n  \n**Calibration Solutions**\n  \n**Clinical Genomics**\n  \n**Corporate and Other (e)**\n  \n**Total Company**\n \n\n**Year Ended March 31, 2026**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\n**Revenues (a)**\n $101,567  $48,626  $53,551  $45,386  $-  $249,130 \n\n*Less:*\n   * *   * *   * *   * *   * *   * *\n\nDepreciation in cost of revenues\n  1,779   308   448   578   -   3,113 \n\nAmortization in cost of revenues\n  526   1,512   -   765   -   2,803 \n\nOther cost of revenues (b)\n  27,555   18,253   21,121   18,015   -   84,944 \n\nTotal segment cost of revenues\n  29,860   20,073   21,569   19,358   -   90,860 \n\n**Gross Profit (c)**\n $71,707  $28,553  $31,982  $26,028  $-  $158,270 \n\n                         \n\n**Reconciling items:**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\nOperating expense\n  * *   * *   * *   * *   * *  $139,759 \n\nOperating income\n  * *   * *   * *   * *   * *   18,511 \n\nNonoperating expense, net\n  * *   * *   * *   * *   * *   6,497 \n\n**Earnings before income taxes**\n  * *   * *   * *   * *   * *  $12,014 \n\n                         \n\n**Year Ended March 31, 2025**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\n**Revenues (a)**\n $93,418  $48,730  $51,749  $47,081  $-  $240,978 \n\n*Less:*\n   * *   * *   * *   * *   * *   * *\n\nDepreciation in cost of revenues\n  1,419   224   837   680   -   3,160 \n\nAmortization in cost of revenues\n  503   1,373   -   765   -   2,641 \n\nNon-cash GKE inventory step-up amortization\n  1,232   -   -   -   -   1,232 \n\nOther cost of revenues (b)\n  25,604   17,220   20,275   19,966   10   83,075 \n\nTotal segment cost of revenues\n  28,758   18,817   21,112   21,411   10   90,108 \n\n**Gross Profit (c)**\n $64,660  $29,913  $30,637  $25,670  $(10) $150,870 \n\n                         \n\n**Reconciling items:**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\nOperating expense\n  * *   * *   * *   * *   * *  $134,534 \n\nOperating income\n  * *   * *   * *   * *   * *   16,336 \n\nNonoperating expense, net\n  * *   * *   * *   * *   * *   10,375 \n\n**Earnings before income taxes**\n  * *   * *   * *   * *   * *  $5,961 \n\n                         \n\n**Year Ended March 31, 2024**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\n**Revenues (a)**\n $75,124  $40,712  $47,763  $52,588  $-  $216,187 \n\n*Less:*\n   * *   * *   * *   * *   * *   * *\n\nDepreciation in cost of revenues\n  1,204   224   666   937   -   3,031 \n\nAmortization in cost of revenues\n  266   1,338   -   4,448   -   6,052 \n\nNon-cash GKE inventory step-up amortization\n  1,229   -   -   -   -   1,229 \n\nOther cost of revenues (b)\n  19,123   13,750   19,550   20,125   77   72,625 \n\nTotal segment cost of revenues\n  21,822   15,312   20,216   25,510   77   82,937 \n\n**Gross Profit (c)**\n $53,302  $25,400  $27,547  $27,078  $(77) $133,250 \n\n                         \n\n**Reconciling items:**\n   ** **   ** **   ** **   ** **   ** **   ** **\n\nOperating expense\n  * *   * *   * *   * *   * *  $405,325 \n\nOperating (loss)\n  * *   * *   * *   * *   * *   (272,075)\n\nNonoperating expense, net\n  * *   * *   * *   * *   * *   3,573 \n\n**(Loss) before income taxes**\n  * *   * *   * *   * *   * *  $(275,648)\n\n \n\n \n(a)\nIntersegment revenues are eliminated to arrive at consolidated totals. Revenues as presented are consistent with GAAP measurement principles and our CODM's review of segment information.\n\n \n(b)\nOther segment cost of revenues for each reportable segment includes product costs, personnel costs (including stock-based compensation), and other manufacturing and overhead costs necessary to produce and sell our products and services, excluding depreciation, amortization, and non-cash inventory step-up amortization expenses.\n\n (c)Gross profit as presented is consistent with GAAP measurement principles and our CODM's review of segment information.\n\n (d)Includes GKE results beginning upon acquisition in fiscal year *2024.* \n\n (e)Unallocated corporate expenses and other business activities are reported within Corporate and Other. Certain depreciation expense classified reflected in Corporate and Other in fiscal years *2024* and *2023* has been recast to conform to current year presentation.\n\n \n\nPage\n*71*\n\n[Table of Contents](#toc)\n\n \n\n \n\nThe following table sets forth inventories by reportable segment. Our CODM is *not* provided with any other segment asset information. \n\n \n\n  \n**March 31,**\n  \n**March 31,**\n \n\n  \n**2026**\n  \n**2025**\n \n\nSterilization and Disinfection Control\n $5,943  $5,545 \n\nBiopharmaceutical Development\n  6,512   4,934 \n\nCalibration Solutions\n  5,603   5,110 \n\nClinical Genomics  8,315   9,776 \n\nTotal inventories\n $26,373  $25,365 \n\n \n\nThe 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, deferred tax assets and other non-tangible assets. \n\n \n\n  **March 31,**  **March 31,** \n\n  \n**2026**\n  \n**2025**\n \n\nUnited States\n $29,893  $29,200 \n\nSweden\n  10,858   11,634 \n\nGermany\n  5,955   6,712 \n\nOther\n  1,213   1,169 \n\nTotal long-lived assets\n $47,919  $48,715 \n\n \n\nRevenues from external customers are attributed to individual countries based upon the location to which the product is shipped or exported, as follows:\n\n \n\n  \n**Year Ended March 31,**\n \n\n  \n**2026**\n  \n**2025**\n  \n**2024**\n \n\nUnited States\n $116,895  $116,615  $106,395 \n\nChina\n  20,449   25,312   24,933 \n\nOther\n  111,786   99,051   84,859 \n\nTotal revenues\n $249,130  $240,978  $216,187 \n\n \n\n*No* customer accounts for *10%* or more of our consolidated revenues. *No* foreign country exceeds *10%* of total revenues."}