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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Sep. 30, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Revenue Recognition In accordance with Accounting Standards Codification (“ASC”) 606, the Company disaggregates its revenue from clients into three revenue streams, service revenue, product revenue and royalties. At contract inception the Company assesses the services promised in the contract with the clients to identify performance obligations in the arrangements. In accordance with ASC 606, the Company determines appropriate revenue recognition by completing the following steps: (i) identification of the contract(s) with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as the Company satisfies a performance obligation. Service revenue The Company enters into contracts with clients to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers archive storage services to its clients. The Company’s fixed fee arrangements may involve nonclinical research services (toxicology, pathology, pharmacology), bioanalytical, and pharmaceutical method development and validation, nonclinical research services and the analysis of bioanalytical and pharmaceutical samples. For bioanalytical and pharmaceutical method validation services and nonclinical research services, revenue is recognized over time using the input method based on the ratio of direct costs incurred to total estimated direct costs. For contracts that involve in-life study conduct, method development or the analysis of bioanalytical and pharmaceutical samples, revenue is recognized over time when samples are analyzed or when services are performed. The Company generally bills for services on a milestone basis. These contracts represent a single performance obligation and due to the Company’s right to payment for work performed, revenue is recognized over time. Research services contract fees received upon acceptance are deferred until earned and classified within customer advances on the consolidated balance sheets. Unbilled revenues represent revenues earned under contracts in advance of billings. Archive services provide climate controlled archiving for client’s data and samples. The archive revenue is recognized over time, generally when the service is provided. These arrangements include one performance obligation. Amounts related to future archiving or prepaid archiving contracts for clients where archiving fees are billed in advance are accounted for as deferred revenue and recognized ratably over the period the applicable archive service is performed. Product revenue The Company’s products can be sold to multiple clients and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the client order. For these products, all revenue is recognized at a point in time, generally when title of the product and control is transferred to the client based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for clients to purchase. These are typically billed in advance and are accounted for as deferred revenue, are recognized ratably over the applicable maintenance period and are included in customer advances on the consolidated balance sheet. Royalty revenue The Company has an agreement with Teva Pharmaceuticals (formerly Biocraft Laboratories, Inc,) which manufactures and markets pharmaceutical products. The Company receives royalties in accordance with sales of certain pharmaceuticals that Teva manufactures and sells. The royalties are received on a quarterly basis and the revenue is recognized over the quarter as earned. Royalty revenue is included in service revenue on the consolidated statements of operations. Total royalty revenue recognized was $377 and $641 in the years ended September 30, 2021 and 2020, respectively. The following table presents changes in the Company’s contract assets for the years ended September 30, 2021 and 2020. The contract assets are included in the unbilled revenues line item on the consolidated balance sheets for the years ended September 30, 2021 and 2020. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fiscal year ended
​ | ​ | September 30,
​ | ​ | 2021 | ​ | 2020
Opening balance |  | $ | 1,879 |  | $ | 2,119
Additions | ​ |  | 6,985 | ​ |  | 2,511
Deductions | ​ |  | (2,670) | ​ |  | (2,751)
Ending balance | ​ | $ | 6,194 | ​ | $ | 1,879
​ ​ The following table presents changes in the Company’s contract liabilities for the years ended September 30, 2021 and 2020. The contract liabilities are included in the customer advances line item on the consolidated balance sheets for the years ended September 30, 2021 and 2020. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fiscal year ended
​ | ​ | September 30,
​ | ​ | 2021 | ​ | 2020
Opening balance |  | $ | 11,392 |  | $ | 6,726
Additions | ​ |  | 208,377 | ​ |  | 106,956
Deductions | ​ |  | (193,155) | ​ |  | (102,290)
Ending balance | ​ | $ | 26,614 | ​ | $ | 11,392
​ Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At times, cash in the bank deposit may exceed federally insured limits. Restricted Cash Restricted cash generally consists of amounts held by our creditors. For the year ended September 30, 2021, the Company had $18,000 of restricted cash held by First Internet Bank of Indiana pursuant to its credit facility with the Company. Accounts Receivable The Company evaluates the creditworthiness of its customers on a periodic basis, monitors economic conditions, and calculates allowances for estimated credit losses on its trade receivables on a quarterly basis using an expected credit loss model. The Company assesses whether collectability is probable at the time of sale and on an ongoing basis. Collateral is generally not required. The risk associated with this concentration is mitigated by the Company’s ongoing credit-review procedures. The Company’s allowance for doubtful accounts was $668 and $561 at September 30, 2021 and 2020, respectively. A summary of activity in our allowance for doubtful accounts is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fiscal year ended September 30,
​ |  | 2021 |  | 2020
Opening balance | ​ | $ | 561 | ​ | $ | 1,759
Charged to expense | ​ |  | 208 | ​ |  | 180
Uncollectible invoices written off | ​ |  | (77) | ​ |  | (1,378)
Amounts collected | ​ |  | (24) | ​ |  | —
Ending balance | ​ | $ | 668 | ​ | $ | 561
​ Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) cost method of accounting. The Company evaluates inventory on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand. For inventory deemed to be obsolete, we provide a reserve. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates the estimate of future demand. A summary of activity in our inventory obsolescence is as follows for the years ended September 30, 2021 and 2020: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fiscal year ended September 30,
​ | ​ | 2021 | ​ | 2020
Opening balance |  | $ | 177 |  | $ | 198
Provision for slow moving and obsolescence | ​ |  | 10 | ​ |  | 84
Write-off of obsolete and slow moving inventory | ​ |  | (47) | ​ |  | (105)
Closing balance | ​ | $ | 140 | ​ | $ | 177
​ Property and Equipment The Company records property and equipment acquired as part of business combinations at fair value while other property and equipment is recorded at cost, including interest capitalized during the period of construction of major facilities. Depreciation, including amortization on capital leases, is computed using the straight-line method over the estimated useful lives of the assets, which we estimate to be: buildings and improvements, 34 to 40 years; machinery and equipment, 5 to 10 years, and office furniture and fixtures, 10 years. Expenditures for maintenance and repairs are expensed as incurred unless the life of the asset is extended beyond one year, which would qualify for asset treatment. Depreciation and amortization expense was $6,268 in fiscal 2021 and $4,074 in fiscal 2020. Property and equipment, net, as of September 30, 2021 and 2020 consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of September 30,
​ | ​ | 2021 |  | 2020
Land and improvements | ​ | $ | 2,276 | ​ | $ | 1,755
Buildings and improvements | ​ |  | 40,169 | ​ |  | 29,813
Machinery and equipment | ​ |  | 36,743 | ​ |  | 27,500
Office furniture and fixtures | ​ |  | 1,338 | ​ |  | 828
Construction in progress | ​ |  | 3,725 | ​ |  | 718
​ | ​ |  | 84,251 | ​ |  | 60,614
Less: accumulated depreciation | ​ |  | (36,273) | ​ |  | (31,885)
Net property and equipment | ​ | $ | 47,978 | ​ | $ | 28,729
​ Right-of-use assets The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASU 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for the leases on a straight-line basis over the lease term. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration. Long-Lived Assets including Goodwill Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized of the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company carries goodwill at cost and is not amortized. The Company reviews goodwill for impairment on an annual basis and when impairment indicators are present in accordance with ASC 350, Intangibles- Goodwill and Other. Goodwill may be impaired if the carrying amount of a reporting unit exceeds the fair value of that reporting unit, calculated as based on discounted cash flows. An impairment charge would be recorded for the excess, if any, of the reporting unit's carrying amount over its fair value, but not to exceed the total amount of goodwill allocated to the reporting unit. The estimated fair value, and any potential impairment, is based on a number of assumptions, including, but not limited to, macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other relevant entity-specific events, events affecting a reporting unit and, if applicable, a sustained decrease in share price. Changes in these estimates or a continued decline in general economic conditions could change our conclusion regarding an impairment of goodwill and potentially result in a non-cash impairment loss in a future period. The assumptions used in our impairment testing could be adversely affected by certain risks. The Company had one reporting unit with goodwill at September 30, 2021, our Services business, which is included in our Services operating segment based on the discrete financial information available, which is reviewed by management. An annual goodwill impairment assessment was performed for the Services reporting unit at September 30, 2021 and there was no indication of impairment. There have been no significant events since the timing of our impairment assessment that would have triggered additional impairment testing after fiscal year-end. Other intangible assets with definite lives are stated at cost and are amortized on a straight-line basis over their estimated useful lives. All intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented, or exchanged, are recognized as an asset apart from goodwill. Goodwill is not amortized. At September 30, 2021 and 2020, respectively, the remaining recorded goodwill was $51,927 and $4,368. The increase is primarily attributable to the HistoTox Labs, Bolder BioPATH and Gateway Laboratories acquisitions as described in Note 12. The changes in the balance of goodwill for the years ended September 30, 2021 and 2020 are as follows: ​
​ | ​ | ​ | ​
​ | ​ |  | ​
​ |  | Goodwill
Balance as of October 1, 2019 | ​ | $ | 3,617
Acquisition of PCRS | ​ | ​ | 751
Balance as of September 30, 2020 | ​ | $ | 4,368
Acquisition of HistoTox Labs | ​ |  | 9,129
Acquisition of Bolder BioPATH | ​ | ​ | 36,223
Acquisition of Gateway Laboratories | ​ | ​ | 2,207
Balance as of September 30, 2021 | ​ | $ | 51,927
​ At September 30, 2021, the intangible assets subject to amortization totaled $24,233 as compared to $4,261 at September 30, 2020. The increase in intangible assets is due to the HistoTox Labs, Bolder BioPATH, BioReliance and Gateway Laboratories acquisitions as described in Note 12. The changes in the balances of the intangible assets for the years ended September 30, 2021 and 2020 are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ |  | ​ | ​ | Client | ​ | Non-Compete | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
​ |  | Trademarks |  | Relationships |  | Agreements |  | Backlog |  | Patents |  | Totals
Balance as of October 1, 2019 | ​ | $ | 1,072 | ​ | $ | 1,670 | ​ | $ | 131 | ​ | $ | — | ​ | $ | 10 | ​ | $ | 2,883
Acquisition of PCRS | ​ | ​ | 460 | ​ | ​ | 1,280 | ​ | ​ | 220 | ​ | ​ | 121 | ​ | ​ | — | ​ | ​ | 2,081
Amortization | ​ |  | (103) | ​ |  | (380) | ​ |  | (93) | ​ |  | (121) | ​ |  | (6) | ​ |  | (703)
Balance as of September 30, 2020 | ​ | $ | 1,429 | ​ | $ | 2,570 | ​ | $ | 258 | ​ | $ | — | ​ | $ | 4 | ​ | $ | 4,261
Acquisition of HistoTox Labs | ​ |  | — | ​ | ​ | 6,800 | ​ | ​ | 1,700 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 8,500
Acquisition of Bolder BioPATH | ​ | ​ | — | ​ | ​ | 12,500 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 12,500
Acquisition of BioReliance | ​ | ​ | — | ​ | ​ | 640 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 640
Acquisition of Gateway Laboratories | ​ | ​ | — | ​ | ​ | 100 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 100
Amortization | ​ |  | (109) | ​ | ​ | (1,413) | ​ | ​ | (244) | ​ | ​ | — | ​ | ​ | (2) | ​ |  | (1,768)
Balance as of September 30, 2021 | ​ | $ | 1,320 | ​ | $ | 21,197 | ​ | $ | 1,714 | ​ | $ | — | ​ | $ | 2 | ​ | $ | 24,233
​ Future amortization expense for intangible assets at September 30, 2021 for the next five years and a total, thereafter, are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2022 | ​ | 2023 | ​ | 2024 | ​ | 2025 | ​ | 2026 | ​ | Thereafter | ​ | Totals
Trademarks |  | ​ | 109 |  | ​ | 109 |  | ​ | 109 |  | ​ | 108 |  | ​ | 108 |  | ​ | 777 |  | ​ | 1,320
Client Relationships |  | ​ | 2,913 | ​ | ​ | 2,913 |  | ​ | 2,912 |  | ​ | 2,912 |  | ​ | 2,851 |  | ​ | 6,696 |  | ​ | 21,197
Non-Compete Agreements |  | ​ | 431 |  | ​ | 395 |  | ​ | 349 |  | ​ | 340 |  | ​ | 199 |  | ​ | — |  | ​ | 1,714
Patents |  | ​ | 2 |  | ​ | — |  | ​ | — |  | ​ | — |  | ​ | — |  | ​ | — |  | ​ | 2
​ | ​ | $ | 3,455 | ​ | $ | 3,417 | ​ | $ | 3,370 | ​ | $ | 3,360 | ​ | $ | 3,158 | ​ | $ | 7,473 | ​ | $ | 24,233
​ Stock-Based Compensation The Company has a stock option plan and an equity incentive plan for officers, outside directors and employees, which are described more fully in Note 9. In accordance with ASC 718, the Company recognizes the cost resulting from all share-based payment transactions in our financial statements using a fair-value based method. Compensation cost for all share-based awards are measured based on estimated fair values and compensation is recognized over the vesting period for awards. The Company uses the Black-Scholes option valuation model to determine the grant date fair value. The determination of fair value is affected by our common share price as well as assumptions regarding subjective and complex variables such as expected employee exercise behavior and our expected stock price volatility over the term of the award. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We estimated the following key assumptions for the binomial valuation calculation:
| ● | Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option.
| ● | Expected volatility. The Company uses our historical share price volatility on our common shares for our expected volatility assumption.
| ● | Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding. The expected term is determined based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.
| ● | Expected dividends. The Company assumes that we will pay no dividends.
The Company expenses the estimated fair value of stock options over the vesting periods of the grants. The Company recognizes expense for awards subject to graded vesting using the straight-line attribution method. The Company adopted a change in accounting policy effective October 1, 2020 for forfeitures. Prior to October 1, 2020, stock-based compensation expense was reduced for estimated forfeitures, and if necessary, an adjustment was recognized in future periods if actual forfeitures differed from those estimates. The accounting change was made prospectively; therefore, stock-based compensation for equity grants subsequent to October 1, 2020, will not be reduced for estimated forfeitures as expense will be adjusted in the period that a forfeiture occurs. The Company believes that this accounting change will more accurately account for expense relating to forfeitures. The Company has assessed the cumulative effect of this change in accounting policy and has deemed the impact to be immaterial; therefore, an adjustment has not been recorded to beginning retained earnings. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We record valuation allowances based on a determination of the expected realization of tax assets. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The amount of the accrual for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon settlement of the position. The Company records interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the liability for uncertain tax positions would impact our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months. Fair Value of Financial Instruments The provisions of the Fair Value Measurements and Disclosure Topic defines fair value, establishes a consistent framework for measuring fair value and provides the disclosure requirements about fair value measurements. This Topic also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows:
| ● | Level 1 – Valuations based on quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
| ● | Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
| ● | Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The carrying amounts for cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other assets, accounts payable and other accruals approximate their fair values because of their nature and respective duration. The carrying value of the credit facility approximates fair value as it was amended during fiscal year 2021 and subsequent to the amendment, there have been no factors that would indicate a change in the carrying value. As of September 30, 2021, the Company had $54,922 in long-term debt related to the conversion feature of convertible senior notes that were issued on September 27, 2021, as well as $640 of contingent consideration related to the BioReliance acquisition that are each subject to fair value measurement on a recurring basis as they include unobservable and significant inputs in each of the fair value determinations. The Company used a Black-Scholes model to value the embedded derivative convertible feature of the notes at September 30, 2021, and the inputs used included a volatility of 81.1%, risk-free interest rate of 1.195% and maturity period of 6.04 years. As a result of the fair value remeasurement of the convertible senior notes, the Company recognized a gain of $8,362 included in other income for the year ended September 30, 2021. The fair value of the contingent consideration related to BioReliance was estimated using a discounted cash flow analysis and level 3 inputs including projections representative of a market participant view for net sales through December 2023 and an estimated discount rate. The amount to be paid is calculated as a percentage of net sales (see Note 7). As of September 30, 2020, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis. The changes in the balances of the level three financial instruments for the year ended September 30, 2021 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Contingent | ​ | Convertible | ​ |  | ​
​ |  | Consideration |  | Notes |  | Totals
Balance as of September 30, 2020 | ​ | $ | — | ​ | $ | — | ​ | $ | —
Contingent consideration related to BioReliance acquisition | ​ | ​ | 640 | ​ | ​ | — | ​ | ​ | 640
Convertible senior notes | ​ | ​ | — | ​ | ​ | 63,284 | ​ | ​ | 63,284
Fair value adjustment of convertible senior notes | ​ | ​ | — | ​ | ​ | (8,362) | ​ | ​ | (8,362)
Balance as of September 30, 2021 | ​ | $ | 640 | ​ | $ | 54,922 | ​ | $ | 55,562
​ Convertible Debt and Derivatives On September 27, 2021, the Company issued $140,000 principal amount of its 3.25% Convertible Senior Notes (“Notes”) due 2027. The Notes were issued pursuant to, and are governed by, an indenture, dated as of September 27, 2021, among the Company, BAS Evansville, Inc. ("BAS Evansville"), as guarantor, and U.S. Bank National Association, as trustee. Pursuant to the purchase agreement between the Company and the initial purchaser of the Notes, the Company granted the initial purchaser an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $15,000 principal amount of Notes. The Notes issued on September 27, 2021 include $15,000 principal amount of Notes issued pursuant to the full exercise by the initial purchaser of such option. The Company used a portion of the net proceeds from the offering of Notes, together with borrowings under a new senior secured term loan facility, to fund the cash portion of the purchase price of the acquisition of Envigo RMS Holding Corp., including related fees and expenses. In accordance with ASC 815, the Company evaluated the convertible feature of the Notes to determine if it was required to be bifurcated as an embedded derivative. The significant and unobservable inputs used in the measurement of the convertible senior notes as well as the balances for the year ending September 30, 2021 are described above. As a result of the fair value remeasurement of the convertible senior notes, the Company recognized a gain of $8,362 included in other income for the year ended September 30, 2021 The Company recorded $131,673 of long-term debt related to the Notes in the consolidated balance sheets for the year ended September 30, 2021, which included $54,922 related to the fair value of the conversion feature. Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates as part of the issuance of these consolidated financial statements include but are not limited to the determination of fair values including derivatives and contingent consideration, allowance for doubtful accounts, inventory obsolescence, deferred tax valuations, depreciation, impairment charges and stock compensation. Our actual results could differ from those estimates. Research and Development In fiscal 2021 and 2020, the Company incurred $405 and $617, respectively, on research and development. Separate from our contract research services business, we maintain applications research and development to enhance our products business. The Company expenses research and development costs as incurred. Startup costs Costs related to the development and initiation of new service offerings that are not revenue generating at this time are shown on a new line in the consolidated statements of operations identified as startup costs. These expenses include, but are not limited to, employee compensation expenses, travel expenses, relocation fees, and recruiting expenses. While certain of these costs are one-time in nature, there are certain costs (e.g. employee compensation expenses) that will be expected to recur once the new offerings are revenue generating at which time the related costs will be reclassified on the consolidated statements of operations. Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. The Company expenses startup costs as incurred. In fiscal 2021 and 2020, the Company incurred startup costs of $1,477 and $333, respectively. ​ Debt issuance costs The Company capitalizes costs associated with the issuance of debt and amortizes them as additional interest expense over the lives of the debt on a straight-line basis, which approximates the effective interest method. The Company believes the difference between the straight-line basis and the effective interest method is not material to the consolidated financial statements. Debt issuance costs of $6,458 and $235, as of September 30, 2021 and 2020, respectively, were netted with long-term debt less current portion on the consolidated balance sheets. Debt issuance costs paid in the years ending September 30, 2021 and 2020 were $6,223 and $127, respectively. Upon prepayment of the related debt, the Company accelerates the recognition of an appropriate amount of the costs as refinancing or extinguishment of debt. New Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 “Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument” “CECL”). ASU 2016-13 requires an allowance for expected credit losses on financial assets to be recognized as early as day one of the instrument. This ASU departs from the incurred loss model which means the probability threshold is removed. It considers more forward-looking information and requires the entity to estimate its credit losses as far as it can reasonably estimate. This update became effective for the Company on October 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. On October 1, 2019, the Company adopted ASU 2016-02, Leases, and all the related amendments to its lease contracts using the modified retrospective method. The effective date was used as the Company’s date of initial application with no restatement of prior periods. As such prior periods continue to be reported under the accounting standards in effect for those periods. The Company recorded upon adoption a financing right-of-use asset and lease liability on the consolidated balance sheet of $4,628 and $4,650, respectively, and an operating right-of-use asset and lease liability of $4,581 and $4,687, respectively, in the consolidated balance sheets for the year ended September 30, 2020. The lease liability reflects the present value of the Company’s estimated future minimum lease payments over the term of the lease, which includes options that are reasonably certain to be exercised, discounted utilizing a collateralized incremental borrowing rate. The impact of the new lease standard does not affect the Company’s operating cash flows. See Note 6 for additional information. In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). Amendments in this ASU simplify accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. The amendments remove the separation models for convertible debt instruments with cash conversion features and convertible instruments with beneficial conversion features. Consequently, a convertible debt instrument will be accounted for as a single liability at its amortized cost and convertible preferred stock will be accounted for as a single debt or equity instrument measured at its historical cost as long as no other features require bifurcation and recognition as derivatives. The amendments also modify the accounting for certain contracts in an entity's own equity that are currently accounted for as derivatives because of specific settlement provisions. Lastly, the earnings per share ("EPS") calculation is being amended to (i) require entities to use the if-converted method for all convertible instruments and include the effect of potential share settlement; (ii) clarify that the average market price for the period should be used in the computation of the diluted EPS denominator; and (iii) require entities to use the weighted-average share count from each quarter when calculating the year-to-date weighted average share count for all potentially dilutive securities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 31, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than the fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently in the process of evaluating the potential impact of early adoption on its financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment. The standard has been updated subsequent to its issuance to provide further guidance and clarification. Under the updated guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference rather than calculating the impairment using a two-step method as previously required. This update becomes effective for the Company in the first quarter of fiscal 2022. The Company does not expect that the adoption of this guidance will have a material impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income taxes, to reduce the complexity of accounting for income taxes, including providing a model under which an entity can consider recording a deferred tax asset (“DTA”) in certain situations previously prohibited. The previous guidance in ASC 740-10-25-4 prohibited recognition of a DTA for a subsequent step-up in the tax basis of goodwill that is related to the portion of goodwill from a prior business combination for which a DTL was not initially recognized, in most cases. Under the new approach, an entity can consider a list of factors in determining whether the step-up in tax basis is related to the business combination that caused the initial recognition of goodwill or to a separate transaction. The amendments are effective for public business entities for fiscal years beginning after December 15, 2020. The Company does not expect that the adoption of this guidance will have a material impact on the Company’s consolidated financial statements. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an entity’s accounting for certain equity transactions affecting the presentation of earnings per share. This update is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is still evaluating the potential impact that the adoption of this guidance will have on its consolidated financial statements. Building Lease The Lease Agreement with Cook Biotech, Inc. (“lessee”) for a portion of the Company’s headquarters facility is recorded as an operating lease with the escalating rents being recognized on a straight-line basis once the lessee took full possession of the space on May 1, 2015 through the end of the lease on December 31, 2024. The straight-line rents of $53 per month are recorded as a reduction to general and administrative expenses on the consolidated statements of operations and other accounts receivable on the consolidated balance sheets. The cash rent received is recorded in lease rent receivable on the consolidated balance sheets. The variance between the straight-line rents recognized and the actual cash rents received will net to zero by the end of the agreement on December 31, 2024.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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