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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022.

OR

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

For the transition period from __________ to __________.

Commission File Number: 001-38298

Zomedica Corp.

(Exact name of registrant as specified in its charter)

Alberta, Canada

N/A

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

100 Phoenix Drive, Suite 125
Ann Arbor, Michigan

48108

(Address of principal executive offices)

(Zip code)

(734) 369-2555

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, without par value

ZOM

NYSE American

As of May 10, 2022, 979,899,668 shares of the registrant’s common shares, without par value, were issued and outstanding.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Zomedica Corp.

Consolidated balance sheets

(Unaudited) (United States dollars in thousands)

As of

    

March 31, 

    

December 31, 

    

2022

    

2021

Assets

 

  

 

  

Current assets

 

  

 

  

Cash and cash equivalents

$

192,337

$

194,952

Inventory, net

 

3,606

 

2,848

Prepaid expenses and deposits

 

1,696

 

1,842

Trade receivables, net

 

341

 

315

Other receivables

 

470

 

450

Total current assets

 

198,450

 

200,407

Prepaid expenses and deposits

 

410

 

394

Property and equipment, net

 

1,373

 

1,130

Assets in process

547

420

Right-of-use asset

 

1,218

 

1,320

Goodwill

 

43,288

 

43,288

Intangible assets, net

 

32,439

 

33,176

Other assets

 

265

 

265

Total assets

$

277,990

280,400

Liabilities and shareholders’ equity

 

  

 

Current liabilities

 

  

 

Accounts payable and accrued liabilities

$

3,109

$

3,225

Accrued income taxes

 

217

 

240

Current portion of lease obligations

 

422

 

415

Customer contract liabilities

 

148

 

198

Other current liabilities

 

222

 

262

Total current liabilities

 

4,118

 

4,340

Lease obligations

 

855

 

964

Deferred tax liabilities

 

3,430

 

3,709

Customer contract liabilities

 

155

 

140

Other liabilities

 

391

 

361

Total liabilities

 

8,949

 

9,514

Commitments and contingencies (Note 13)

 

  

 

  

Shareholders’ equity

 

  

 

  

Unlimited common shares, no par value; 979,899,668 issued and outstanding at March 31, 2022 and December 31, 2021

380,962

$

380,962

Additional paid-in capital

 

11,354

 

9,313

Accumulated deficit

 

(123,328)

 

(119,391)

Accumulated comprehensive income

 

53

 

2

Total shareholders' equity

 

269,041

 

270,886

Total liabilities and shareholders’ equity

$

277,990

280,400

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Zomedica Corp.

Consolidated statements of loss and comprehensive loss

(Unaudited) (United States dollars in thousands, except per share data)

    

For the Three Months Ended March 31, 

    

2022

    

2021

Net revenue

$

3,751

$

14

Cost of revenue

 

990

 

6

Gross profit

 

2,761

 

8

Expenses

 

 

Research and development

 

351

 

412

Selling, general and administrative

 

6,724

 

3,468

Loss from operations

 

(4,314)

 

(3,872)

Interest income

 

(107)

 

(55)

Loss on disposal of assets

219

Other expense

 

1

 

Foreign exchange loss

 

7

 

1

Loss before income taxes

 

(4,215)

 

(4,037)

Income tax benefit

 

(278)

 

Net loss

 

(3,937)

 

(4,037)

Change in foreign currency translation

 

51

 

Net loss and comprehensive loss

$

(3,886)

$

(4,037)

Weighted average number of common shares - basic and diluted

 

979,899,668

 

890,245,654

Loss per share - basic and diluted (Note 15)

 

(0.004)

$

(0.04)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Zomedica Corp.

Consolidated statements of shareholders’ equity

(Unaudited) (United States dollars in thousands)

    

For the three months ended March 31, 2022

Common

Additional

Accumulated

Common stock

stock

paid-in

Accumulated  

comprehensive  

 

Shares

    

Amount

    

subscribed

capital

    

deficit

    

income

    

Total

Balance at December 31, 2021

979,899,668

$

380,962

$

    

$

9,313

$

(119,391)

$

2

$

270,886

Stock-based compensation

 

 

 

 

2,041

 

 

 

2,041

Net loss

 

 

 

 

 

(3,937)

 

 

(3,937)

Other comprehensive income

 

 

 

 

 

 

51

 

51

Balance at March 31, 2022

 

979,899,668

$

380,962

$

$

11,354

$

(123,328)

 

$

53

$

269,041

    

For the three months ended March 31, 2021

Common

Additional

Accumulated

Common stock

stock

paid-in

Accumulated  

comprehensive  

 

Shares

    

Amount

    

subscribed

capital

    

deficit

    

income

    

Total

Balance at December 31, 2020

642,036,228

$

104,783

$

460

    

$

14,792

$

(68,970)

$

$

51,065

Stock issuance for financing

 

105,013,158

 

199,525

 

 

 

 

 

199,525

Stock issuance costs

 

 

(14,281)

 

 

 

 

 

(14,281)

Stock-based compensation

 

 

 

 

1,283

 

 

 

1,283

Stock issuance from warrant exercises

 

200,323,821

 

43,944

 

(460)

 

(11,473)

 

 

 

32,011

Stock redemption

 

24,719,101

 

44,000

 

 

 

(32,039)

 

 

11,961

Net loss

 

 

 

 

 

(4,037)

 

 

(4,037)

Balance at March 31, 2021

 

972,092,308

$

377,971

$

$

4,602

$

(105,046)

 

$

$

277,527

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Zomedica Corp.

Condensed consolidated statements of cash flows

(Unaudited) (United States dollars in thousands)

    

For the Three Months Ended March 31, 

    

2022

    

2021

Cash flows from operating activities:

 

  

 

  

Net loss

$

(3,937)

$

(4,037)

Adjustments for

 

  

 

  

Depreciation

 

82

 

59

Amortization - intangible assets

 

737

 

44

Loss on sale of property and equipment

 

 

243

(Gain) loss on right-of-use assets

 

 

(24)

Stock-based compensation

 

2,041

 

1,283

Non cash portion of rent expense

 

 

24

Change in non-cash operating working capital

 

  

 

  

Purchased inventory

 

(1,005)

 

(309)

Prepaid expenses and deposits

 

128

 

309

Trade receivables

 

(27)

 

(8)

Other receivables

 

(25)

 

(102)

Accounts payable and accrued liabilities

 

(118)

 

(120)

Accrued income tax

 

(23)

 

Deferred tax liabilities

 

(279)

 

Other current liabilities

 

(40)

 

Customer contract liabilities

 

(35)

 

Other liabilities

 

30

 

Net cash used in operating activities

 

(2,471)

 

(2,638)

Cash flows from investing activities:

 

  

 

  

Investment in property and equipment

 

(83)

 

(15)

Investment in intangibles

 

 

(3)

Investment in assets in process

(123)

Net cash used in investing activities

 

(206)

 

(18)

Cash flows from financing activities:

 

  

 

  

Cash proceeds from issuance of common shares and warrants

 

 

199,525

Cash received from warrant exercises

 

 

32,011

Cash paid for shares and warrant issuance costs

 

 

(14,270)

Net cash provided by financing activities

 

 

217,266

(Decrease) increase in cash and cash equivalents

 

(2,677)

 

214,610

Effect of exchange rate changes on cash

62

Cash and cash equivalents, beginning of year

 

194,952

 

61,992

Cash and cash equivalents, end of year

$

192,337

$

276,602

Noncash investing and financing activities

 

  

 

  

Transfer of inventory into property and equipment

$

246

$

Supplemental cash flow information:

 

  

 

  

Interest received

$

(90)

$

(24)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

1. Nature of operations

The Company is a veterinary health company creating point-of-care diagnostics and therapeutics products for dogs and cats, that focuses on the needs of the veterinarians themselves.  The Company has two reportable segments, consisting ofDiagnostics, which comprises the parent company and its U.S subsidiary and includes the TRUFORMA® products, and Therapeutics, which comprises PulseVet operations and its two international subsidiaries, HMT High Medical Technologies (Japan) Co. Ltd. ("HMT") and NeoPulse, GmbH ("NeoPulse"), and includes the ProPulse products and services.

The impact of the novel strain of coronavirus (“COVID-19”)

The outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in the World Health Organization declaring this virus a global pandemic in March 2020. Governments around the world have enacted emergency measures to combat the spread of the virus. These measures include the implementation of travel bans, self-imposed quarantine periods and social distancing. The closure of businesses has caused material disruption to businesses resulting in an economic slowdown. Governments and central banks have responded with significant monetary and fiscal interventions designed to stabilize the financial markets.

The COVID-19 pandemic materially and adversely affected the development and commercialization of our TRUFORMA® platform and the initial five assays. In response to the pandemic, our development partner had reduced the number of employees working in its facilities for a period of time which has delayed the completion of the verification of the five initial TRUFORMA® assays and the manufacturing of commercial quantities of the TRUFORMA® platform and the related assays. Veterinary hospitals and clinics that had agreed to participate in the validation of our initial TRUFORMA® assays either shut down for a period of time or limited their operations to those involving only life-threatening conditions, which we have mitigated to a certain extent with our recent ability to successfully complete remote installations. Potential customers have at times restricted access to their facilities which has affected and may continue to affect our ability to perform on-site demonstrations and other marketing activities. The extent to which the COVID-19 pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the spread and severity of COVID-19, and the effectiveness of governmental actions in response to the pandemic.

The emergence of new variants has not caused significant modification to business operations.  We continue to install remotely, if potential customers restrict access to their facilities.  We intend to continue development of new assays, both for equine indications of our current and planned assays, and for various additional disease states affecting canine, feline, and equine patients in the future.  

2. Basis of preparation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for the presentation of interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the financial position, results of operations and cash flows for the periods presented. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. These unaudited financial statements should be read in combination with the other Notes in this section; “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in Item 2; and the Consolidated Financial Statements, including the Notes to the Consolidated Financial Statements, included in our Annual Report on Form 10-K for the fiscal

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

year ended December 31, 2021. The Consolidated Balance Sheet as of December 31, 2021 was derived from audited financial statements.

3. Significant accounting policies

Estimates and assumptions

In preparing these financial statements, management was required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry, information provided by our customers and suppliers and information available from other outside sources, as appropriate. These estimates and assumptions are subject to an inherent degree of uncertainty. We are not presently aware of any events or circumstances that would require us to update such estimates and assumptions or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur, and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.

Inventories

Inventories are stated at the lower of cost or net realizable value. The Company utilizes the specific identification and First in, First out (“FIFO”) methods to track inventory costs. The Company records reserves, when necessary, to reduce the carrying value of inventory to its net realizable value. Management considers forecast demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining excess and obsolescence and net realizable value adjustments. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and any subsequent improvements in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Intangible Assets

Expenditures related to the planning and operation of the Company’s website are expensed as incurred. Expenditures related to the website application and infrastructure development are capitalized and amortized over the website’s estimated useful life.

Costs related to acquired trademarks, tradename, customer relationships and developed technology have been capitalized and amortized over the estimated useful life.

Revenue recognition and liabilities due to customers

The Company enters into agreements which may contain multiple promises where customers purchase products, services or a combination thereof. Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires judgment. We determine the transaction price for a contract based on the total consideration we expect to receive in exchange for the transferred goods or services.

The Company allocates revenue to each performance obligation in proportion to the relative standalone selling prices and recognizes revenue when control of the related goods or services is transferred for each obligation. We utilize the observable standalone selling price when available, which represents the price charged for the performance obligation when sold separately.

The Company's contracts with customers are generally comprised of purchase orders for the sale of the point of care instrument, consumable products, and extended warranties, or some variation thereof.  The instrument and consumables each represent a single performance obligation when sold separately, that is satisfied at a point in time upon transfer of

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

control of the product to the customer which is typically upon receipt of the goods by the customer.  The extended warranties are also a separate performance obligation, whereby revenue is recognized over time.

The nature of the Company’s business gives rise to variable consideration, including discounts and applicator (“trode”) returns. Credits are issued for unused shocks on returned trodes, which can be used toward the purchase of replacement trodes. Discounts and the estimated unused shock credits decrease the transaction price, which reduces revenue. Variable consideration related to unused shock credits is estimated using the expected value method, which estimates the amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends. These estimated credits are nonrefundable and may only be used towards the purchase of future trode refurbishments. This practice encourages refurbishment purchase prior to complete utilization of the previous trode, so the customer will always have a trode at hand with ample capacity to perform treatments.

At times the Company receives consideration prior to when the performance obligation is completed, giving rise to a contract liability.  

Sales are recorded net of sales tax. Sales tax is charged on sales to end users and remitted to the appropriate state authority.

Accounts receivable are recorded at net realizable value and have payment terms of 30 days.  The Company recorded an allowance for doubtful accounts for $36 and $34, as of March 31, 2022 and December 31, 2021, respectively, which is recorded net in trade receivables.

For the period ending March 31, 2022, the Diagnostics segment reported $57 in revenue from consumables. The Therapeutics segment reported $1,590 in revenue from instruments, $1,952 from trodes, $73 from extended warranties and services, and $79 from other revenues.

For the period ending March 31, 2021, the Diagnostics segment report $14 in revenue from consumables.

Cost of revenue

Cost of goods sold consists of materials, and shipping costs incurred internally to produce and receive the products. Shipping and handling costs incurred by the Company are included in cost of goods sold.

Comparative figures  

Assets in process are separately stated in the current period balance sheet for $547.  The consolidated balance sheets for the year ended December 31, 2021 have been adjusted for $420 of assets in process that were included in intangible assets and property and equipment.  This amount has been reclassified to a separate line in the balance sheet to conform to the current year presentation. The change in presentation had no effect on the reported results of operations. These changes in classification do not affect previously reported cash flows from operating activities in the consolidated statements of cash flows.

4. Business Combinations

Acquisition of PulseVet

On October 1, 2021, Zomedica Inc., a wholly-owned subsidiary of Zomedica Corp. (the “Company”), entered into a Stock Purchase Agreement with Branford PVT Mid-Hold, LLC pursuant to which Zomedica Inc. acquired 100% of the capital stock of Branford PVT Acquiror, Inc., a Delaware corporation (“BPA”). BPA is a holding company whose direct and

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

indirect wholly-owned subsidiaries include Pulse Veterinary Technologies, LLC (“PulseVet”), which, together with its consolidated subsidiaries, is a leading provider of non-invasive shock wave therapy treatment devices to the veterinary industry (the “Acquisition”). The purchase price for the Acquisition was $71,929 in cash.

As a result of total consideration exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $43,288 was recorded in connection with this acquisition, none of which will be deductible for U.S tax purposes. The goodwill largely results from our ability to market and sell the PulseVet Technology through our established customer base.

The Company’s 2021 consolidated operating results included revenues of $4,008 and net income of $454 since the date of acquisition.

The following table summarizes the preliminary acquisition date fair values of the assets acquired and liabilities assumed and subsequent initial period adjustments:

    

Initial

    

Measurement

    

allocation of

period

Updated

    

consideration

    

adjustments

    

allocation

Cash and cash equivalents

$

526

$

3

$

529

Inventory

 

840

 

31

 

871

Prepaid expenses and deposits

 

365

 

 

365

Trade receivables

 

269

 

 

269

Other receivables

 

 

150

 

150

Property and equipment

 

125

 

 

125

Intangible Assets (estimated useful life)

 

 

 

Developed technology (15 years)

 

8,650

 

 

8,650

Trade name (19 years)

 

2,350

 

 

2,350

Customer relationships (11 years)

 

22,650

 

 

22,650

Other Assets

 

69

 

265

 

334

Total assets acquired

 

35,844

 

449

 

36,293

Accounts payable and accrued liabilities

 

1,112

 

(543)

 

569

Income tax payable

 

44

 

 

44

Deferred revenue

 

61

 

 

61

Liability for contracts with customers

 

332

 

 

332

Deferred tax liabilities

 

7,138

 

(900)

 

6,238

Other non current liabilities

 

143

 

265

 

408

Total liabilities assumed

 

8,830

 

(1,178)

 

7,652

Net assets acquired, excluding goodwill

 

27,014

 

1,627

 

28,641

Goodwill

 

44,915

 

(1,627)

 

43,288

Net assets acquired

$

71,929

$

$

71,929

During the period subsequent to the acquisition of PulseVet, we made certain preliminary measurement period adjustments to the acquired assets and liabilities assumed. The determination of the final purchase price allocation to specific assets and liabilities assumed is incomplete. The purchase price allocation may change in future periods as the fair value estimates of the deferred tax assets and liabilities are adjusted.

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

5. Inventory

The detail of inventory is a follows:

    

Diagnostics

    

Therapeutics

    

Consolidated

Raw Materials

$

$

888

$

888

Finished Goods

 

 

106

 

106

Purchased Inventory

 

2,640

 

 

2,640

Total

 

2,640

 

994

 

3,634

 

Reserves

 

(6)

 

(22)

 

(28)

Inventory, Net

$

2,634

$

972

$

3,606

6. Prepaid expenses, deposits and deferred financing costs

    

March 31, 

    

December 31, 

2022

2021

Deposits

$

1,582

$

1,340

Prepaid rent

9

Prepaid marketing

 

71

 

83

Prepaid insurance

 

296

 

599

Other

 

148

 

214

Total

$

2,106

$

2,236

7. Property and equipment

    

March 31, 

    

December 31, 

2022

2021

Machinery and office equipment

$

1,697

$

1,392

Furniture and equipment

 

110

 

110

Laboratory equipment

 

230

 

225

Leasehold improvements

 

287

 

287

 

2,324

 

2,014

Accumulated depreciation and amortization

 

951

 

884

Net property and equipment

$

1,373

$

1,130

Depreciation expense for the three months ended March 31, 2022 and March 31, 2021 was $82 and $59, respectively.

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

8. Intangible assets

    

March 31, 

    

December 31, 

2022

2021

Computer software

$

28

$

28

Trademarks

 

16

 

16

Website

 

546

 

546

Tradename

 

2,350

 

2,350

Customer relationships

 

22,650

 

22,650

Technology

 

8,650

 

8,650

 

34,240

 

34,240

Accumulated amortization

 

1,801

 

1,064

Net intangibles

$

32,439

$

33,176

The estimated future amortization of intangible assets is as follows:

2022 Remainder

    

$

2,210

2023

 

2,773

2024

 

2,768

2025

 

2,761

2026 and beyond

 

21,927

Total

$

32,439

Amortization expense for the three months ended March 31, 2022 and March 31, 2021 was $737 and $44, respectively.

9. Leases

On February 1, 2021 the Company downsized its office space and modified its existing lease with Wickfield Phoenix LLC. The new lease period was for 48 months, commencing on February 1, 2021 and ending on January 31, 2025 with a monthly rent payment of $12 for the first two months and escalating to $31 over the lease period. The carrying value of the right of use asset was $1,258 upon modification using the Company's incremental borrowing rate of 3.95%. During the period ending March 31, 2021 the Company recorded a gain on right-of-use asset of $24 in the consolidated statements of comprehensive loss.

On September 15, 2021, the Company entered into an additional lease with Wickfield Phoenix LLC for warehousing space. The new lease period is for 41 months, commencing on September 15, 2021, and ending on January 31, 2025, with a monthly rent payment of $5 for the first month and escalating to $10 over the lease period. The Company recorded a right-of-use asset and corresponding lease liability for $366 using the Company's incremental borrowing rate of 3.95%.

During the three months ended March 31, 2022, the Company recognized $152 in rent expense with $16 recorded in research and development expenses and $136 recorded in general and administrative expense in the consolidated statements of comprehensive loss.

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

During the three months ended March 31, 2021, the Company recognized $81 in rent expense with $19 recorded in research and development expenses and $62 recorded in general and administrative expense in the consolidated statements of comprehensive loss.

March 31, 

December 31,

    

2022

 

2021

Right-of-use asset

    

    

    

    

    

Cost

 

  

  

Aggregate lease commitments

$

1,779

$

1,779

Less: impact of present value

 

(155)

 

(155)

Balance

 

1,624

 

1,624

Reduction in right-of-use asset

 

  

 

  

Straight line amortization

 

461

 

346

Interest

 

(55)

 

(42)

Balance

 

406

 

304

Net book value as at:

Balance

$

1,218

$

1,320

Lease liabilities

Additions

$

1,647

$

1,647

Payments

 

(425)

 

(310)

Interest

 

55

 

42

Total lease liabilities

$

1,277

$

1,379

Current portion of lease liabilities

 

422

 

415

Long term portion of lease liabilities

 

855

 

964

Total lease liabilities

$

1,277

$

1,379

Total remaining undiscounted lease liabilities related to the above lease are as follows:

    

2022 Remainder

$

347

2023

359

2024

 

490

2025

 

41

Total

$

1,237

10. Stock-based compensation

During the three months ended March 31, 2022, the Company issued 14,425,000 stock options to purchase an aggregate of 14,425,000 common shares. The options vest over a period of four years and have an expiration period of ten years.  During the three months ended March 31, 2021, the Company issued 1,400,000 stock options to purchase an aggregate of 1,400,000 common shares.  The options vest over a period of four years and have an expiration period of 10 years.  

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

The continuity of stock options are as follows:

Number of

Weighted Avg

Options

Exercise Price

Balance at December 31, 2021

    

50,717,724

    

$

0.45

    

Stock options granted

 

14,425,000

$

0.35

Stock options exercised

 

$

Stock options forfeited

 

700,000

$

0.55

Vested stock options expired

 

6,810,000

$

0.22

Balance at March 31, 2022

 

57,632,724

$

0.45

Vested at March 31, 2022

 

13,621,349

$

0.34

As at March 31, 2022, details of the issued and outstanding stock options were as follows:

    

    

    

    

Number of 

    

Weighted Avg 

Number of options

Number of 

unvested  

Remaining Life

 issued

vested options 

options

outstanding 

Grant date

Exercise price

 and outstanding

outstanding

outstanding

(years)

March 14, 2020

 

0.19

 

1,933,557

 

1,599,682

 

333,875

 

2.96

July 9, 2020

 

0.18

 

175,000

 

87,500

 

87,500

 

3.28

August 25, 2020

 

0.13

 

20,000

 

 

20,000

 

3.41

October 1, 2020

 

0.11

 

266,667

 

116,667

 

150,000

 

3.51

October 20, 2020

 

0.09

 

20,000

 

10,000

 

10,000

 

3.56

December 31, 2020

 

0.23

 

17,942,500

 

10,307,500

 

7,635,000

 

8.76

February 26, 2021

 

1.87

 

600,000

 

300,000

 

300,000

 

8.91

March 1, 2021

 

2.06

 

200,000

 

100,000

 

100,000

 

8.92

March 8, 2021

 

1.88

 

200,000

 

100,000

 

100,000

 

8.94

March 15, 2021

 

2.49

 

200,000

 

100,000

 

100,000

 

8.96

May 12, 2021

 

0.78

 

3,600,000

 

850,000

 

2,750,000

 

9.12

May 14, 2021

 

0.75

 

3,200,000

 

50,000

 

3,150,000

 

9.12

August 11, 2021

 

0.57

 

1,100,000

 

 

1,100,000

 

9.37

August 18, 2021

 

0.50

 

200,000

 

 

200,000

 

9.39

August 23, 2021

 

0.50

 

100,000

 

 

100,000

 

9.40

September 13, 2021

 

0.57

 

1,000,000

 

 

1,000,000

 

9.46

October 1, 2021

 

0.58

 

12,650,000

 

 

12,650,000

 

9.51

January 3, 2022

0.36

100,000

100,000

9.76

January 4, 2022

0.35

200,000

200,000

9.77

January 14, 2022

0.35

200,000

200,000

9.79

January 16, 2022

0.35

325,000

325,000

9.80

January 18, 2022

0.35

100,000

100,000

9.81

February 14, 2022

0.30

400,000

400,000

9.88

February 21, 2022

0.37

200,000

200,000

9.90

February 25, 2022

0.35

12,500,000

12,500,000

9.91

March 30, 2022

0.35

200,000

200,000

10.00

Balance at March 31, 2022

 

 

57,632,724

 

13,621,349

 

44,011,375

 

  

The Company calculates volatility of stock-based compensation using the historical price of the Company’s stock. An increase/decrease in the volatility would have resulted in an increase/decrease in the fair value of the options.

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

The fair value of options granted during the three months ended March 31, 2022 and March 31, 2021 was estimated using the Black-Scholes option pricing model to determine the fair value of options granted using the following assumptions:

    

February 26,

    

March 1,

    

March 8,

 

2021

2021

2021

 

Volatility

 

117

%  

117

%  

117

%

Risk-free interest rate

 

0.95

%  

0.92

%  

1.07

%

Expected life (in years)

 

10

 

10

 

10

Dividend yield

 

0

%  

0

%  

0

%

Common share price

$

1.87

$

2.06

$

1.88

Strike price

$

1.87

$

2.06

$

1.88

Forfeiture rate

 

0

%  

0

%  

0

%

    

May 12,

    

August 11,

    

August 23,

 

2021

2021

2021

 

Volatility

 

118

%  

116

%  

116

%

Risk-free interest rate

 

1.11

%  

0.96

%  

0.92

%

Expected life (in years)

 

6.21-6.22

 

6.18-6.25

 

6.25

Dividend yield

 

0

%  

0

%  

0

%

Common share price

$

0.78

$

0.56

$

0.50

Strike price

$

0.78

$

0.57

$

0.50

Forfeiture rate

 

0

%  

0

%  

0

%

    

September 27,

    

October 1,

    

2021

2021

Volatility

 

116

%  

116

%  

Risk-free interest rate

 

1.14

%  

1.10

%  

Expected life (in years)

 

6.25

 

6.25

 

Dividend yield

 

0

%  

0

%  

Common share price

$

0.54

$

0.57

Strike price

$

0.54

$

0.58

Forfeiture rate

 

0

%  

0

%  

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

    

January 3,

    

January 4,

    

January 14,

2022

2022

2022

Volatility

 

114

%  

114

%  

114

%  

Risk-free interest rate

 

1.50

%  

1.47

%  

1.64

%  

Expected life (in years)

 

6.25

 

6.25

 

6.25

 

Dividend yield

 

0

%  

0

%  

0

%  

Common share price

$

0.36

$

0.35

$

0.35

Strike price

$

0.36

$

0.35

$

0.35

Forfeiture rate

 

0

%  

0

%  

0

%  

January 16,

    

January 18,

    

February 14,

    

2022

2022

2022

Volatility

114

%  

114

%  

113

%  

Risk-free interest rate

1.73

%  

1.74

%  

1.94

%  

Expected life (in years)

6.25

 

6.25

 

6.25

 

Dividend yield

0

%  

0

%  

0

%  

Common share price

$

0.35

$

0.35

$

0.29

Strike price

$

0.35

$

0.35

$

0.30

Forfeiture rate

 

0

%  

0

%  

0

%  

Volatility

 

February 21,

    

February 25, 2021

    

March 30,

    

Risk-free interest rate

 

2022

2022

2022

Expected life (in years)

 

113

%  

113

%  

114

%  

Dividend yield

 

1.89

%  

1.91

%  

2.43

%  

Common share price

6.25

 

6.25

 

6.25

 

Strike price

0

%  

0

%  

0

%  

Forfeiture rate

$

0.37

$

0.35

$

0.35

$

0.37

$

0.35

$

0.35

 

0

%  

0

%  

0

%  

The Company recorded $2,041 and $1,283 of stock-based compensation for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022 and 2021 there were no stock options exercised.

11. Warrants

The Company values warrants issued in equity placements using the Black Scholes model to allocate the fair value of the proceeds from equity financings using a relative fair value approach. Like other stock-based compensation, management uses judgment to determine the inputs to the Black-Scholes option pricing model including the expected life, and underlying share price volatility. Changes in these assumptions will impact the calculation of fair value and the value attributed to the warrants.  The Company calculates volatility of warrants based on the historical price of the Company’s stock. An increase/decrease in the volatility would have resulted in an increase/decrease in the fair value of the options.

In connection with the February 14, 2020 registered direct offering, the Company issued 20,833,334 five and one half-year Series A warrants to purchase 20,833,334 shares of common stock at an exercise price of $0.20. The Company also issued 1,041,667 warrants to purchase 1,041,667 shares of common stock at an exercise price of $0.15 per share to the placement agents.

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Zomedica Corp.

Notes to the condensed consolidated financial statements

(Unaudited) (United Stated dollars in thousands, except for per share data)

In connection with the April 9, 2020 CMPO, the Company issued 16,666,667 five-year Series B Warrants to purchase 16,666,667 common shares at an exercise price of $0.15. The Company also issued 1,666,667 Placement Agent Warrants to purchase 1,666,667 common shares at an exercise price of $0.15 per share.

In connection with the May 29, 2020 public offering, the Company issued 133,333,333 two-year Series C Warrants to purchase 133,333,333 common shares at an exercise price of $0.15. The Company also issued 12,170,000 Series C Pre-Funded Warrants to purchase common shares at an exercise price of $0.0001 on a cashless exercise basis. As of December 31, 2020, all of the Series C Pre-Funded Warrants have been exercised.

In connection with the July 7, 2020 public offering, the Company issued 187,500,000 two-year Series D Warrants to purchase 187,500,000 common shares at an exercise price of $0.16. The Company also issued 25,000,000 Series D Pre-Funded Warrants to purchase common shares at an exercise price of $0.0001 on a cashless exercise basis. As of December 31, 2020, all of the Series D Pre-Funded Warrants have been exercised.

As at March 31, 2022, details of the outstanding warrants were as follows:

    

    

    

Weighted 

Average

Exercise

Warrants 

 Remaining 

Original Issue date

 Price

Outstanding