UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~[X]~~

☒

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

For the quarterly period ended September 30, ~~2020.~~2021.

~~[ ]~~

☐

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~~ Zomedica Corp.
(Exact name of registrant as specified in its charter)

Alberta, Canada

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

100 Phoenix Drive, Suite ~~180~~
125

Ann Arbor, Michigan

48108

(Address of principal executive offices)

(Zip code)

(734) 369-2555

~~(Registrant’s~~ (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 ~~[X]~~☒ 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 ~~[X]~~☒ 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	☒	~~[X]~~	Smaller reporting company	~~[X]~~ ☒
			Emerging growth company	~~[X]~~ ☒

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. ~~[X]~~☒

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

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 November ~~11, 2020, 564,051,438~~12, 2021, 979,894,668 shares of the registrant’s common shares, without par value, were issued and outstanding.

Zomedica Corp.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

SEPTEMBER 30, ~~2020~~2021

TABLE OF CONTENTS

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Zomedica Corp.

Condensed ~~unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Expressed in United States Dollars, except as otherwise noted)~~

~~Zomedica Corp.~~

~~Condensed unaudited interim~~ consolidated balance sheets

As atof September 30, ~~2020~~2021, and December 31, ~~2019~~2020

~~(Stated in United States dollars)~~

(Unaudited) (Stated in United States dollars)

September 30, December 31,
Note 2020 2019

Assets

Current assets:
Cash and cash equivalents $ 52,032,640 $ 510,586
Prepaid expenses and deposits 5 932,408 1,228,585
Tax credits 129,269 67,618
53,094,317 1,806,789

Prepaid expenses and deposits 5 1,000,000 -
Property and equipment 6 720,701 729,142
Right-of-use asset 8 1,380,744 1,103,658
Intangible assets 7 408,583 543,395
$ 56,604,345 $ 4,182,984

Liabilitites and shareholders' equity

Current liabilities:
Accounts payable and accrued liabilities $ 1,827,761 2,087,525
Current portion of lease obligations 8 242,491 -
2,070,252 2,087,525

Lease obligations 8 1,154,304 -
3,224,556 2,087,525

Shareholders' equity
Capital stock
Series 1 preferred shares, without par value; 20 shares authorized (2019 - 20) Issued and outstanding 12 series 1 preferred shares (2019 - 12) 10 11,961,397 11,961,397
Unlimited common shares without par value; Issued and outstanding 564,051,438 common shares (2019 - 108,308,398) 11 87,958,137 38,566,820
Additional paid-in capital 13 18,256,678 3,625,083
Accumulated deficit (64,796,423 ) (52,057,841 )
53,379,789 2,095,459

$ 56,604,345 $ 4,182,984

~~Commitments and contingencies (Note 14)~~

	September 30,			December 31,
	2021			2020

Assets

Current assets
Cash and cash equivalents	$	271,411,043		$	61,991,703
Inventory		1,423,923			0
Prepaid expenses and deposits		1,633,846			1,727,814
Trade receivables		6,938			0
Other receivables		258,359			146,207
Total current assets		274,734,109			63,865,724

Prepaid expenses and deposits		168,020			13,924
Property and equipment, net		706,266			583,007
Right-of-use asset		1,419,790			1,318,716
Intangible assets, net		473,966			362,663
Total assets	$	277,502,151		$	66,144,034

Liabilities, mezzanine and shareholders' equity

Current liabilities
Accounts payable and accrued liabilities	$	4,464,874		$	1,248,628
Current portion of debt obligations		0			527,360
Current portion of lease obligations		407,278			252,788
Total current liabilities		4,872,152			2,028,776

Lease obligations		1,069,687			1,087,998
Total liabilities		5,941,839			3,116,774

Commitments and contingencies (Note 13)

Mezzanine equity:
Series 1 preferred shares, no par value;
20 shares authorized
0 and 12 Series 1 preferred shares issued and outstanding		-			11,961,397
at September 30, 2021 and December 31, 2020, respectively

Shareholders' equity
Unlimited common shares, no par value;
979,738,168 and 642,036,228 issued and outstanding		380,928,831			104,783,612
at September 30, 2021 and December 31, 2020, respectively
Common shares subscribed		0			459,600
Additional paid-in capital		6,732,887			14,792,276
Accumulated deficit		(116,101,406	)		(68,969,625	)
Total shareholders' equity		271,560,312			51,065,863

Total liabilities, mezzanine equity and shareholders' equity	$	277,502,151		$	66,144,034

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

	2
3

Table of Contents

Zomedica Corp.

Condensed ~~unaudited interim~~ consolidated statements of ~~operations~~loss and comprehensive loss

For the three and nine months ended September 30, ~~2020~~2021, and ~~2019~~2020

~~(Stated~~
(Unaudited) (Stated in United States dollars)

Three months ended
September 30,

Nine months ended
September 30,

Note 2020 2019 2020 2019

Expenses:
Research and development 17 $ 2,702,103 $ 962,463 $ 7,205,674 $ 9,555,345
General and administrative 17 1,335,085 1,377,252 3,607,346 5,490,928
Professional fees 17 839,646 306,937 1,413,118 1,296,884
Amortization - right-of-use asset 8 - 127,345 42,448 382,035
Amortization - intangible assets 7 45,399 273 135,425 810
Depreciation 6 78,200 70,096 232,475 201,075
Loss from operations 5,000,433 2,844,366 12,636,486 16,927,077
Interest income (21,238 ) - (21,566 ) -
Interest expense - - 732 18,338
Loss on disposal of property and equipment 6 - - 69,834 1,308
Loss on right-of-use-asset 8 - - 59,097 -
Gain on settlement of liabilities - - - (19,737 )
Other income (1,963 ) - (7,463 ) -
Foreign exchange loss (gain) 2,743 1,313 1,462 30
Loss before income taxes 4,979,975 2,845,679 12,738,582 16,927,016
Income tax expense - - - -
Net loss and comprehensive loss $ 4,979,975 $ 2,845,679 $ 12,738,582 $ 16,927,016

Weighted average number of common shares - basic and diluted 550,541,878 108,038,398 291,314,002 105,711,459

Loss per share - basic and diluted $ (0.01 ) $ (0.03 ) $ (0.04 ) $ (0.16 )

	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020

Net revenue	$	22,514		$	0		$	52,331		$	0
Cost of revenue		17,899			0			59,433			0
Gross profit		4,615			0			(7,102	)		0

Expenses
Research and development		288,453			2,702,103			1,008,083			7,205,674
Selling, general and administrative		6,124,382			2,298,330			14,593,952			5,430,812
Loss from operations		(6,408,220	)		(5,000,433	)		(15,609,137	)		(12,636,486	)
Interest income		(94,302	)		(21,238	)		(261,556	)		(21,566	)
Interest expense		-			0			6,054			732
Loss on disposal of assets		26,760			0			269,707			128,931
Gain on extinguishment of debt		-			0			(533,414	)		0
Other gains		(600	)		(1,963	)		(2,481	)		(7,463	)
Foreign exchange loss		5,609			2,743			5,731			1,462
Loss before income taxes		(6,345,687	)		(4,979,975	)		(15,093,178	)		(12,738,582	)
Income tax expense		-			0			-			0
Net loss and comprehensive loss	$	(6,345,687	)	$	(4,979,975	)	$	(15,093,178	)	$	(12,738,582	)

Weighted average number of common shares - basic and diluted		978,494,076			550,541,878			948,664,410			291,314,002

Loss per share - basic and diluted (Note 16)	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.04	)

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

Table of Contents

Zomedica Corp.

Condensed ~~unaudited interim~~ consolidated statements of shareholders’ equity

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020

~~(Stated~~
(Unaudited) (Stated in United States dollars)

Series 1 preferred stock Common stock
Note Shares Amount Shares Amount
Common
stock subscribed

Additional
paid-in capital
Accumulated deficit Total

Balance at December 31, 2018 - $ - 97,598,898 $ 30,410,648 $ 4,280,000 $ 1,240,139 $ (32,273,787 ) $ 3,657,000
Stock issuance for services 11 - - 707,236 792,104 - - - 792,104
Stock-based compensation 12 - - - - - 2,539,092 - 2,539,092
Stock issuance for financing, net of cost 10,11 12 11,961,397 9,337,529 6,690,922 (4,280,000 ) - - 14,372,319
Stock issued due to exercise of options 11,12 - - 394,735 754,148 - (154,148 ) - 600,000
Net loss - - - - - - (16,927,016 ) (16,927,016 )
Balance at September 30, 2019 12 $ 11,961,397 108,038,398 $ 38,647,822 $ - $ 3,625,083 $ (49,200,803 ) $ 5,033,499

Balance at December 31, 2019 12 $ 11,961,397 108,038,398 $ 38,566,820 $ - $ 3,625,083 $ (52,057,841 ) $ 2,095,459
Stock, warrants and prefunded warrant issued for financing 11 - - 337,830,001 32,275,266 - 24,221,017 - 56,496,283
Stock issuance costs 11 - - - (2,979,594 ) - (2,128,021 ) - (5,107,615 )
Placement agent warrants 11 - - - (154,767 ) - 154,767 - -
Stock-based compensation 12 - - - - - 478,835 - 478,835
Stock issued due to exercise of warrants and prefunded warrants 11 - - 118,183,039 20,250,412 (8,095,003 ) - 12,155,409
Net loss - - - - - - (12,738,582 ) (12,738,582 )
Balance at September 30, 2020 12 $ 11,961,397 564,051,438 $ 87,958,137 $ - $ 18,256,678 $ (64,796,423 ) $ 53,379,789

	Series 1 preferred shares				Common shares					Common stock			Additional paid-			Accumulated
For the nine months ending September 30, 2021	Shares		Amount		Shares		Amount			subscribed			in capital			deficit			Total
Balance at December 31, 2020		-		0		642,036,228	$	104,783,612		$	459,600		$	14,792,276		$	(68,969,625	)	$	51,065,863
Stock issuance for financing		-		0		105,013,158		199,525,000			0			0			0			199,525,000
Stock issuance costs		-		0		-		(14,280,914	)		0			0			0			(14,280,914	)
Stock-based compensation		-		0		-		0			0			4,502,597			0			4,502,597
Stock issued from warrant exercises		-		0		200,951,905		44,082,183			(459,600	)		(11,511,046	)		0			32,111,537
Stock issued from stock option exercises		-		0		7,017,776		2,818,950			0			(1,050,940	)		0			1,768,010
Preferred share exchange		-		0		24,719,101		44,000,000			0			0			(32,038,603	)		11,961,397
Net loss		-		0		-		0			0			0			(15,093,178	)		(15,093,178	)
Balance at September 30, 2021		-		-		979,738,168	$	380,928,831		$	-		$	6,732,887		$	(116,101,406	)	$	271,560,312

	Series 1 preferred shares				Common shares					Common stock			Additional paid-			Accumulated
For the three months ending September 30, 2021	Shares		Amount		Shares		Amount			subscribed			in capital			deficit			Total
Balance at June 30, 2021		-		0		977,950,993	$	380,222,091		$	0		$	5,601,641		$	(109,755,719	)	$	276,068,013
Stock-based compensation		-		0		-		0			0			1,437,778			0			1,437,778
Stock issued from stock option exercises		-		0		1,787,175		706,740			0			(306,532	)		0			400,208
Net loss		-		0		-		0			0			0			(6,345,687	)		(6,345,687	)
Balance at September 30, 2021		-		-		979,738,168	$	380,928,831		$	-		$	6,732,887		$	(116,101,406	)	$	271,560,312

	Series 1 preferred shares				Common shares					Common stock			Additional paid-in			Accumulated
For the nine months ending September 30, 2020					Shares		Amount			subscribed			capital			deficit			Total
Balance at December 31, 2019		12	$	11,961,397		108,038,398	$	38,566,820		$	0		$	3,625,083		$	(52,057,841	)	$	2,095,459
Stock, warrants and pre-funded warrants issuance for financing						337,830,001		32,275,266			0			24,221,017			0			56,496,283
Stock issuance costs						-		(2,979,594	)		0			(2,128,021	)		0			(5,107,615	)
Placement agent warrants						-		(154,767	)		0			154,767			0			0
Stock-based compensation						-		0			0			478,835			-			478,835
Stock issued from exercise of warrants and prefunded warrants						118,183,039		20,250,412			0			(8,095,003	)		0			12,155,409
Net loss						-		0			0			0			(12,738,582	)		(12,738,582	)
Balance at September 30, 2020		12	$	11,961,397		564,051,438	$	87,958,137		$	-		$	18,256,678		$	(64,796,423	)	$	53,379,789

		Series 1 preferred shares			Common shares					Common stock			Additional paid-in			Accumulated
For the three months ending September 30, 2020					Shares		Amount			subscribed			capital			deficit			Total
Balance at June 30, 2020		12	$	11,961,397		361,039,946	$	67,328,922		$	1,465,500		$	8,639,590		$	(59,816,448	)		29,578,961
Stock, warrants and pre-funded warrants issuance for financing						162,500,000		16,290,941			(1,465,500	)		13,706,559			0			28,532,000
Stock issuance costs						-		(1,224,218	)		0			(1,043,997	)		0			(2,268,215	)
Placement agent warrants						-		0			0			0			0			0
Stock-based compensation						-		0			0			187,969			0			187,969
Stock issued from exercise of warrants and prefunded warrants						40,511,492		5,562,492			0			(3,233,443	)		0			2,329,049
Net loss						-		0			0			0			(4,979,975	)		(4,979,975	)
Balance at September 30, 2020		12	$	11,961,397		564,051,438	$	87,958,137		$	-		$	18,256,678		$	(64,796,423	)	$	53,379,789

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

Table of Contents

Zomedica Corp.

Condensed ~~unaudited interim~~ consolidated statements of cash flows

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020

~~(Stated~~
(Unaudited) (Stated in United States dollars)

	Nine months ended September 30,
	2021			2020

Cash flows from operating activities:
Net loss	$	(15,093,178	)	$	(12,738,582	)
Adjustments for
Depreciation		175,168			232,475
Amortization - intangible assets		136,200			177,873
Loss on disposal of property and equipment		247,753			69,834
Loss on other assets		5,323			59,097
Gain on extinguishment of debt		(533,414	)		0
Stock-based compensation		4,502,597			478,835
Non-cash portion of rent expense		35,838			16,051
Change in non-cash operating working capital
Purchased inventory		(1,875,423	)		0
Prepaid expenses and deposits		(61,004	)		(1,003,091	)
Trade receivable		(6,938	)		0
Other receivables		(122,972	)		(61,651	)
Accounts payable and accrued liabilities		3,216,246			(787,124	)
Net cash used in operating activities		(9,373,804	)		(13,556,283	)


Cash flows from investing activities:
Cash from sale of property and equipment		225			5,400
Investment in intangibles		(245,560	)		0
Investment in property and equipment		(96,964	)		(613	)
Cash from lease cancellation or modification		0			1,002,113
Net cash (used in) provided by investing activities		(342,299	)		1,006,900

Cash flows from financing activities:
Proceeds from issuance of common shares, warrants and pre-funded warrants		199,525,000			56,496,283
Cash received from warrant exercises		32,111,537			12,155,409
Cash received from stock option exercises		1,768,010			0
Cash received from shares to be issued		0			0
Cash paid on stock issuance costs		(14,269,104	)		(5,107,615	)
Cash received for government loan		0			527,360
Net cash provided by financing activities		219,135,443			64,071,437

Increase in cash and cash equivalents		209,419,340			51,522,054

Cash and cash equivalents, beginning of period		61,991,703			510,586

Cash and cash equivalents, end of period	$	271,411,043		$	52,032,640

Noncash investing and financing activities
Transfer of inventory into property and equipment	$	451,500		$	0
Deferred financing fees charged to stock issuance costs	$	11,810		$	0
Account receivable recorded in intercompany account	$	(990	)	$	0
Net equity effect of preferred share exchange	$	(11,961,397	)	$	0

Supplemental cash flow information:

Interest paid	$	0		$	651
Interest received	$	228,881		$	14,347

Three months ended September 30, Nine months ended September 30,
Note 2020 2019 2020 2019

Cash flows used in operating activities:
Net loss for the period $ (4,979,975 ) $ (2,845,679 ) $ (12,738,582 ) $ (16,927,016 )
Adjustments for
Depreciation 6 78,200 70,096 232,475 201,075
Amortization - intangible assets 7 45,399 273 135,425 810
Amortization - right-of-use-asset 8 - 127,345 42,448 382,035
Loss on disposal of property and equipment 6 - - 69,834 1,308
Loss on right-of-use asset 8 - - 59,097 -
Non-cash portion of rent expense 8 6,019 - 16,051 -
Stock issued for services 11 - - - 792,104
Stock-based compensation 12 187,969 197,988 478,835 2,539,092
Change in non-cash operating working capital
Tax credits and other receivables 53,228 19,558 (61,651 ) (22,333 )
Prepaid expenses (243,461 ) (122,315 ) (175,553 ) 140,695
Deposits (906,300 ) 21,366 (827,538 ) (76,709 )
Accounts payable and accrued liabilities 96,292 (1,378,710 ) (787,124 ) (798,994 )
(5,662,629 ) (3,910,078 ) (13,556,283 ) (13,767,933 )

Cash flows from financing activities:
Proceeds from financing of preferred shares 10 - - - 12,000,000
Proceeds from issuance of common shares, warrants and pre-funded warrants 11,13 29,997,500 - 56,496,283 3,000,000
Cash received from warrant exercises 13 863,550 - 12,155,409 600,000
Cash paid on stock issuance costs 11,13 (2,268,217 ) (1,414 ) (5,107,615 ) (627,681 )
Cash received for government loan 9 - - 527,360 -
28,592,833 (1,414 ) 64,071,437 14,972,319

Cash flows (used in) from investing activities:
Cash from sale of property and equipment 6 - - 5,400 -
Investment in intangibles - (501,487 ) - (501,487 )
Investment in property and equipment 6 (613 ) (80,950 ) (613 ) (155,513 )
Cash from lease repurchase 8 - - 1,002,113 -
(613 ) (582,437 ) 1,006,900 (657,000 )

Increase in cash and cash equivalents 22,929,591 (4,493,929 ) �� 51,522,054 547,386

Cash and cash equivalents, beginning of period 29,103,049 6,981,580 510,586 1,940,265

Cash and cash equivalents, end of period $ 52,032,640 $ 2,487,651 $ 52,032,640 $ 2,487,651

Supplemental cash flow information:

Interest paid $ - $ 12,164 $ 651 $ 18,338
Interest received $ 14,347 $ - $ 14,347 $ -

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

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~6

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Nature~~Table of ~~operations and going concern~~Contents

Zomedica Corp. ~~("Zomedica" or~~

Notes to the ~~“Company”) was incorporated on January 7, 2013 under the~~ ~~Business Corporations Act~~ (Alberta) as Wise Oakwood Ventures Inc. (“WOW”) and was classified as a capital pool company, as defined in Policy 2.4 of the TSX Venture Exchange. ZoMedica Pharmaceuticals Inc. was incorporated on May 14, 2015 under the Canada Business Corporations Act.

On April 21, 2016, the Company closed its qualifying transaction (“Transaction”), consisting of the acquisition of ZoMedica Pharmaceuticals Inc. (“ZoMedica”) pursuant to a three-cornered amalgamation, whereby ZoMedica was amalgamated with 9674128 Canada Inc. (which was wholly-owned by WOW) and common shares and options of the Company were issued to former holders of ZoMedica securities as consideration. The amalgamated company changed its name to Zomedica Pharmaceuticals Ltd. and WOW subsequently changed its name to Zomedica Pharmaceuticals Corp. Prior to completion of the Transaction, WOW consolidated its common shares on the basis of the one post-consolidation common share for every 2.5 pre-consolidation common shares. The Transaction constituted WOW’s qualifying transaction under TSX Venture Exchange Policy 2.4 – ~~Capital Pool Companies~~. The shares of Zomedica Pharmaceuticals Corp. began trading on the TSX Venture Exchange under the new symbol “ZOM” on Monday, May 2, 2016. On June 21, 2016, the Company filed Articles of Amalgamation and vertically amalgamated with its wholly-owned subsidiary, Zomedica Pharmaceuticals Ltd. On November 17, 2017, the Company cross-listed on the NYSE American. On February 10, 2020, Zomedica Pharmaceuticals Corp. voluntarily delisted from the TSX-V. On October 5, 2020, Zomedica Pharmaceuticals Corp. changed its name to Zomedica Corp.

~~Zomedica has one corporate subsidiary, Zomedica Pharmaceuticals, Inc., a Delaware company whose results and operations are included in these~~condensed consolidated financial statements. We are a development stage veterinary health company focused on creating point-of-care diagnostic platforms for use by veterinarians treating companion animals by focusing on the unmet needs of clinical veterinarians. Zomedica's head office is located at 100 Phoenix Drive, Suite 180, Ann Arbor, MI 48108 and its registered office is located at 3400, 350-7th Ave SW, Calgary, AB, T2P 3N9.statements

~~Basis of preparation~~

The accounting policies set out below have been applied consistently in the condensed unaudited interim consolidated financial statements. The condensed unaudited interim consolidated financial statements do not include all of the information required for annual consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results forFor the three and nine months ended September 30, ~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.~~

~~These condensed unaudited interim consolidated financial statements were prepared using the same basis of presentation, accounting policies~~2021 and ~~methods of computation as those of the audited consolidated financial statements for the year ended December 31, 2019.~~2020

~~Basis of consolidation~~

~~These condensed unaudited interim consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiary, Zomedica Pharmaceuticals, Inc.~~

~~All inter-company accounts and transactions have been eliminated on consolidation.~~

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

~~Significant accounting policies~~

~~Use of estimates~~

The preparation of the condensed unaudited interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed unaudited interim consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

Areas where significant judgment is involved in making estimates are the determination of fair value of stock-based compensation, the useful lives of property and equipment, allocation of proceeds from financings to shares and warrants, fair value of placement agent warrants, and forecasting future cash flows for assessing the going concern assumption.

~~Basis of measurement~~

~~The condensed unaudited interim consolidated financial statements have been prepared on the historical cost basis except as otherwise noted.~~

~~Functional and reporting currencies~~

~~The Company’s and its subsidiary’s functional currency, as determined by management, is US dollars, which is also the Company’s reporting currency.~~

~~The accounting policies set out below have been applied consistently to all periods and companies presented in the condensed unaudited interim consolidated financial statements.~~

~~Research and development~~

~~Research and development costs related to continued research and development programs are expensed as incurred in accordance with Accounting Standards Codification (“ASC”) topic 730.~~

~~Share issue costs~~

~~Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.~~

~~Translation of foreign currencies~~

In respect of transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, the monetary assets and liabilities are remeasured at the period end rates. Revenue and expenses are measured at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the condensed unaudited interim consolidated statements1. Nature of operations ~~and comprehensive loss.~~

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Significant accounting policies (continued)~~

~~Stock-based compensation~~

The Company ~~measures~~is a veterinary health company creating point-of-care diagnostics products for dogs and cats, that focuses on the ~~cost of equity-settled transactions by reference to the fair value~~needs of the ~~equity instruments at the date at which they are granted if the fair value of the goods or services received by the Company cannot be reliably estimated.~~veterinarians themselves.

The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option using the graded vesting method. The provisions of the Company's stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest.

~~The Company estimates forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.~~

~~Loss per share~~

Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options is excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase common shares of the Company during the period were not included in the computation of diluted EPS as the Company has incurred a loss for the three and nine months ended September 30, 2020 and 2019 and the effect would be anti-dilutive.

~~Comprehensive loss~~

The Company follows ASC topic 220. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. The Company has no other comprehensive loss items.

~~Critical accounting judgments and key sources of estimation uncertainty~~

The preparation of financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Critical accounting judgments and key sources of estimation uncertainty (continued)~~

~~Critical areas of estimation and judgements in applying accounting policies include the following:~~

~~Stock-based payments~~

The Company estimates the fair value of convertible securities such as options using the Black-Scholes option-pricing model which requires significant estimation around assumptions and inputs such as expected term to maturity, volatility and dividends.

~~Useful lives of property and equipment~~

The Company reviews the estimated useful lives of property and equipment with definite useful lives at the end of each year and assesses whether the useful lives of certain items should be shortened or extended due to various factors including technology, competition and revised service offerings. During the three and nine months ended September 30, 2020 and 2019, the Company was not required to adjust the useful lives of any assets based on the factors described above. Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable.

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 ~~which~~ 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. ~~A critical estimate~~

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.

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 ~~Company is~~presentation of interim financial statements and with the instructions to ~~assess~~Form 10-Q and Article 10 of Regulation S-X. Accordingly, the ~~impact~~unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the ~~pandemic~~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 and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. 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 ~~recoverability~~fiscal year ended December 31, 2020. The Consolidated Balance Sheet as of ~~long-lived assets as well as the availability of future financing in assessing the going concern assumption.~~December 31, 2020, was derived from audited financial statements.

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~7

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

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 specific identification 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.

Revenue recognition

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

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.

5.		~~Prepaid expenses and deposits~~
8

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Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

September 30, December 31,
2020 2019
Deposits (i) $ 1,561,503 $ 1,033,231
Prepaid marketing (ii) 32,190 19,829
Prepaid insurance (ii) 258,306 110,636
Other (iii) 80,409 64,889
Total $ 1,932,408 $ 1,228,585

3. Significant accounting policies (continued)

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

Certain prior year amounts have been reclassified to conform to the current year presentation. The change in presentation had no effect on the reported results of operations. Adjustments have been made to the consolidated balance sheets and consolidated statements of loss and comprehensive loss for three and six months ended September 30, 2020. These changes in classification do not affect previously reported cash flows from operating activities in the consolidated statements of cash flows.

4. Prepaid expenses, deposits, and deferred financing costs

	September 30,		December 31,
	2021		2020
Deposits (i)	$	1,256,094	$	1,469,043
Prepaid marketing		64,300		26,330
Prepaid insurance		380,254		184,154
Other (ii)		101,218		62,211
Total	$	1,801,866	$	1,741,738

(i)

~~(i)~~

Deposits include payments made to vendors in advance and are primarily associated with inventory, warranties, and research ~~activity, leasing deposits and costs for additional office space.~~activity. As of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, the Company classified ~~$1,000,000~~$168,020 and ~~nil~~$13,924 as a non-current asset, with the remainder classified as a current asset in the consolidated balance ~~sheet;~~sheets.

(ii)

~~(ii)~~

~~As of September 30, 2020, and December 31, 2019, all amounts were classified as a current asset in the consolidated balance sheet;~~

~~(iii)~~

Other is comprised of deferred financing costs, subscription payments, utilities, travel costs, and software licensing. As of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, the Company classified all amounts as a current asset in the consolidated balance ~~sheet.~~sheets.

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~9

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Property and equipment~~

Computer equipment Furniture and equipment Laboratory equipment Leasehold improvements Total
Cost
Balance at December 31, 2018 $ 170,002 $ 181,879 $ 352,637 $ 282,975 $ 987,493
Additions 218,076 3,415 3,350 65,672 290,513
Disposals (2,210 ) - - - (2,210 )
Balance at December 31, 2019 385,868 185,294 355,987 348,647 1,275,796
Additions - - - 299,268 299,268
Disposals (9,933 ) (64,018 ) (13,712 ) (76,455 ) (164,117 )
Balance at September 30, 2020 375,935 121,276 342,275 571,460 1,410,947

Accumulated depreciation
Balance at December 31, 2018 104,918 29,585 99,696 36,206 270,405
Depreciation 88,417 26,617 68,519 93,597 277,150
Disposals (901 ) - - - (901 )
Balance at December 31, 2019 192,434 56,202 168,215 129,803 546,654
Depreciation 65,330 13,333 52,267 101,545 232,475
Disposals (2,849 ) (28,505 ) (30,843 ) (26,686 ) (88,883 )
Balance at September 30, 2020 254,915 41,030 189,639 204,662 690,246

Net book value as at:
December 31, 2019 $ 193,434 $ 129,092 $ 187,772 $ 218,844 $ 729,142
September 30, 2020 $ 121,020 $ 80,246 $ 152,636 $ 366,798 $ 720,701

In the nine months ended September 30, 2020 and 2019, the Company disposed of assets with a net book value of $75,234 and $1,308. The Company received proceeds of $5,400 and nil and recorded a loss of $69,834 and $1,308 in the consolidated statement of loss and comprehensive loss for the nine months ended September 30, 2020 and 2019.

~~In February 2020, the Company reclassified $299,268 of prepaid expenses to property and equipment for leasehold improvements that became ready for use in February 2020 but were paid for in 2019.~~

~~Zomedica Corp.~~Table of Contents

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Intangible assets~~

Computer software Trademarks Website Total intangible assets
Cost
Balance at December 31, 2018 $ 5,143 $ 16,236 $ - $ 21,379
Additions - - 531,419 531,419
Balance at December 31, 2019 5,143 16,236 531,419 552,798
Additions - - 613 613
Balance at September 30, 2020 5,143 16,236 532,032 553,411

Accumulated amortization
Balance at December 31, 2018 5,143 3,178 - 8,321
Amortization - 1,082 - 1,082
Balance at December 31, 2019 5,143 4,260 - 9,403
Amortization - 820 134,605 135,425
Balance at September 30, 2020 5,143 5,080 134,605 144,828

Net book value as at:
December 31, 2019 $ - $ 11,976 $ 531,419 $ 543,395
September 30, 2020 $ - $ 11,156 $ 397,427 $ 408,583

~~Total estimated future amortization of intangible assets for each fiscal year is as follows:~~

2020 $ 46,009
2021 180,144
2022 180,144
2023 1,089
2024 1,089
2025 108
Total $ 408,583

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~Leases~~

~~The Company adopted ASC 842 with an initial application date of January 1, 2019. The Company was party~~Zomedica Corp.

Notes to ~~two lease agreements with Wickfield Phoenix LLC, under which it rented office and laboratory space. The rent for both leases was prepaid upon inception, and, therefore, at January 1, 2019,~~ the ~~Company reclassified its prepaid lease balance of $1,613,038 to a right-of-use asset. The Company recorded nil and $42,448 of amortization on the right-of-use asset for~~condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

5. Property and equipment

	September 30,		December 31,
	2021		2020

Computer equipment	$	901,379	$	364,165
Furniture and equipment		110,244		121,281
Laboratory equipment		225,330		234,087
Leasehold improvements		275,149		571,460
		1,512,102		1,290,993

Accumulated depreciation and amortization		805,836		707,986
Net property and equipment	$	706,266	$	583,007

Depreciation expense for the three months ended September 30, 2021 and 2020 ~~(September~~was $60,445 and $78,200, respectively and for the nine months ended September 30, ~~2019 - $127,345~~2021 and ~~$382,035)~~2020 was $175,168 and $232,475, respectively.

6. Intangible assets

	September 30,		December 31,
	2021		2020

Computer software		28,097	$	22,882
Trademarks		16,236		16,236
Website		755,968		513,680
		800,301		552,798

Accumulated amortization		326,335		190,135
Net intangibles	$	473,966	$	362,663

Amortization expense for the three months ended September 30, 2021 and 2020 was $46,732 and $45,399, respectively and for the nine months ended September 30, 2021 and 2020 was $136,200 and $135,425, respectively.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

7. Leases

On February 1, 2020, the Company cancelled its existing ~~leases~~lease with Wickfield Phoenix ~~LLC~~LLC. and entered ~~into~~ a new lease. The new lease period iswas for 60 months, commencing on February 1, 2020, and ending on January 31, 2025, with a monthly rent payment of $32,452 escalating to $36,525 over the lease period. Upon cancellation of the previous existing lease, the Company received a refund of prepaid rent in the amount of $1,002,113. The carrying value of the ~~right-of-use~~right of use asset was $1,061,210 upon cancellation. ~~In February 2020, the~~The Company recorded a loss on ~~the~~ right-of-use asset of $59,097 during the three months ended March 31, 2020 in the consolidated statements of ~~operations and~~ comprehensive loss.

On February 1, 2020, the Company recorded a right-of-use asset and a corresponding lease liability in the amount of $1,553,611 using the Company’s incremental borrowing rate of 12%.

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 $12,039 for the first two months and escalating to $30,911 over the lease period. The carrying value of the right of use asset was $1,258,263 upon modification. The Company recorded a gain on right-of-use asset of $731 during the three months ended March 31, 2021 in the consolidated statements of comprehensive loss.

On February 1, 2021, the Company recorded a right-of-use asset and a corresponding lease liability in the amount of $1,281,609 using the Company’s incremental borrowing rate of 3.95%.

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 recorded a right-of-use asset and a corresponding lease liability in the amount of $4,580 for the first month and escalating to $10,009 over the lease period. The Company recorded a right-of-use asset and corresponding lease liability for $365,840 using the Company’s incremental borrowing rate of 3.95%.

During the three and nine months ended September 30, 2021, the Company recognized $93,980 and $270,554 in rent expense, $3,882 of the expense was for common area maintenance charges, with $31,605 and $69,403 recorded in research and development expenses, respectively and $62,375 and $201,151 recorded in general and administrative expense, respectively in the consolidated statements of comprehensive loss.

During the three and nine months ended September 30, 2020, the Company recognized $103,375 and $279,997 in rent expense with $17,229 and $56,221 recorded in research and development expenses and $86,146 and $223,776 recorded in general and administrative expense, respectively in the consolidated statements of ~~operations and~~ comprehensive loss. ~~During~~

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, ~~2019, the Company recognized $7,603~~2021 and $19,483 in rent expense with nil recorded in research and development expenses and $7,603 and $19,483 recorded in general and administrative expense in the consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2020 the Company also recorded nil and $4,331 in rent expense related to month to month leases with the entirety in general and administrative expense in the consolidated statements of operations and comprehensive loss.

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

~~Leases (continued)~~

Right-of-use asset Premise lease
Cost
Aggregate lease commitments $ 2,067,505
Less: impact of present value (513,894 )
Balance at September 30, 2020 1,553,611

Reduction in right-of-use asset
Straight line amortization 275,667
Interest (102,800 )
Balance at September 30, 2020 172,867

Net book value as of:
September 30, 2020 $ 1,380,744

7. Leases (continued)

				September 30, 2021			December 31, 2020
Right-of-use asset
Cost
Aggregate lease commitments				$	1,778,798		$	2,067,505
Less: impact of present value and lease modification					(154,695	)		(513,894	)
Balance					1,624,103			1,553,611

Reduction in right-of-use asset
Straight line amortization					232,214			379,043
Interest					(27,901	)		(144,148	)
Balance					204,313			234,895

Net book value				$	1,419,790		$	1,318,716

Lease liabilities	Premise lease

Additions	$	1,553,611		$	1,647,449		$	1,553,611
Payments		(259,616	)		(198,385	)		(356,972	)
Interest		102,800			27,901			144,147
Total lease liabilities at September 30, 2020		1,396,795
Total lease liabilities				$	1,476,965		$	1,340,786

Current portion of lease liabilities		242,491			407,278			252,788
Long term portion of lease liabilities		1,154,304			1,069,687			1,087,998
Total lease liabilities at September 30, 2020	$	1,396,795
Total lease liabilities				$	1,476,965		$	1,340,786

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

2020 $ 97,357
2021 400,133
2022 412,137
2023 424,501
2024 437,236
2025 36,525
Total $ 1,807,889

2021 - remainder balance	$	112,342	$	400,133
2022		461,727		412,137
2023		475,579		424,501
2024		489,845		437,236
2025		40,920		36,526
Total	$	1,580,413	$	1,710,533

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~12

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

~~Loan arrangements~~

8. Loan arrangements

On October ~~17,~~18, 2017, the Company entered into a loan arrangement with a shareholder of the Company, pursuant to which such shareholder has agreed to provide a loan facility to the Company, whereby the Company may borrow up to $5,000,000, with the proceeds to be used for working capital and general corporate purposes. The term of the loan facility is five (5) years, with principal and interest payments being due only at the time of maturity. Under the loan agreement, the Company may borrow in one or more advances, provided however that a minimum amount of $250,000 must be borrowed at any one time and not more than two advances may occur per month. Interest shall accrue at a rate of fourteen percent (14%) per annum, payable upon maturity. As of September 30, ~~2020,~~2021, no amounts have been borrowed.

The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “Program”). The Program provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downturn. Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5x the business’s average monthly payroll. Collateral or guarantor support is not required for the loan.

Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 8-week period beginning on the date the proceeds were received on the loan. Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services. The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable in 18 equal monthly installments commencing after the forgiveness period. The Program was subsequently amended to allow the borrower to use an extended forgiveness period of 24 weeks beginning on the date the proceeds were received on the loan and to extend the repayment period to 54 months commencing after the 24-week forgiveness period.

In April of 2020, the Company received $527,360 ~~from~~under the ~~Small Business Administration’s Paycheck Protection Program.~~program. The receipt ~~is currently~~was reported as a current liability and accounted for as a loan. The Company was granted forgiveness on June 13, 2021 and recorded a gain on the extinguishment of debt for $533,414, inclusive of $6,054 in ~~accounts payable and~~ accrued ~~liabilities. If the loan is required to be repaid it will be granted a two-year term at 1%~~ interest.

9. Preferred shares

~~10.~~

~~Preferred stock~~

The Company is authorized to issue up to 20 shares of its Series 1 Preferred Shares, all without par value, and each having a stated value of $1,000,000. The Series 1 Preferred Shares do not have voting rights except to the extent required by applicable law and are not convertible into the Company’s common shares. Holders of the Series 1 Preferred Shares will not be entitled to dividends but, in lieu thereof, will receive Net Sales ~~Payments~~Returns (“Net Sales ~~Payments”~~Returns” is defined as annual payments equal to 9 percent of net sales) until such time as the holders have received total Net Sales ~~Payments~~Returns equal to 9 times the aggregate stated value of the outstanding Series 1 Preferred Shares. The Company will have the right to redeem the outstanding Series 1 Preferred Shares at any time at a redemption price equal to 9 times the aggregate stated value of the Series 1 Preferred Shares outstanding less the aggregate amount of the Net Sales ~~Payments~~Returns paid (the “Redemption Amount”).

Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series 1 Preferred Shares will be entitled to a liquidation preference equal to the stated value of the Series 1 Preferred Shares less the Net Sales ~~Payments~~Returns paid on the Series 1 Preferred Shares.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

9. Preferred shares (continued)

In the event of a fundamental transaction (defined to include an amalgamation, merger or other business combination transaction involving ~~the Company~~our company in which ~~our~~the shareholders do not have the right to cast more than 50% of the votes that may be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of ~~the Company~~our company as an entirety or substantially as an entirety to a third party), the holders of the Series 1 Preferred Shares will be entitled to receive consideration for their Series 1 Preferred Shares equal to a multiple of the stated value of the Series 1 Preferred Shares ranging from 5.0 to 9.0 depending on the timing of the fundamental transaction, subject to a cap equal to the ~~Redemption Amount. The Company has assessed the likelihood of any Net Sales Payments to the Series 1 Preferred shareholders to be remote.~~redemption amount.

Issued and outstanding preferred stock:

Number of
preferred Preferred
stock stock amount
Balance at December 31, 2018 - $ -
Stock issued from financing (i) 12 11,961,397
Balance at December 31, 2019 12 $ 11,961,397
Balance at September 30, 2020 12 $ 11,961,397

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~11.~~

~~Common stock~~

	Number of			Preferred
	preferred stock			stock amount
Balance at December 31, 2019		12		$	11,961,397
Balance at December 31, 2020		12			11,961,397
Stock exchanged		(12	)		(11,961,397	)
Balance at September 30, 2021		-		$	-

The Company ~~is authorized to issue an unlimited number~~exchanged the issued and outstanding shares of its Series 1 Preferred Shares on March 7, 2021, for 24,719,101 of common shares ~~all without par value.~~valued at $44,000,000. The difference between the carrying value of the preferred shares and the fair value of the common shares exchanged of $32,038,603 was charged to accumulated deficit.

~~Issued and outstanding common stock:~~10. Common shares

Common Common
stock amount stock value
Balance at December 31, 2018 97,598,898 $ 30,410,648
Stock issuance for services (i and ii) 707,236 792,104
Stock issued from financing (iii and iv) 9,337,529 6,690,922
Stock issued due to exercise of options 394,735 754,148
Balance at September 30, 2019 108,038,398 $ 38,647,822

Balance at December 31, 2019 108,038,398 $ 38,566,820
Stock issued from financing (v,vi,vii,viii) 337,830,001 29,140,905
Stock issued from the financing and exercise of prefunded warrants (viii) 37,146,984 3,410,276
Stock issued from the exercise of warrants (ix and xi) 81,036,055 16,840,136
Balance at September 30, 2020 564,051,438 $ 87,958,137

(i)

~~(i)~~

On January 14, 2019, the Company settled $75,000 of amounts due to a vendor by issuing 49,342 common shares valued at $55,263 at the date of issuance. The Company recorded a $19,737 gain on the settlement of liabilities.

~~(ii)~~

On January 14, 2019, the Company issued 657,894 common shares in satisfaction of $1,000,000 of all remaining milestones under a License and Supply Agreement with a third party. The Company recognized $736,841 as research and development expense, based on the value of the common stock on the date of issuance.

~~(iii)~~

On January 14, 2019, the Company completed a non-brokered private placement, and issued 2,815,789 common shares. Gross proceeds of $4,280,000 were received prior to December 31, 2018. The Company recorded $465 of share issuance costs as an offset to common stock.

~~(iv)~~

On March 28, 2019, the Company completed an underwritten public offering of its common stock pursuant to which the Company sold an aggregate 6,521,740 common shares for gross proceeds of $3,000,000. The Company recorded $592,707 of share issuance costs as an offset to common stock.

~~(v)~~

On February 14, 2020, the Company completed a registered direct offering (“RDO”) of its common shares and a simultaneous private placement of its warrants (“Series A Warrants”) in a fixed combination of one common share and a Series A Warrant to purchase one common share, resulting in the sale of 20,833,334 common shares and Series A Warrants to purchase 20,833,334 common shares at a combined offering price of $0.12 per share and related Series A Warrant. Each Series A Warrant has an exercise price of $0.20 per share, is exercisable six months after issuance and has a term of ~~5- and one-half~~5.5 years. The Company also issued warrants to the placement agents to purchase 1,041,667 common shares at an exercise price of $0.15 per share (“~~Series A~~ Placement Agent Warrants”), which were exercisable immediately upon issuance and have a term of 5 years. In aggregate, the Company issued 20,833,334 common shares, 20,833,334 Series A Warrants, in and an additional 1,041,667 Series A Placement Agent Warrants.

The Company raised $2,500,000 in gross proceeds as part of the RDO. The Company recorded $1,705,655 as the value of common shares under common shares and $794,345 as the value of Series A Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

The direct cash costs related to the issuance of the common shares and warrants issued in February 2020 were $348,220. These direct costs were recorded as an offset against the statement of shareholders’ equity with $238,217 being recorded under common shares and $110,003 being recorded under additional paid-in-capital. The Company also recorded the value of the Series A Placement Agent Warrants in the amount of $52,496 as an offset against the statement of shareholders’ equity with $35,816 being recorded under common shares and $16,680 being recorded under additional paid-in-capital.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

10. Common shares (continued)

~~11.~~

(ii)

~~Common stock (continued)~~

The Company raised $2,500,000 in gross proceeds as part of the RDO. The Company recorded $1,705,655 as the value of common shares under common stock and $794,345 as the value of Series A Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

The direct cash costs related to the issuance of the common shares and warrants issued in February 2020 were $348,220. These direct costs were recorded as an offset against the statement of shareholders’ equity with $238,217 being recorded under capital stock and $110,003 being recorded under additional paid-in-capital. The Company also recorded the value of the Series A Placement Agent Warrants in the amount of $52,496 as an offset against the statement of shareholders’ equity with $35,816 being recorded under capital stock and $16,680 being recorded under additional paid-in-capital.

~~(vi)~~

On April 9, 2020, the Company completed a confidentially marketed public offering (“CMPO”) of its common shares and warrants (“Series B Warrants”) of 33,333,334 common shares and warrants to purchase up to 16,666,667 common shares. The securities were sold in a fixed combination of one common share and 0.5 of a Series B Warrant at a combined offering price of $0.12 per share and accompanying warrant. Each whole warrant is exercisable immediately for one common share after issuance, at an exercise price of $0.15 per share and has a term of 5 years. The Company also issued warrants to the placement agents to purchase 1,666,667 common shares at an exercise price of $0.15 per share (“Series B Placement Agent Warrants”), which were exercisable immediately upon issuance and have a term of 5 years. In aggregate, the Company issued 33,333,334 common shares,16,666,667 Series B Warrants ~~and an additional~~in addition to 1,666,667 Series B Placement Agent Warrants.

The Company raised $4,000,000 in gross proceeds in the CMPO. The Company recorded $2,942,248 as the value of common shares under common stock and $1,057,752 as the value of Series B Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

The direct cash costs related to the issuance of the common shares and warrants issued in April were $582,977. These direct costs were recorded as an offset against the statement of shareholders’ equity with $428,283 being recorded under capital stock and $154,694 being recorded under additional paid-in-capital. The Company also recorded the value of the Series B Placement Agent Warrants in the amount of $161,714 as an offset against the statement of shareholders’ equity, with $118,951 being recorded under capital stock and $42,763 being recorded under additional paid-in-capital.

The direct cash costs related to the issuance of the common shares and warrants issued in April were $582,977. These direct costs were recorded as an offset against the statement of shareholders’ equity with $428,283 being recorded under capital stock and $154,694 being recorded under additional paid-in-capital. The Company also recorded the value of the Series B Placement Agent Warrants in the amount of $161,714 as an offset against the statement of shareholders’ equity with $118,951 being recorded under capital stock and $42,763 being recorded under additional paid-in-capital.

	~~(vii)~~
(iii)	On May 29, 2020 the Company completed a public offering of its common shares or common share equivalents (“Series C ~~Pre-Funded Warrants”~~pre-funded warrants”), and warrants (“Series C Warrants”) in a fixed combination of one common share or Series C ~~Pre-Funded Warrant,~~pre-funded warrant, and a Series C Warrant to purchase one common share, resulting in the sale of 121,163,333 common shares, 12,170,000 ~~Series C Pre-Funded Warrants,~~pre-funded warrants, and Series C Warrants to purchase 133,333,333 common shares at a combined offering price of $0.15 per share for the common shares and related Series C Warrant, or a combined offering price of $0.1499 per ~~Pre-Funded Warrant~~pre-funded warrant and related Series C ~~Warrant.~~warrant. Each Series C ~~Pre-Funded Warrant~~pre-funded warrant has an exercise price of $0.0001 per share, is exercisable immediately after issuance, is exercisable only on a cashless exercise basis, and will not expire prior to exercise. Each Series C Warrant has an exercise price of $0.15 per share, is exercisable immediately after issuance and has a term of 2 years.

	The Company raised $19,998,783 in gross proceeds as part of the public offering. The Company recorded $11,336,422 as the value of common shares under common stock, $1,080,289 as the value of the pre-funded warrants and $7,582,072 as the value of Series C Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity. The direct cash costs related to the issuance of the common shares, Series C pre-funded warrants and Series C Warrants issued in May were $1,908,202. These direct costs were recorded as an offset against the statement of shareholders’ equity with $1,088,876 being recorded under capital stock and $819,327 being recorded under additional paid-in-capital.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

10. Common shares (continued)

~~11.~~

(iv)

~~Common stock (continued)~~

The Company raised $19,998,783 in gross proceeds as part of the public offering. The Company recorded $11,336,422 as the value of common shares under common stock, $1,080,289 as the value of the Series C Pre-Funded Warrants and $7,582,072 as the value of Series C Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

The direct cash costs related to the issuance of the common shares, Series C Pre-Funded Warrants and Series C Warrants issued in May 2020 were $1,908,202. These direct costs were recorded as an offset against the statement of shareholders’ equity with $1,088,876 being recorded under capital stock and $819,327 being recorded under additional paid-in-capital.

~~(viii)~~

On July 7, 2020 the Company completed a public offering of its common shares or common share equivalents (“Series D Pre-Funded Warrants”), and warrants (“Series D Warrants”) in a fixed combination of one common share or Series D Pre-Funded warrant, and a Series D Warrant to purchase one common share, resulting in the sale of 162,500,000 common shares, 25,000,000 Series D Pre-Funded Warrants, and Series D Warrants to purchase 187,500,000 common shares at a combined offering price of $0.16 per share for the common shares and related Series D Warrant, or a combined offering price of $0.1599 per Series D Pre-Funded warrant and related Series D Warrant. Each Series D Pre-Funded warrant has an exercise price of $0.0001 per share, is exercisable immediately after issuance, is exercisable only on a cashless exercise basis, and will not expire prior to exercise. Each Series D Warrant has an exercise price of $0.16 per share, is exercisable immediately after issuance, and has a term of 2 years.

The Company raised $29,997,500 in gross proceeds as part of the public offering. The Company recorded $16,290,941 as the value of common shares under common stock, $2,329,983 as the value of the Series D Pre-Funded Warrants and $11,376,575 as the value of the Series D Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

The direct cash costs related to the issuance of the common shares, Series D Pre-Funded Warrants and Series D Warrants issued in July 2020 were $2,268,215. These direct costs were recorded as an offset against the statement of shareholders’ equity with $1,224,218 being recorded under capital stock and $1,043,997 being recorded under additional paid-in-capital.


	~~(ix)~~ The Company raised $29,997,500 in gross proceeds as part of the public offering. The Company recorded $16,290,941 as the value of common shares under common stock, $2,329,983 as the value of the Series D Pre-Funded Warrants and $11,376,575 as the value of the Series D Warrants under additional paid-in-capital in the consolidated statements of shareholders’ equity.

	The direct cash costs related to the issuance of the common shares, Series D Pre-Funded Warrants and Series D Warrants issued in July 2020 were $2,268,215. These direct costs were recorded as an offset against the statement of shareholders’ equity with $1,224,218 being recorded under capital stock and $1,043,997 being recorded under additional paid-in-capital.

(v)	All Series C ~~Pre-Funded Warrants~~pre-funded warrants were exercised in June 2020. Upon exercise the value of the warrant exercise was based on the one-day VWAP of the Company stock the day before the exercise request date. The cashless exercise option resulted in the issuance of 12,162,492 shares.


(vi)	~~(x)~~ On February 8, 2021, the Company completed a sale of 91,315,790 common shares at an offering price of $1.90 per share. The Company also granted the underwriter a 30-day option to purchase up to 13,697,368 additional common shares at the public offering price.
	~~All Series D Pre-Funded Warrants were exercised~~
	The Company raised $199,525,000 in ~~July 2020.~~gross proceeds as part of the offering. The ~~cashless exercise, option resulted in~~Company recorded $199,525,000 as the value of common shares under common shares. The direct cash costs related to the issuance of ~~24,984,492~~the common shares and warrants issued in February 2021 were $14,2980,914. These direct costs were recorded as an offset against the statement of shareholders’ equity with the entirety recorded under common shares.

~~(xi)~~16

Table of September 30, 2020, 11,602,084 Series B Warrants have been exercised, resulting in additional cash proceeds of $1,740,313, and 69,433,971 Series C Warrants have been exercised, resulting in additional cash proceeds of $10,415,096.Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

~~12.~~

~~Stock-based compensation~~

11. Stock-based compensation

During the three and nine months ended September 30, ~~2020~~2021, the Company issued stock options to purchase an aggregate of 2,900,000 and ~~2019, nil~~12,100,000 common shares. The options vest over a period of four years and have an expiration period of ten years. During the three and nine months ended September 30, 2021, 1,787,175, and 7,017,776 options were ~~exercised.~~ exercised, and the Company received $400,208 and $1,768,011 in cash receipts and reclassified $306,532 and $1,050,940 of additional paid in capital to common stock due to the exercise of stock options.

During the three and nine months ended September 30, 2020, the Company issued stock options to purchase an aggregate of 515,000 and ~~2019, nil~~7,571,000 common shares. The options vest over a period of four years and ~~394,735 options were exercised, respectively.~~have an expiration period of five years. During the three ~~months ended September 30, 2020~~ and ~~2019, the Company issued 515,000 and 1,500,000 stock options, respectively. During the~~ nine months ended September 30, 2020, ~~and 2019, the Company issued 7,571,000 and 7,495,000~~no stock options ~~respectively, each option entitling~~were exercised.

The Company recorded $1,437,778 and $4,502,597 of stock-based compensation for the ~~holder to purchase one common share~~three and nine months ended September 30, 2021. The Company recorded $187,969 and $478,835 of stock-based compensation for the ~~Company.~~three and nine months ended September 30, 2020.

The continuity of stock options isare as follows:

Number of options Weighted avg exercise price
Balance at December 31, 2019 7,040,265 $ 1.28
Stock options forfeited January 23, 2020 (50,000 ) 1.52
Stock options forfeited February 25, 2020 (5,000 ) 1.12
Stock options forfeited March 1, 2020 (50,000 ) 1.52
Stock options granted March 14, 2020 5,056,000 0.19
Stock options forfeited April 21, 2020 (150,000 ) 0.19
Stock options forfeited May 4, 2019 (15,000 ) 0.19
Stock options forfeited May 5, 2020 (30,000 ) 1.52
Stock options forfeited May 7, 2020 (15,000 ) 1.52
Stock options forfeited June 11, 2020 (15,000 ) 1.52
Stock options granted June 16, 2020 2,000,000 0.19
Stock options granted July 9, 2020 175,000 0.18
Stock options forfeited July 20, 2020 (400,000 ) 1.52
Stock options forfeited July 20, 2020 (50,000 ) 0.19
Stock options forfeited July 31, 2020 (3,750 ) 0.19
Stock options forfeited August 2, 2020 (10,000 ) 1.52
Stock options forfeited August 2, 2020 (5,000 ) 0.19
Stock options forfeited August 14, 2020 (675,000 ) 0.19
Stock options forfeited August 19, 2020 (75,375 ) 0.19
Stock options granted August 25, 2020 40,000 0.13
Stock options forfeited September 25, 2020 (37,500 ) 0.19
Stock options granted September 29, 2020 300,000 0.11
Balance at September 30, 2020 13,024,640 $ 0.72
Vested at September 30, 2020 9,136,348 $ 0.95

	Number of Options		Weighted Avg Exercise Price
Balance at December 31, 2020		39,604,515	$	0.36
Stock options granted		12,100,000	$	0.86
Stock options exercised		7,017,776	$	0.25
Unvested stock options forfeited		1,670,000	$	0.64
Vested stock options exprired		4,034,015	$	1.52
Balance at September 30, 2021		38,982,724	$	0.40
Vested at September 30, 2021		9,152,474	$	0.28

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

(Unaudited) (Stated in United States dollars)

~~12.~~

~~Stock-based compensation (continued)~~

11. Stock-based compensation (continued)

As atof September 30, ~~2020,~~2021, details of the issued and outstanding stock options were as follows:

Grant date Exercise price Number of options issued and outstanding Number of vested options outstanding Number of unvested options outstanding Weighted Avg Remaining Life outstanding (years)
January 10, 2019 $ 1.52 4,965,265 4,965,265 - 0.28
August 19, 2019 0.26 500,000 500,000 - 0.88
August 19, 2019 0.35 100,000 100,000 - 0.88
August 19, 2019 0.45 100,000 100,000 - 0.88
August 19, 2019 0.55 100,000 100,000 - 0.88
August 19, 2019 0.65 100,000 100,000 - 0.88
August 19, 2019 0.75 100,000 100,000 - 0.88
September 16, 2019 0.43 500,000 500,000 - 0.96
March 14, 2020 0.19 4,044,375 1,209,000 2,835,375 4.45
June 16, 2020 0.19 2,000,000 1,333,334 666,666 4.71
July 9, 2020 0.18 175,000 43,750 131,250 4.78
August 25, 2020 0.13 40,000 10,000 30,000 4.90
September 29, 2020 0.11 300,000 75,000 225,000 5.00
Balance at September 30, 2020 13,024,640 9,136,349 3,888,291

Grant date	Exercise price		Number of options issued and outstanding		Number of vested options outstanding		Number of unvested options outstanding		Weighted Avg Remaining Life outstanding (years)
March 14, 2020		0.19		3,028,557		1,675,807		1,352,750		3.45
July 9, 2020		0.18		175,000		87,500		87,500		3.78
August 25, 2020		0.13		20,000		-		20,000		3.90
September 29, 2020		0.11		225,000		225,000		-		4.00
October 1, 2020		0.11		266,667		41,667		225,000		4.01
October 20, 2020		0.09		25,000		10,000		15,000		4.06
December 31, 2020		0.23		24,142,500		6,762,500		17,380,000		4.25
February 26, 2021		1.87		600,000		150,000		450,000		4.41
March 1, 2021		2.06		200,000		50,000		150,000		4.42
March 8, 2021		1.88		200,000		50,000		150,000		4.44
March 15, 2021		2.49		200,000		50,000		150,000		4.46
May 12, 2021		0.78		3,800,000		-		3,800,000		4.62
May 14, 2021		0.75		3,200,000		50,000		3,150,000		4.62
August 11, 2021		0.57		1,300,000		-		1,300,000		4.87
August 18, 2021		0.50		200,000		-		200,000		4.88
August 23, 2021		0.50		100,000		-		100,000		4.90
September 13,2021		0.57		800,000		-		800,000		4.96
September 27,2021		0.54		500,000		-		500,000		4.99
Balance at September 30, 2021				38,982,724		9,152,474		29,830,250

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.

The fair value of options granted during the three and nine months ended September 30, ~~2020~~2021 was estimated using the Black-Scholes option pricing model to determine the fair value of options granted using the following assumptions:

July 9, 2020 June 16, 2020 March 14, 2020
Volatility 100% 100% 87%
Risk-free interest rate 0.28% 0.21% 0.49%
Expected life (years) 5 5 5
Divedend yield 0% 0% 0%
Common share price $0.17 $0.19 $0.18
Strike price $0.18 $0.19 $0.19
Forfeiture rate nil nil nil

September 29, 2020 August 25, 2020
Volatility 100% 99%
Risk-free interest rate 0.24% 0.30%
Expected life (years) 5 5
Divedend yield 0% 0%
Common share price $0.10 $0.13
Strike price $0.11 $0.13
Forfeiture rate nil nil

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~18

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~12.~~

~~Stock-based compensation (continued)~~Table of Contents

~~The Company recorded $187,969 and $478,835 of stock-based compensation for~~Zomedica Corp.

Notes to the ~~three and nine months ended September 30, 2020 (2019 – $197,988 and $2,539,092).~~ condensed consolidated financial statements

For the three and nine months ended September 30, ~~2020 the Company recorded nil cash receipts due to the exercise of options. For the three~~2021 and nine months ended September 30, 2019 the Company recorded nil and $600,000 in cash receipts and reclassified nil and $154,148 of stock-based compensation to common stock due to the exercise of options.2020

(Unaudited) (Stated in United States dollars)

	February 26, 2021			March 1, 2021			March 8, 2021			March 15, 2021
Volatility		117	%		117	%		117	%		117	%
Risk-free interest rate		0.95	%		0.92	%		1.07	%		1.06	%
Expected life	10 years			10 years			10 years			10 years
Dividend yield		0	%		0	%		0	%		0	%
Common share price	$	1.87		$	2.06		$	1.88		$	2.49
Strike price	$	1.87		$	2.06		$	1.88		$	2.49
Forfeiture rate	zero			zero			zero			zero

	May 12, 2021			August 11, 2021			August 23, 2021			September 13, 2021
Volatility		118	%		116	%		116	%		116	%
Risk-free interest rate		1.11	%		0.96	%		0.92	%		0.96	%
Expected life	6.21 - 6.22 Years			6.18 - 6.25				6.25			6.25
Dividend yield		0	%		0	%		0	%		0	%
Common share price	$	0.78		$	0.56		$	0.50		$	0.57
Strike price	$	0.78		$	0.57		$	0.50		$	0.57
Forfeiture rate	zero			zero			zero			zero

	September 27, 2021
Volatility		116	%
Risk-free interest rate		1.14	%
Expected life		6.25
Dividend yield		0	%
Common share price	$	0.54
Strike price	$	0.54
Forfeiture rate	zero

~~The Company has estimated its stock option forfeitures to be nil for the three and nine months ended September 30, 2020 (three and nine months ended September 30, 2019 - nil).~~12. Warrants

~~13.~~

~~Warrants~~

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

In connection with the April 9, 2020 CMPO, the Company issued 16,666,667 five-year Series B Warrants to purchase one common share at an exercise price of $0.15. The Company also issued 1,666,667 Placement Agent Warrants to purchase one common share 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 one ~~share of~~ common ~~stock~~share 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 ~~September 30,~~December 31, 2020, all of the Series C Pre-Funded Warrants have ~~all~~ been exercised.

In connection with the July 7, 2020 public offering, the Company issued 187,500,000 two-year Series D Warrants to purchase one ~~share of~~ common ~~stock~~share 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 ~~September 30,~~December 31, 2020, all of the Series D Pre-Funded Warrants have ~~all~~ been exercised.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

(Unaudited) (Stated in United States dollars)

12. Warrants (continued)

As of September 30, ~~2020,~~2021, details of the outstanding warrants were as follows:

Original Issue date	Exercise Price		Warrants Outstanding		Weighted Average Remaining Life		Exercise Price		Warrants Outstanding		Weighted Average Remaining Life

February 14, 2020		0.20		20,833,334		4.87		0.20		-		-
February 14, 2020		0.15		1,041,667		4.37		0.15		197,917		3.37
April 9, 2020		0.15		6,731,250		4.53		0.15		363,501		3.52
May 29, 2020		0.15		63,899,362		1.66		0.15		276,500		0.66
July 7, 2020		0.16		187,500,000		1.77		0.16		231,000		0.77
Balance at September 30, 2020				280,005,613
Balance at September 30, 2021										1,068,918

~~Zomedica Corp.~~

~~Notes to~~Cumulative warrant exercises as of the ~~condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~13.~~

~~Warrants (continued)~~

~~The fair value of warrants issued during the three and~~ nine months ended September 30, ~~2020 was estimated using the Black-Scholes option pricing model to determine the fair value of warrants granted using the following assumptions:~~

Series A Warrants February 14, 2020 Series A Placement Agent Warrants February 14, 2020
Volatility 87% 87%
Risk-free interest rate 1.42% 1.42%
Expected life (years) 5.5 5
Dividend yield 0% 0%
Common share price $0.12 $0.12
Strike price $0.20 $0.15
Forfeiture rate nil nil

Series B Warrants April 9, 2020 Series B Placement Agent Warrants April 9, 2020
Volatility 99% 99%
Risk-free interest rate 0.41% 0.41%
Expected life (years) 5 5
Dividend yield 0% 0%
Common share price $0.14 $0.14
Strike price $0.15 $0.15
Forfeiture rate nil nil


		~~Series C Warrants May 29, 2020~~
~~Volatility~~		~~118%~~
~~Risk-free interest rate~~		~~0.16%~~
~~Expected life (years)~~		2
~~Dividend yield~~		0%
~~Common share price~~		~~$0.16~~
~~Strike price~~		~~$0.15~~
~~Forfeiture rate~~		~~nil~~


		~~Series D Warrants July 7, 2020~~
~~Volatility~~		~~118%~~
~~Risk-free interest rate~~		~~0.16%~~
~~Expected life (years)~~		2
~~Dividend yield~~		0%
~~Common share price~~		~~$0.17~~
~~Strike price~~		~~$0.16~~
~~Forfeiture rate~~		~~nil~~

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~14.~~

~~Commitments and contingencies~~

~~On November 26, 2018, the Company entered into a Development and Supply Agreement and, as part of this agreement, the Company has contingent future outflows~~2021 were as follows:

•

1^st ~~payment: At the later of the achievement of a future milestone event or September 12, 2019, can decide to receive payment as follows:~~

Warrant series	Warrants exercised		Amount

Series A		21,677,084	$	4,293,229
Series B		17,969,833		2,695,475
Series C		133,056,833		19,958,525
Series D		187,269,000		29,963,040
Subtotal		359,972,750		56,910,269
Common stock subscribed		-		(459,600	)
Total		359,972,750	$	56,450,669

○

~~$3,000,000 in cash~~ or

○

~~$1,500,000 in cash and $1.95 million in equity~~

•

2^nd ~~payment: At the later of the achievement of a future milestone or February 19, 2020 - $2,000,000 in cash.~~

•

3^rd ~~payment: At the later of the achievement of a future milestone event or September 12, 2019, can decide to receive payment as follows:~~

○

~~$3,000,000 in cash~~ or

○

~~$1,500,000 in cash and $1.95 million in equity~~

•

4^th ~~payment: At the later of the achievement of a future milestone or February 19, 2020 - $2,000,000 in cash.~~

~~As of September 30, 2020, all milestones have been met~~13. Commitments and ~~paid.~~contingencies

On May 10, 2018, the Company entered into a Development, Commercialization and Exclusive Distribution Agreement. As part of the agreement, the Company is required to make the following future milestone payments:

•

●

1^st payment: $3,500,000 in cash payment upon the achievement of future development ~~milestones.~~milestones


	• ●	2^nd payment: $3,500,000 in equity, ~~based on the number of the Company’s common stock~~ determined by dividing the amount due by the ~~VWAP~~volume-weighted average price of the Company’s common stock on the NYSE American exchange over the 10 trading days prior to the achievement of the milestone event.

As of September 30, ~~2020, neither~~2021, none of the future development milestones related to the above agreement ~~has~~have been met. The Company has assessed the probability of meeting the above milestones and has determined that an accrual is not necessary as of September 30, 2021, and December 31, 2020.

From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As of September 30, 2021, and continuing as of November 12, 2021, the Company is not aware of any pending or threatened material litigation claims against the Company.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

Unaudited) (Stated in United States dollars)

13. Commitments and contingencies (continued)

On ~~November 1, 2019,~~September 20, 2021, Heska Corporation (“Heska”) ~~filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against~~, Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and ~~the Company~~our company (collectively with Qorvo, the “Defendants”) which was amended on November 22, 2019. The amended Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The amended Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the TRUFORMA^TM ~~diagnostic instrument. On January 21, 2020, the Defendants filed~~entered into a ~~motion seeking dismissal of the Complaint. On February 11, 2020, Heska filed its response to the Defendants’ motion to dismiss~~settlement agreement pursuant to which the litigation previously commenced by Heska against the Defendants ~~responded on February 25, 2020. Heska subsequently moved~~in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, was dismissed with prejudice. Pursuant to ~~strike a portion~~the settlement agreement, the parties also provided mutual releases of any and all claims related to the subject matter of the ~~Defendants’ response. On~~litigation. We were not required to make any payment or agree to any covenants restricting the conduct of our business in connection with the settlement.

Table of Contents

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, ~~2020, the court denied the Defendants’ motion to dismiss~~2021 and granted Heska’s motion to strike. The Company believes that the allegations in the amended Complaint have no merit and will not have a material adverse effect on our business, results of operations or financial condition.2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

Unaudited) (Stated in United States dollars)

14. Financial instruments

~~14.~~

~~Commitments and contingencies (continued)~~

Under the terms of the Development and Supply Agreement, dated November 26, 2018, by and between Qorvo Biotech and the Company (as amended, the “Qorvo Agreement”), Qorvo Biotech agreed to indemnify us and certain related parties against claims alleging infringement or misappropriation of third-party intellectual property rights, subject to certain limitations and exceptions. Qorvo Biotech has notified us that Qorvo Biotech has assumed the defense of the amended Complaint and will indemnify us for losses arising from the amended Complaint in accordance with the terms of the Qorvo Agreement. Qorvo Biotech has further advised us that it intends to mount a vigorous defense to the claims in the amended Complaint, and that it believes the allegations contained in the amended Complaint are without merit.

~~15.~~

~~Financial instruments~~

(a)

Fair values

The Company follows ASC topic 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC topic 820 apply to other accounting pronouncements that require or permit fair value measurements. ASC topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement ~~date,~~date; and establishes a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs for ~~assets~~asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The carrying values of cash, trade and other receivable, accounts payable and accrued liabilities and shareholder loans payable approximates their fair values because of the short-term nature of these instruments.

~~(b)~~

~~Interest rate and credit risk~~

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and cash equivalents, due to the short-term nature of these balances.

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~15.~~

~~Financial instruments (continued)~~

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank. The Company’s cash is not subject to any external restrictions.

~~(c)~~

~~Foreign exchange risk~~

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange (“FX”) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to an FX loss while a weakening U.S. dollar will lead to an FX gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

~~(d)~~

~~Liquidity risk~~

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as atof September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

September 30, 2020
Less than 3 to 6 6 to 9 9 months Greater than
3 months months months 1 year 1 year Total
$ $ $ $ $ $
Third parties
Accounts payable and accrued liabilities 1,827,761 - - - - 1,827,761
1,827,761 - - - - 1,827,761

December 31, 2019
Less than 3 to 6 6 to 9 9 months Greater than
3 months months months 1 year 1 year Total
$ $ $ $ $ $
Third parties
Accounts payable and accrued liabilities 2,087,525 - - - - 2,087,525
2,087,525 - - - - 2,087,525

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated in United States dollars)~~

~~16.~~

~~Segmented information~~

									September 30, 2021
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
Third parties
Accounts payable and accrued liabilities	$	4,464,874	$	0	$	0	$	0	$	0	$	4,464,874
Lease obligations		112,343		114,589		115,713		115,713		1,018,607		1,476,965
	$	4,577,217	$	114,589	$	115,713	$	115,713	$	1,018,607	$	5,941,839

									December 31, 2020
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
Third parties
Accounts payable and accrued liabilities	$	1,248,628	$	0	$	0	$	-	$	0	$	1,248,628
Debt obligations		527,360		0		0		0		0		527,360
Lease obligations		59,662		62,463		64,356		66,307		1,087,998		1,340,786
	$	1,835,650	$	62,463	$	64,356	$	66,307	$	1,087,998	$	3,116,774

15. Segment information

The ~~Company's~~Company’s operations comprise a single reportable segment engaged in the research, ~~and~~ development targeting health and wellness solutions for the companion animal. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for loss for the period, depreciation and total assets also represent ~~non-segmented~~segmented amounts. In addition, all of the ~~Company's~~Company’s long-lived assets are in the United States of America (“US”).

	September 30,		December 31,		September 30,		December 31,
	2020		2019		2021		2020
	$		$
Total assets
Canada		52,077,832		249,929	$	172,945,051	$	53,160,701
US		4,526,513		3,933,055		104,557,100		12,983,333
Total assest					$	277,502,151	$	66,144,034

Total US property and equipment		720,701		729,142	$	706,266	$	583,007
Total US right-of-use asset		1,380,744		1,103,658		1,419,790		1,318,716
		2,101,445		1,832,800	$	2,126,056	$	1,901,723

~~17.~~22

~~Schedule~~Table of ~~expenses~~Contents

For the three months ended
September 30, For the three months ended
September 30,
2020 2019
Research and Professional General and Research and Professional General and
Development Fees Administrative Development Fees Administrative

Salaries, bonus and benefits $ 118,015 $ - $ 910,668 $ 147,515 $ - $ 879,422
Contracted expenditures 544,952 - - 661,917 - -
Marketing and investor relations - - 59,559 - - 165,837
Travel and accommodation - - 91 8,327 - 198,993
Insurance 181 - 62,649 1,301 - 36,065
License fees 2,000,000 - - - - -
Office 9,750 - 63,771 11,565 - 52,332
Consultants 6,500 839,646 - 29,343 306,937 -
Regulatory - - 152,201 31,773 - 26,163
Rent 17,229 - 86,146 - - 7,603
Supplies 5,476 - - 70,722 - 10,837
Total $ 2,702,103 $ 839,646 $ 1,335,085 $ 962,463 $ 306,937 $ 1,377,252

For the nine months ended
September 30, For the nine months ended
September 30,
2020 2019
Research and Professional General and Research and Professional General and
Development Fees Administrative Development Fees Administrative

Salaries, bonus and benefits $ 433,659 $ - $ 2,414,103 $ 651,315 $ - $ 4,524,682
Contracted expenditures 1,423,764 - - 2,474,483 - -
Marketing and investor relations - - 176,938 - - 297,252
Travel and accommodation 407 - 13,006 21,103 - 318,730
Insurance 622 - 154,999 4,197 - 77,165
License fees 5,000,000 - - 5,936,841 - -
Office 31,827 - 361,967 31,162 - 149,788
Consultants 84,626 1,413,118 - 178,223 1,296,884 -
Regulatory 151,073 - 262,557 95,418 - 76,333
Rent 56,221 - 223,776 - - 19,483
Supplies 23,475 - - 162,603 - 27,495
Total $ 7,205,674 $ 1,413,118 $ 3,607,346 $ 9,555,345 $ 1,296,884 $ 5,490,928

Zomedica Corp.

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2021 and 2020

~~Zomedica Corp.~~

~~Notes to the condensed unaudited interim consolidated financial statements~~

~~For the three and nine months ended September 30, 2020 and 2019~~

~~(Stated~~

Unaudited) (Stated in United States dollars)

~~18.~~

~~Capital risk management~~

The capital of the Company includes equity, which is comprised of issued common shares, additional paid-in capital, and accumulated deficit. The Company's objective when managing its capital is to safeguard the ability to continue as a going concern in order to provide returns for its shareholders and other stakeholders, and to maintain a strong capital base to support the Company's core activities.16. Loss per share

~~19.~~

~~Loss per share~~

	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended September 30						For the nine months ended September 30
	2020			2019			2020			2019			2021			2020			2021			2020

Numerator
Net loss for the period	$	4,979,975		$	2,845,679		$	12,738,582		$	16,927,016		$	(6,345,687	)	$	(4,979,975	)	$	(15,093,178	)	$	(12,738,582	)
Charge to retained earnings for preferred share exchange														-						(32,038,603	)		-
Loss attributable to common shareholders														(6,345,687	)		(4,979,975	)		(47,131,781	)		(12,738,582	)

Denominator
Weighted average shares - basic		550,541,878			108,038,398			291,314,002			105,711,459			978,494,076			550,541,878			948,664,410			291,314,002
Stock options														-			-			-			-
Warrants		-			-			-			-			-			-			-			-
Stock options		-			-			-			-
Denominator for diluted loss per share		550,541,878			108,038,398			291,314,002			105,711,459			978,494,076			550,541,878			948,664,410			291,314,002

Loss per share - basic and diluted	$	(0.01	)	$	(0.03	)	$	(0.04	)	$	(0.16	)	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.04	)

For the ~~above-mentioned~~above‑mentioned periods, the Company had ~~securities~~stock options and warrants outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been ~~anti-dilutive.~~anti‑dilutive.

17. Subsequent Events

On October 1, 2021, Zomedica Inc., the wholly-owned subsidiary of Zomedica Corp. 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 indirect wholly-owned subsidiaries include Georgia, United States-based Pulse Veterinary Technologies, LLC, which, together with its consolidated subsidiaries, is a leading provider of non-invasive shock wave therapy treatment devices to the veterinary industry. The purchase price for the Acquisition was $71.9 million in cash, which was subject to adjustments based on the amount of the Target’s cash and net working capital at the closing of the acquisition.

~~20.~~		~~Related party transactions and key management compensation~~23

Table of Contents

Key management personnel are comprised of the Company’s directors and executive officers. In addition to their salaries, key management personnel also receive share-based compensation. Key management personnel compensation is as follows:

For the three months ended
September 30, For the nine months ended
September 30,
2020 2019 2020 2019
Salaries and benefits, including bonuses $ 281,868 $ 251,737 $ 624,604 $ 887,635
Stock-based compensation 15,445 100,002 393,470 1,744,327
Total $ 297,313 $ 351,739 $ 1,018,074 $ 2,631,962

~~21.~~

~~Comparative figures~~

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. Adjustments have been made to the consolidated schedule of expenses for the three and nine months ended September 30, 2019 to classify health insurance benefits as part of salaries, wages and bonuses, and audit fees to professional fees. This change in classification does not affect previously reported cash flows from operating activities in the consolidated statements of cash flows.

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATION

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this ~~Quarterly~~ Report. This discussion contains forward-looking statements ~~and~~as well as forward-looking information under applicable Canadian securities legislation (collectively, “forward-looking statements”) that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this ~~Quarterly~~ Report, and those set forth in our most recent Annual Report on Form 10-K particularly those under “Risk Factors” discussed below and in our most recent Annual Report on Form ~~10-K.~~10-Kand in other reports we file under applicable securities laws.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This ~~report on Form 10-Q~~Report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and pursuant to applicable Canadian securities legislation that are based on management’s beliefs and assumptions and on information currently available to management. Some of the statements under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this ~~Form 10-Q~~Report contain forward-looking statements. In some cases, you can identify forward-looking statements through our use of words such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

	·	our ability to successfully commercialize our lead product, TRUFORMA^®;

	·	our ability to successfully integrate our recent acquisition of PulseVet (as defined below) and the ~~success,~~timing and costs to achieve that integration;

	·	our ability to successfully market and sell TRUFORMA^®, and the PulseVet veterinary products and services and any other products we develop or acquire and the related cost and timing ~~of our research and development activities, validation studies and beta testing, including with respect to our lead product, TRUFORMA™;~~thereof;

~~our ability to obtain and maintain any required approvals from the USDA Center for Veterinary Biologics for our proposed and future diagnostic products, to the extent applicable;~~

~~our ability to obtain funding for our operations;~~

the ability of our contract ~~research organizations~~partners and contractors to ~~appropriately~~ conduct our ~~safety~~product development, validation studies, verification studies, and beta testing, and certain other development ~~activities;~~activities appropriately and on a timely basis;


	·	the ability of our contract manufacturing organizations to manufacture and supply our ~~products;~~products to satisfy our requirements on a timely basis;


	·	our plans to develop and commercialize our planned and future products;

~~the expected impact of the novel coronavirus pandemic on our operations, including the development and commercialization of our TRUFORMA™ platform and the five initial assays;~~


	·	our ability to obtain funding for our operations;

	·	our ability to develop and commercialize products that can compete effectively;


	·	the size and growth of the veterinary diagnostics and medical device markets;


	·	our ability to obtain and maintain intellectual property protection for our planned and future products candidates;


	·	regulatory developments in the United ~~States;~~States and other important geographical markets;


	·	the loss of key ~~scientific or management~~ personnel;

~~our expectations regarding the period during which we will be an “emerging growth company” under the JOBS Act;~~


	·	the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

	·	~~risks~~
	·	the impact of the novel coronavirus pandemic on our operations, including the development, manufacturing, and selling of our TRUFORMA^®platform and related ~~to our Series 1 preferred shares;~~assays.


	·	our ability to maintain the listing of our common shares on the NYSE American exchange; and


	·	our status as a “passive foreign investment company” for U.S. federal income tax ~~purposes; and~~purposes.

·24

~~the anticipated U.S. and Canadian federal income tax consequences~~

Table of ~~our proposed domestication into a Delaware corporation.~~Contents

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those ~~anticipate~~anticipated in our forward-looking statements. Please see “Risk Factors” below and in our most recent Annual Report on Form 10-K and in other reports we file under applicable securities laws for additional risks which could adversely impact our business and financial performance.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this ~~report.~~Report or the date of the document incorporated by reference into this Report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

Overview

We are a veterinary health company creating products for companion animals by focusing on the unmet needs of clinical veterinarians. We expect that our product portfolio will include innovative diagnostics and medical devices that emphasize patient health and practice health. With a team that includes clinical veterinary professionals, our goal is to provide veterinarians the opportunity to increase productivity and grow revenue while better serving the animals in their care.

Our strategic focus ishas been on the commercialization of our TRUFORMA^® diagnostic biosensor platform and the final development and commercialization of ~~our TRUFORMA™ diagnostic biosensor platform and~~ the first ~~five~~three assays for the detection of adrenal and thyroid disorders in cats and dogs. We also have continued our efforts on the development of the final two assays and will begin commercialization as soon as they are available. The ~~TRUFORMA™~~TRUFORMA^® platform uses Bulk Acoustic Wave (BAW) technology to provide a non-optical and fluorescence free detection system for use at the point-of-care. We believe that BAW technology will enable precise and repeatable test results at the point-of-care during a typical veterinary appointment.

We employ fifteen direct field commercialization personnel, supported by two regional directors, a Vice President of Sales, and a Chief Commercial Officer.

We believe that ~~the TRUFORMA™ diagnostic platform does not require pre-market regulatory approval for use with companion animals~~market acceptance of TRUFORMA^® has been adversely impacted by delays in the ~~United States.~~development of our fT4 and ACTH assays by our development partner. Pending commercial availability of those assays, we have focused on encouraging veterinarians to install the TRUFORMA^® instrument in order to test and utilize the TRUFORMA® platform. We expect this initiative to continue as we focus our efforts on growth of TRUFORMA^® in the market.

~~Following~~We are also continuing to recruit and hire level sales representatives, professional services veterinarians, and support staff in order both to further the execution of our instrument placement programs and to prepare for an acceleration of our sales efforts once the fT4 and ACTH assays are available for commercial ~~launch~~release.

We are continuing to develop the fT4 and ACTH assays with our development partner. We are also continuing development work on three assays to diagnose gastro-intestinal conditions (cPL, Cobalamin and Folate) and are in discussions with our development partner regarding the development order and timing of ~~TRUFORMA™,~~additional assays. We also expect to commence the marketing of TRUFORMA^® in select markets outside the United States sometime during 2022.

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On October 1, 2021 we acquired Pulse Veterinary Technologies, LLC, (“PulseVet”) a leading provider of non-invasive shock wave therapy treatment devices to the veterinary industry (the “Acquisition”). The purchase price for the Acquisition was approximately $71.9 million in cash, subject to certain adjustments. The operations of PulseVet will be included in our consolidated financial statements commencing with the 4^thquarter of the fiscal year ended December 31,2021. PulseVet has its own sales representatives, professional services veterinarians and support staff and is capable of operating independently. Our management will assess the optimal manner of operation of the combined businesses going forward, which is expected to involve integration of PulseVet operations with existing operations.

We expect to continue the development of another point-of-care diagnostic platform, which is based on miniaturized laser-based Raman spectroscopy technology and is designed to detect pathogens in companion animals. We believe this platform will enable the identification of biological and biochemical signatures in complex biological samples and has the potential to achieve reference lab sensitivity/specificity to screen for a wide range of pathogens in companion animal feces, urine, respiratory, and dermatological samples in minutes without the need for extensive sample prep or the use of reagents. The diagnostic platform ~~requires a small fecal sample preparation. Additionally, the platform~~ has automated analysis and does not require specialized staff training. ~~Assuming development work is successfully completed, we expect the commercial launch of our fecal test to occur by 2022 and urine tests by 2023.~~ We believe that this diagnostic platform does not require pre-market regulatory approval for use with companion animals in the United States.

We have performed initial development work on a circulating tumor cell (CTC) “liquid biopsy” ~~platform~~product for use in a reference lab setting as a canine cancer diagnostic. This ~~platform~~product is intended for use to detect canine cancers faster, more affordably and less invasively compared to existing methods, which can be expensive and cost-prohibitive for pet owners. We have worked on the development of an assay ~~for use with this platform~~ that targets hard-to-diagnose canine cancers, such as hemangiosarcoma and osteosarcoma.

Consistent with our focus on the development of point-of-care diagnostic ~~platforms,~~products, we intend to seek one or more partners for the further development and commercialization of the liquid biopsy ~~platform.~~product.

~~We are~~Through the year ended December 31, 2020, we were a development-stage company with no commercialized products, ~~approved for marketing and sale,~~ and we ~~have~~did not ~~generated~~generate any ~~revenue.~~revenue from product sales. We have incurred significant net losses since our inception. We incurred net losses of approximately $6.3 million and $15.1 million for the three and nine months ended September 30, 2021 and approximately $5.0 million and $12.7 million for the three and nine months ended September 30, ~~2020 and approximately $2.8 million and $16.9 million for the three and nine months ended September 30, 2019.~~2020. These losses have resulted principally from costs incurred in connection with investigating and developing our product candidates, research and development activities, and general and administrative costs associated with our operations. As of September 30, ~~2020,~~2021, we had an accumulated deficit of approximately ~~$64.8~~$116.1 million and cash and cash equivalents of approximately ~~$52.0 million.~~$271.4 million, prior to giving effect to the PulseVet acquisition.

For the foreseeable future, we expect to continue to incur losses, which will ~~increase from~~approximate historical levels as we continue the commercialization of our TRUFORMA^® platform, support the marketing and sales of PulseVet’s products and services and expand our product development ~~activities, commercialize products, seek regulatory approvals for our planned~~ and ~~future products to the extent required, and expand our~~ sales and marketing activities.

For further information on the regulatory, business and product pipeline, please see the “Business” section of our Annual Report on Form 10-K. For further information on the risk ~~factors we~~factorswe face, please see the “Risk Factors” section of our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.

Revenue

We ~~do not have any products approved for sale, have not generated any~~launched our TRUFORMA^® platform and our first three assays during the first quarter of 2021. Through September 30, 2021, our revenue ~~from product sales since our inception~~consisted of instruments, cartridges, and ~~do not expect to generate any revenue from the sale of products~~warranty services sold in the near future. If our development efforts result in clinical success or collaboration agreements with third parties for any of our product candidates, we may generate revenue from those product candidates.U.S.

Cost of Revenue

Cost of revenue through September 30, 2021 consisted primarily of the cost of purchasing instruments and cartridges and the related warranties purchased. We expense all inventory obsolescence provisions related to normal manufacturing changes as cost of revenue.

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Operating Expenses

The majority of our operating expenses ~~to date~~through September 30, 2021 have been for the general and administrative activities related to general business activities, capital market activities and stock-based compensation, developing a commercial team, and research and development activities related to ~~the development of~~ our lead product candidates.

Research and Development Expense

All costs of research and development are expensed in the period in which they are incurred. Research and development costs primarily consist of salaries and related expenses for personnel, fees paid to consultants, outside service providers, professional services, travel costs and materials used in ~~clinical trials~~testing and research and development.

Selling General and Administrative Expense

~~General~~Selling, general and administrative expense consists ~~primarily~~ of personnel costs, including salaries, related benefits and stock-based compensation for administrative employees, consultants, and directors. ~~General and administrative~~These expenses also include costs associated with sales and marketing activity, professional fees, and corporate administrative and overhead costs, including rent and other facilities costs, amortization, and ~~professional and consulting fees for legal, accounting, tax services and other general business services.~~depreciation.

~~Professional Fees~~

Professional fees include attorney’s fees, accounting fees and consulting fees incurred in connection with product investigation and analysis, regulatory analysis, government relations, audit, securities offerings, investor relations, and general corporate and intellectual property advice.

Income Taxes

As of December 31, ~~2019,~~2020, we had net operating loss carryforwards for U.S. federal and state income tax purposes of approximately ~~$16.1~~$19.6 million and non-capital loss carryforwards for ~~Canadian income tax purposes~~Canada of approximately ~~$20.4~~$27.8 million, which will begin to expire in fiscal year 2035. We have evaluated the factors bearing upon the realizability of our deferred tax assets, which are comprised principally of net operating loss carryforwards and non-capital loss carryforwards. We concluded that, due to the uncertainty of realizing any tax benefits as of December 31, ~~2019,~~2020, a valuation allowance was necessary to fully offset our deferred tax assets. There has been no significant change in the first nine months ended September 30, 2021.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and revenue, costs and expenses and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 3 of the notes to our consolidated financial statements appearing elsewhere in this report, we believe that the estimates and assumptions involved in the following accounting policies may have the greatest potential impact on our financial statements.

JOBS Act

The Jumpstart Our Business Startups Act, or the JOBS Act, contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” We have irrevocably elected not to avail ourselves of the JOBS Act provision that an emerging growth company may delay adopting new or revised accounting standards until such times as those standards apply to private companies.

In addition, as an “emerging growth company” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply until December 31, 2022, or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier.

Because our public float was in excess of $700 million on June 30, 2021, we will no longer be an "emerging growth company" as of December 31, 2021.

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Use of Estimates

The preparation of ~~consolidated financial statements~~our Consolidated Financial Statements in ~~conformity~~accordance with accounting principles generally accepted in the United States and the rules and regulations of the U.S. ~~GAAP~~Securities & Exchange Commission requires the use of estimates and assumptions. A listing of the Company’s significant accounting policies is detailed in Note 3 “Significant Accounting Policies.” A subsection of these accounting policies has been identified by management as “Critical Accounting Policies and Estimates.” Critical accounting policies and estimates are those which require management to make estimates ~~and~~using assumptions that ~~affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities~~were uncertain at the ~~date~~time the estimates were made and for which the use of different assumptions, which reasonably could have been used, could have a material impact on the financial ~~statements~~condition or results of operations. Management has identified Inventories as a “Critical Accounting Policies and ~~the reported amounts of expenses during the year. Actual results could differ from those estimates.~~Estimates”

~~Areas where significant judgment is involved~~Inventories are stated at the lower of cost or net realizable value determined by the specific identification method. Inventories are regularly reviewed and write-downs for excess and obsolete inventory are recorded based primarily on current inventory levels, expiration date and estimated sales forecasts. While estimated sales forecasts are subjective in ~~making estimates are,~~nature, the ~~determination of fair~~projections allow management to reasonably predict the net realizable value of ~~stock-based compensation,~~current inventory based on expected demand. A decrease in the ~~useful lives of property~~estimated sales forecasts would indicate the need to write-down excess and ~~equipment, allocation of proceeds from financings to shares~~obsolete inventory. Management continuously monitors the market activity and ~~warrants, fair value of placement agent warrants and forecasting future cash flows for assessing the going concern assumption.~~assesses inventory levels.

Research and Development ~~Costs~~

Research and development expenses include costs incurred in performing research and development activities, including salaries and benefits, safety and efficacy studies, contract manufacturing costs, contract research costs, patent procurement costs, materials and supplies, and occupancy costs. Research and development activities include internal and external activities associated with research and development studies of current product candidates and advancing product candidates towards a goal of obtaining regulatory approval to manufacture and market the product candidate.

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC topic 730.

Translation of Foreign Currencies

The functional currency, as determined by management, is U.S. dollars, which is also our reporting currency. Transactions denominated in currencies other than U.S. dollars and the monetary value of assets and liabilities are ~~remeasured~~translated at the ~~period-end~~period end exchange rates. Revenue and expenses are measured at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

We measure the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted if the fair value of the goods or services received by us cannot be reliably estimated.

We calculate stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option using the graded vesting method. The provisions of our stock-based compensation plans do not require us to settle any options by transferring cash or other assets, and therefore we classify the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately ~~are~~ expected to vest. We estimate forfeitures at the time of grant and revise these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on an average of the term of the options. The risk-free rate assumed in valuing the options is based on the USU.S. treasury yield curve in effect at the time of grant for the expected term of the option. The expected dividend yield percentage at the date of grant is ~~nil~~zero as we are not expected to pay dividends in the foreseeable future.

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Loss Per Share

Basic loss per share, or EPS, is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase our common shares issued during the period were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

Comprehensive Loss

We follow ASC topic 220. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. We currently have no other comprehensive loss items.

Results of Operations

~~Three and nine months ended September 30, 2020 compared to~~Revenue

Revenue for the three and nine months ended September 30, ~~2019~~2021 was $22,514 and $52,331, respectively and resulted from the sale of our TRUFORMA^® products and associated warranties. We commenced commercialization of TRUFORMA^® on March 15, 2021 and accordingly have had only limited sales activity in the first three quarters of 2021.

As noted in the “Overview” section above, we believe that market acceptance of TRUFORMA^® has been adversely impacted by unexpected delays in the development of our fT4 and ACTH assays by our development partner. We expect that market adoption of TRUFORMA^® will be challenging until our fT4 and ACTH assays are available for commercial release.

Our ~~results~~future revenue will include revenue associated with PulseVet operations.

Cost of ~~operations~~Revenue

Cost of revenue for the three and nine months ended September 30, 2021 was $17,899 and $59,433, respectively. As noted above, commercialization of TRUFORMA^® commenced on March 15, 2021. We expect that cost of revenue will increase as we sell additional products in subsequent periods, inclusive of costs associated with PulseVet operations.

Research and Development

Research and development expense for the three and nine months ended September 30, 2021 was approximately $0.3 million and approximately $1.0 million, respectively, compared to approximately $2.7 million and $7.2 million for the three and nine months ended September 30, 2020, ~~and September 30, 2019 are as follows:~~

Three months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
$ $ $ % $ $ $ %
Expenses
Research and development 2,702,103 962,463 1,739,640 181 % 7,205,674 9,555,345 (2,349,671 ) -25 %
General and administrative 1,335,085 1,377,252 (42,167 ) -3 % 3,607,346 5,490,928 (1,883,582 ) -34 %
Professional fees 839,646 306,937 532,709 174 % 1,413,118 1,296,884 116,234 9 %
Amortization - right-of-use asset - 127,345 (127,345 ) -100 % 42,448 382,035 (339,587 ) -89 %
Amortization - intangible 45,399 273 45,126 16530 % 135,425 810 134,615 16619 %
Depreciation 78,200 70,096 8,104 12 % 232,475 201,075 31,400 16 %
Loss from operations 5,000,433 2,844,366 2,156,067 76 % 12,636,486 16,927,077 (4,290,591 ) -25 %
Interest income (21,238 ) - �� (21,238 ) N/A (21,566 ) - (21,566 ) N/A
Interest expense - - - N/A 732 18,338 (17,606 ) -96 %
Loss on property and equipment - - - N/A 69,834 1,308 68,526 5239 %
Loss on right-of-use asset - - - N/A 59,097 - 59,097 N/A
Gain on settlement of liabilities - - - N/A - (19,737 ) 19,737 -100 %
Other income (1,963 ) - (1,963 ) N/A (7,463 ) - (7,463 ) N/A
Foreign exchange gain 2,743 1,313 1,430 109 % 1,462 30 1,432 4773 %
Loss before income taxes 4,979,975 2,845,679 2,134,296 75 % 12,738,582 16,927,016 (4,188,434 ) -25 %

Income tax expense - - - N/A - - - N/A

Net loss and comprehensive loss 4,979,975 2,845,679 2,134,296 75 % 12,738,582 16,927,016 (4,188,434 ) -25 %

~~Revenue~~

~~We did not generate any revenue during the three and nine months ended September 30, 2020 and September 30, 2019.~~

~~Research and Development~~

Research and development expense for the three months ended September 30, 2020 was approximately $2.7 million, compared to approximately $1.0 million for the three months ended September 30, 2019, an increase of approximately $1.7 million, or 181%. The increase primarily resulted from a milestone expense of $2.0 million pursuant to our development and supply agreement with Qorvo Biotechnologies, LLC. (“Qorvo”), offset in part by decreases in contracted expenditures, supplies, regulatory fees and consulting fees of approximately $237,000.

~~Research and development expense for the nine months ended September 30, 2020 was approximately $7.2 million, compared to approximately $9.6 million for the nine months ended September 30, 2019,~~respectively, representing a decrease of approximately ~~$2.3~~$2.4 million, or ~~25%.~~89%, over the prior three-month period and a decrease of approximately $6.2 million, or 86%, for the prior nine-month period. The decrease ~~primarily~~in both periods was ~~due to~~ a result of an overall reduction in ~~general~~ research and development ~~activity~~costs related to TRUFORMA^® as we ~~continue~~completed development of the instrument and three of the first five assays and began transitioning to ~~focus on TRUFORMA~~^TM~~activities, and is more specifically related to contracted expenditures, milestone expenses, salaries, bonus and benefits, supplies, and consulting fees as compared to the commensurate period in 2019.~~commercialization activities.

Selling, General and Administrative

~~General~~Selling, general and administrative expense for the three months ended September 30, ~~2020~~2021 was approximately ~~$1.3~~$6.1 million, compared to approximately ~~$1.4~~$2.3 million for the three months ended September 30, ~~2019, a decrease~~2020, an increase of approximately ~~$42,000,~~$3.8 million, or 3%166%. The ~~decrease resulted~~increase primarily ~~from a decrease~~was due to an increase in ~~travel and accommodation, marketing and investor relations, and other expenses~~share-based compensation expense, which was approximately $1.5 million for the three months ended September 30, 2021, compared to approximately $0.2 million for the comparable period in 2020. Other significant increases include professional fees of approximately ~~$316,000, offset in part by increases in regulatory fees, rent expense, which is related~~$2.1 million relating to the ~~reclassification of right-of-use asset expense from amortization to rent,~~PulseVet acquisition and increased fees associated with SEC compliance requirements, and salaries ~~bonus~~for administrative and ~~benefits, insurance and office expense~~sales personnel of approximately ~~$274,000.~~$0.4 million.

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~~General~~Selling, general and administrative expense for the nine months ended September 30, ~~2020~~2021 was approximately ~~$3.6~~$14.6 million, compared to approximately ~~$5.5~~$5.4 million for the nine months ended September 30, 2019, a decrease of approximately $1.9 million, or 34%. The decrease primarily was due to a reduction in stock compensation expense of approximately $2.1 million compared to the prior period and a reduction in travel and accommodation, marketing and investor relations expenses, salary expense, and supplies of approximately $504,000. These decreases were offset in part by an increase in office expense associated with the expensing of furniture in the office space completed in the first quarter, rent expense which is related to the reclassification of right-of-use asset expense from amortization to rent, regulatory fees, and insurance expense of approximately $681,000.

~~Professional Fees~~

~~Professional fees for the three months ended September 30,~~ 2020, ~~were approximately $840,000, compared to approximately $307,000 for the three months ended September 30, 2019,~~ an increase of ~~$0.5~~approximately $9.2 million, or ~~174%~~169%. The increase primarily was due to an increase in ~~legal fees incurred in connection with our 2020 annual and special meeting and our proposed domestication into a Delaware corporation.~~

~~Professional fees for the nine months ended September 30, 2020 were~~share-based compensation expense, which was approximately ~~$1.4 million, compared to approximately $1.3~~$4.5 million for the nine months ended September 30, ~~2019, an increase~~2021, compared to approximately $0.5 million for the comparable period in 2020 as a result of stock option grants made during the first quarter of 2021. Other significant increases include professional fees of approximately ~~$116,000, or 9%. The increase~~$2.9 million, related primarily ~~was due~~ to the ~~reasons described~~PulseVet acquisition and the exchange of our Series 1 preferred stock, increased fees associated with SEC compliance requirements, salaries of approximately $1.1 million, regulatory fees incurred for the annual shareholders meeting of approximately $0.8 million largely as a result of administrative costs related to increases in the ~~prior paragraph.~~shareholder base, marketing, travel and office expense of approximately $0.3 million, and contracted expenditures of approximately $0.1 million.

Net Loss

Our net loss for the three months ended September 30, ~~2020~~2021 was approximately ~~$5.0~~$6.3 million, or $0.01 per share, compared ~~with~~to a net loss of approximately ~~$2.8~~$5.0 million, or ~~$0.03~~$0.01 per share, for the three months ended September 30, ~~2019,~~2020, an increase in losses of approximately ~~$2.1~~$1.3 million, or ~~75%. The net loss in each period was attributed to the matters described above.~~

Our net loss for the nine months ended September 30, 2020 was approximately $12.7 million, or $0.04 per share, compared with a net loss of approximately $16.9 million, or $0.16 per share, for the nine months ended September 30, 2019, a decrease of approximately $4.2 million, or 25%27%. The net loss in each period was attributed to the matters described above. We expect to continue to record net losses in future periods until such time ~~if ever,~~ as we have sufficient revenue ~~from our products~~ to offset our operating expenses.

~~Cash Flows~~

~~Three and~~Our net loss for the nine months ended September 30, 2021 was approximately $15.1 million, or $0.05 per share, compared to a net loss of approximately $12.7 million, or $0.04 per share, for the nine months ended September 30, 2020, an increase in losses of approximately $2.4 million, or 18%. The net loss in each period was attributed to the matters described above. We expect to continue to record net losses in future periods until such time as we have sufficient revenue to offset our operating expenses.

Cash Flows

Nine months ended September 30, 2021 compared to ~~three and~~ nine months ended September 30, ~~2019~~2020

The following table shows a summary of our cash flows for the periods set forth below:

Three months ended
September 30, Nine months ended
September 30,
2020 2019 Change 2020 2019 Change
$ $ $ % $ $ $ %
Cash flows used in operating activities (5,662,629 ) (3,910,078 ) (1,752,551 ) 45 % (13,556,283 ) (13,767,933 ) 211,650 -2 %
Cash flows from financing activities 28,592,833 (1,414 ) 28,594,247 -2022224 % 64,071,437 14,972,319 49,099,118 328 %
Cash flows from (used) in investing activities (613 ) (582,437 ) 581,824 -100 % 1,006,900 (657,000 ) 1,663,900 -253 %
Increase in cash 22,929,591 (4,493,929 ) 27,423,520 -610 % 51,522,054 547,386 50,974,668 9312 %
Cash and cash equivalents, beginning of period 29,103,049 6,981,580 22,121,469 317 % 510,586 1,940,265 (1,429,679 ) -74 %
Cash and cash equivalents, end of period 52,032,640 2,487,651 49,544,989 1992 % 52,032,640 2,487,651 49,544,989 1992 %

	Nine months ended September 30
	2021			2020			Change
							$			%
Cash flows used in operating activities	$	(9,373,804	)	$	(13,556,283	)		4,182,479			-31	%
Cash flows (used) provided by investing activities		(342,299	)		1,006,900			(1,349,199	)		-134	%
Cash flow provided by financing activities		219,135,443			64,071,437			155,064,006			242	%
Increase in cash and cash equivalents		209,419,340			51,522,054			157,897,286			306	%
Cash and cash equivalents, beginning of period		61,991,703			510,586			61,481,117			12041	%
Cash and cash equivalents, end of period	$	271,411,043		$	52,032,640			219,378,403			422	%

Operating Activities

Net cash used in operating activities for the three months ended September 30, 2020 was approximately $5.7 million, compared to approximately $3.9 million for the three months ended September 30, 2019, an increase of approximately $1.8 million, or 45%. The increase resulted primarily from a higher net loss in the third quarter of 2020 compared to the third quarter of 2019. In addition, other operating uses of cash included approximately $1.1 million of deposits and prepaid expenses for inventory, insurance, and property tax paid, offset in part by an increase in of accounts payable of approximately $100,000.

Net cash used in operating activities for the nine months ended September 30, ~~2020~~2021 was approximately ~~$13.6~~$9.4 million, compared to approximately ~~$13.8~~$15.6 million for the nine months ended September 30, ~~2019,~~2020, a decrease of approximately ~~$212,000,~~$4.2 million, or 2%40%. The ~~decrease~~reduction in net cash used in operating activities resulted primarily from a ~~lower~~$4.5 million non-cash stock compensation expense in the 2021 period, approximately $0.5 million in gains recognized on extinguishment of debt, a loss on disposal of property of $0.2 million, and an increase in accounts payable in the 2021 period of approximately $3.2 million. These amounts were offset in part by an increase in inventory purchases of approximately $1.9 million. Other non-cash activity in the 2021 period included amortization and depreciation of approximately $0.3 million.

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Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2021 was approximately $0.3 million, compared to net ~~loss~~cash provided of approximately $1.0 million for the nine months ended September 30, 2020, an increase in net cash used of approximately $1.3 million, or 134%. The increase in net cash used in investing activities resulted from the receipt of cash from the modification of our lease in the first half of 2020, compared to investments of intangible and other property and equipment in the comparable period of 2019. In addition, other operating uses of cash include a reduction in accounts payable of approximately $799,000, more than offset by non-cash items including stock compensation expense of approximately $2.5 million, and expense recorded for the issuance of stock for services, amortization of right-of-use asset, and depreciation of approximately $1.4 million.current period.

Financing Activities

Net cash from financing activities for the three months ended September 30, 2020 was approximately $28.6 million, compared to a use of cash of approximately $1,400 for the three months ended September 30, 2019, an increase of approximately $28.6 million. The increase resulted primarily from the sale of our equity securities during the third quarter of 2020 for total gross proceeds of approximately $30.0 million and proceeds from warrant exercises of approximately $864,000, offset in part by stock issuance costs of approximately $2.2 million.

Net cash from financing activities for the nine months ended September 30, ~~2020~~2021 was approximately ~~$64.0~~$219.1 million, compared to approximately ~~$15.0~~$64.1 million for the nine months ended September 30, ~~2019,~~2020, an increase of approximately ~~$49.1~~$155.1 million, or ~~328%~~242%. The increase resulted primarily from the sale of our equity securities ~~during the nine months ended September 30, 2020~~in 2021 for total gross proceeds of approximately ~~$56.5~~$199.5 million, ~~proceeds~~cash received of approximately $32.1 million from warrant exercises, and cash received of approximately ~~$12.1~~$1.4 million ~~and approximately $527,000 in loan proceeds~~ from ~~the SBA’s Paycheck Protection Program,~~stock option exercises, offset ~~in part~~ by stock issuance costs of approximately ~~$5.1~~$14.3 million.

~~Investing Activities~~

Net cash used in investing activities for the three months ended September 30, 2020 was approximately $1,000, compared to approximately $582,000 for the three months ended September 30, 2019, a decrease of approximately $582,000, or 100%. Cash used in the 2020 period related to enhancements to our finance and accounting software used in the buying and selling of inventory, whereas cash used in the 2019 period included the addition of the website.

Net cash from investing activities for the nine months ended September 30, 2020 was approximately $1.0 million, compared to net cash used of approximately $657,000 for the nine months ended September 30, 2019, an increase of approximately $1.7 million, or 253%. The increase in net cash from investing activities during the nine months ended September 30, 2020 related primarily to approximately $1.0 million of cash received in connection with the cancellation and buyout of our office lease compared to the prior period in which approximately $700,000 was used in association with the digital data platform, the construction of marketing assets, and the capitalization of integration costs associated with the implementation of an ERP system.

Liquidity and Capital Resources

We have incurred losses and negative cash flows from operations ~~and have not generated any revenue~~ since our inception in May 2015. As of September 30, ~~2020,~~2021, we had an accumulated deficit of approximately ~~$64.7~~$116.1 million. We have funded our working capital requirements primarily through the sale of our equity and equity-related securities and the exercise of stock options and warrants.

As of September 30, ~~2020, the Company~~2021, we had cash and cash equivalents of approximately ~~$52.0~~$271.4 million, inventory of approximately $1.4 million, prepaid expenses and deposits of approximately ~~$932,000, and~~$1.6 million, accounts receivable of $6,938 and other receivables of approximately ~~$129,000. Current~~$.3 million. As of September 30, 2021, current assets amounted to approximately ~~$53.1~~$274.8 million ~~with~~and current liabilities ofwere approximately ~~$2.1~~$4.9 million, resulting in working capital (defined as current assets minus current liabilities) of approximately ~~$51.0~~$269.9 million.

~~As of~~Subsequent to September 30, ~~2020, we had shareholders’ equity~~2021, warrants to purchase 156,500 common shares were exercised, resulting in additional cash proceeds of ~~approximately $53.4 million.~~$23,475.

AsOn October 1, 2021 we completed the acquisition of ~~November 11, 2020, we had~~PulseVet, a leading provider of non-invasive shock wave therapy treatment devices to the veterinary industry (the “Acquisition”). The purchase price for the Acquisition was approximately $71.9 million in cash, subject to certain adjustments. The operations of PulseVet will be included in our consolidated financial statements commencing in the fourth quarter of 2021. On a pro forma basis after giving effect to the use of cash for the Acquisition, our cash and cash equivalents were approximately ~~$50.0~~$202 million.

On October 17, 2017, we entered into a five-year ~~$5.0 million~~$5,000,000 unsecured working capital facility with Equidebt LLC, one of our shareholders (the “Equidebt Facility”). Amounts borrowed under the Equidebt Facility bear interest at a rate of 14% per annum payable at maturity. All amounts borrowed under the Equidebt Facility become due and payable on October 17, 2022. We can make two borrowings per month under the Equidebt Facility, each of which must be for a minimum of $250,000. ~~The~~No amounts were outstanding under the Equidebt Facility ~~is unsecured. As of~~at September 30, ~~2020, no amounts have been borrowed against this facility.~~2021.

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange (“FX”) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

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We believe that our existing cash resources will be sufficient to fund our expected working capital needs at least through December ~~2022.~~2025. If we raise additional funds by issuing equity securities, our existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict operations. In the event that we are unable to obtain sufficient capital to meet our working capital requirements, we may be required to change or curtail current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated. In such an event, we may not be able to take advantage of business opportunities and may have to terminate or delay safety and efficacy studies, curtail our product development programs, or sell or assign rights to our product candidates, products and technologies.

Our future capital requirements depend on many factors, including, but not limited to:

the scope, progress, results and costs of researching and developing our current ~~and future diagnostics and medical device products;~~

~~the extent to which any of our future diagnostic assays or medical devices may be subject to USDA-CVB pre-market regulation;~~

~~the timing of, and the costs involved in, obtaining regulatory approvals for any of our existing~~ or future ~~diagnostics or medical device products;~~product candidates;


	·	the number and characteristics of the ~~diagnostics and/or medical device products~~product candidates we pursue;


	·	the cost of manufacturing our ~~existing~~current and future ~~diagnostic and medical device products~~product candidates and any ~~additional~~ products we ~~seek to~~successfully commercialize;


	·	the cost of commercialization activities including marketing, sales, service, customer support and distribution costs;


	·	the expenses needed to attract and retain skilled personnel;


	·	the costs associated with being a public company;


	·	our ability to establish and maintain strategic ~~partnerships,~~collaborations, licensing or other arrangements and the financial terms of such agreements; ~~and~~


	·	the scope and terms of our business plans from time to time, and our ability to realize upon our business plans;

	·	the costs involved in preparing, ~~and~~ filing, ~~patent applications,~~prosecuting, maintaining, ~~any successfully obtained patents and protecting~~defending and enforcing possible patent claims, including litigation costs and the outcome of any such ~~patents.~~litigation; and

	·	the costs associated with additional business development or mergers and acquisitions activity.

Off Balance Sheet Arrangements

Since inception, we have not engaged in the use of any off-balance sheet arrangements, such as structured finance entities, special purpose entities or variable interest entities.

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Outstanding Share Data

The only class of outstanding voting or equity securities of the Company are the common shares. As of November ~~11, 2020:~~12, 2021,

there are ~~564,051,438~~979,894,668 common shares issued and ~~outstanding;~~outstanding.


	·	there are stock options outstanding under our Stock Option Plan to acquire an aggregate of ~~13,024,640~~38,982,724 common ~~shares; and~~shares.


	·	there are common share purchase warrants ~~(collectively, the “February Warrants”)~~ outstanding to acquire an aggregate of ~~21,875,001~~197,917 common shares ~~which February Warrants were issued in connection with~~at an offering completed by the Company on February 14, 2020 (which has been described in a Form 8-K dated February 12, 2020). Of these February Warrants, 20,833,334 are Series A Warrants exercisable for a cash price of $0.20 per share, and 1,041,667 are Series A Placement Agent Warrants exercisable for a cashexercise price of $0.15 per ~~share.~~share issued in February 2020.


	·	there ~~were~~are common share purchase warrants ~~(collectively, the “April Warrants”)~~ outstanding to acquire an aggregate of ~~18,333,334~~363,501 common shares ~~which April Warrants were issued in connection with~~at an offering completed by the Company on April 9, 2020 (which has been described in a Form 8-K dated April 7, 2020). Of these April Warrants, 16,666,667 are Series B Warrants, 1,666,667 are Series B Placement Agent Warrants, and all are exercisable for a cashexercise price of $0.15 per ~~share. There~~share issued in April 2020.

	·	there are ~~currently 6,731,250 April Warrants~~common share purchase warrants outstanding to acquire an aggregate of ~~6,731,250~~120,000 common ~~shares.~~shares at an exercise price of $0.15 per share issued in May 2020.


	·	there ~~were~~are common share purchase warrants ~~(collectively, the “May Warrants”)~~ outstanding to acquire an aggregate of ~~145,503,333~~231,000 common shares ~~which May Warrants were issued in connection with~~at an offering completed by the Company on May 29, 2020 (which has been described in a registration statement on Form S-1 (File No. 333-238322) filed on May 26, 2020). Of these May Warrants, 133,333,333 are Series C Warrants, all exercisable for a cash price of $0.15 per share, and 12,170,000 are Pre-funded Warrants, all of which have now been exercised. There are currently 63,899,362 Series C Warrants outstanding to acquire an aggregate of 63,899,362 common shares.

the there were common share purchase warrants (collectively, the “July Warrants”) outstanding to acquire an aggregate of 212,500,000 common shares, which July Warrants were issued in connection with an offering completed by the Company on July 7, 2020 (which has been described in a Form 8-K dated July 6, 2020). Of these July Warrants, 187,500,000 are Series D Warrants, all exercisable for a cashexercise price of $0.16 per share ~~and 25,000,000 are Pre-funded Warrants, all of which have now been exercised. There are currently 187,500,000 Series D Warrants outstanding to acquire an aggregate of 187,500,000 common shares.~~issued in July 2020.


	·	All of the currently outstanding warrants also have a “cashless exercise” feature which is applicable in certain circumstances. The cashless exercise feature could result in the potential issuance of common shares based upon the “in-the-money” value of the applicable warrants at the time of exercise of the applicable warrants. The number of the common shares that may be issued is not determinable. However, the number of common shares that are issuable is based upon a formula contained in the applicable warrants, which determines the number of common shares issuable by dividing the “in-the-money” value (based upon the then current market price, as provided in the applicable warrants) by the then current market price and multiplying this result by the number of common shares that are issuable under the applicable warrants pursuant to cash exercise.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Evaluation of Our Disclosure Controls

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, our chief executive officer and our chief financial officer, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of September 30, ~~2020,~~2021, our disclosure controls and procedures were effective.

~~Management’s Report on~~Changes in Internal ~~Control Over Financial Reporting~~Controls

~~Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined~~There has been no change in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting ~~based on criteria established~~(as defined in Rules 13a-15(f) and 15(d)-15(f) under the ~~framework in “Internal Control — Integrated Framework (2013)” issued~~Exchange Act) during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, the ~~Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our~~Company’s internal control over financial ~~reporting was effective as of September 30, 2020.~~reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

On ~~November 1, 2019,~~September 20, 2021, Heska Corporation (“Heska”) ~~filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against~~, Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and usour company (collectively with Qorvo, the “Defendants”) which was amended on November 22, 2019. The amended Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The amended Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing our TRUFORMATM diagnostic instrument. On January 21, 2020, the Defendants filedentered into a ~~motion seeking dismissal of the Complaint. On February 11, 2020, Heska filed its response to the Defendants’ motion to dismiss~~settlement agreement pursuant to which the ~~Defendants responded on February 25, 2020.~~litigation previously commenced by Heska subsequently moved to strike a portion of the Defendants’ response. On September 30, 2020, the court denied the Defendants’ motion to dismiss and granted Heska’s motion to strike. On October 14, 2020against the Defendants ~~filed their answer to the amended Complaint. We believe that the allegations~~ in ~~the amended Complaint have no merit and will not have a material adverse effect on our business, results of operations or financial condition.~~

~~Item 1A.Risk Factors.~~

~~RISK FACTORS~~

~~As used below, “Corporation” refers to Zomedica Corp., an Alberta corporation.~~

~~Risks Relating to Our Proposed Domestication~~

While we believe the domestication will be tax-free to U.S. Holders(as defined below) for U.S. federal income tax purposes, if the Internal Revenue Service (“IRS”) does not agree with our calculation of the “all earnings and profits amount” attributable to a holder’s shares in the Corporation, Zomedica Corp.’s U.S. Holders may owe U.S. federal income taxes as a result of the domestication under Section 367(b) of the United States ~~Internal Revenue Code~~District Court for the Middle District of ~~1986, as amended (the “Code”).~~

~~Code Section 367(b) has~~North Carolina, Case 1:19-cv-01108-LCB-JLW, was dismissed with prejudice. Pursuant to the ~~effect~~settlement agreement, the parties also provided mutual releases of ~~potentially imposing income tax on U.S. Holders (as defined below)~~any and all claims related to the subject matter of the litigation. We were not required to make any payment or agree to any covenants restricting the conduct of our business in connection with the domestication. Pursuant to the Treasury Regulations under Code Section 367(b), any 10% Shareholder (as defined below) will have to recognize a deemed dividend on the domestication equal to the “all earnings and profits amount,” within the meaning of Treasury Regulations Section 1.367(b)-2, attributable to such U.S. Holder’s shares in the Corporation. Any U.S. Holder that is not a 10% Shareholder and whose shares have a fair market value of less than $50,000 on the date of the domestication will recognize no gain or loss pursuant to Code Section 367(b) as a result of the domestication. A U.S. Holder that is not a 10% Shareholder but whose shares have a fair market value of at least $50,000 on the date of the domestication must generally recognize gain (but not loss) on the domestication equal to the difference between the fair market value of the Zomedica Corp. stock received at the time of the domestication over the U.S. Holder’s tax basis in the Corporation’s shares. Such a holder, however, instead of recognizing gain, may elect to include in income as a deemed U.S. dividend the “all earnings and profits amount” attributable to such holder’s shares in the Corporation, which we refer to as a “Deemed Dividend Election.”settlement.

~~As used herein, the term ‘‘U.S. Holder’’ means a beneficial owner of shares or warrants of the Corporation or stock or warrants of Zomedica Corp. that is for U.S. federal income tax purposes:~~

~~a citizen or resident of the United States;~~

a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

~~an estate the income of which is taxable in the United States regardless of its source; or~~

a trust, the administration of which is subject to the primary supervision of a U.S. Court and one or more United States persons (within the meaning of Section 7701(a)(30)) have the authority to control all substantial decisions of the trust, or that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

As used herein, the term “10% Shareholders” means U.S. Holders who own, directly or by attribution, ten percent (10%) or more of the total voting power of the Corporation’s all classes of shares or ten percent (10%) or more of the total value of shares of all classes of stock of the Corporation.Item 1A. Risk Factors.

~~Based on the Corporation’s limited activity at the holding company level and the size~~Risks Related to Our Recently Completed Acquisition of the Corporation’s existing earnings and profits deficit, we believe that no U.S. Holder should have a positive ‘‘all earnings and profits amount’’ attributable to such holder’s shares in the Corporation, and accordingly no 10% Shareholder or U.S. Holder who makes a Deemed Dividend Election should be required to include any such amount in income on the domestication. Our belief with respect to the “all earnings and profits amount” results from calculations performed by our accounting firm based on information provided to them by us. However, no assurance can be given that the IRS will agree with us. If it does not agree, then a U.S. Holder may be subject to adverse U.S. federal income tax consequences.PulseVet

~~While we believe the domestication~~We have incurred and will ~~be tax-free~~continue to U.S. Holders for U.S. federal income tax purposes, if proposed Treasury Regulations under Code Section 1291(f) are finalized in their current form, Zomedica Corp.’s U.S. Holders may owe U.S. federal income taxes as a result of the domestication under the rules applicable to a passive foreign investment company (“PFIC”).

The Corporation believes that it is likely a PFIC for U.S. federal income tax purposes. In the event that the Corporation is considered a PFIC, then proposed Treasury Regulations under Code Section 1291(f) (which were promulgated in 1992 with a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain on the exchange of equity securities of the Corporation for equity securities of Zomedica Corp. pursuant to the domestication. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary incomeincur significant transaction and an interest charge would apply based on a complex set of computational rules designed to offset the tax deferral to such U.S. Holders on the Corporation’s undistributed earnings. Any “all earnings and profits amount” included in income by a U.S. Holder as a result of the domestication generally would be treated as gain subject to these rules. However, it is difficult to predict whether, in what form and with what effective date final Treasury Regulations under Code Section 1291(f) will be adopted. U.S. Holders that make or have made certain elections with respect to their common shares of the Corporation are generally not subject to the same gain recognition rules under the current proposed Treasury Regulations.

~~The rights of our shareholders under Canadian law will differ from their rights under Delaware law, which will, in some cases, provide less protection to shareholders following the domestication.~~

Upon consummation of the domestication, our shareholders will become stockholders of a Delaware corporation. There are material differences between the Alberta Business Corporations Act (the “ABCA”) and the Delaware General Corporations Law (the “DGCL”) and our current and proposed charter and bylaws. For example, under Canadian law, many significant corporate actions such as amending a corporation’s articles of incorporation, effecting a share consolidation or consummating a merger require the approval of two-thirds of the votes cast by shareholders, whereas under Delaware law, a majority of the total voting power of all of those entitled to vote may approve the matter. Furthermore, shareholders under Canadian law are entitled to dissent and appraisal rights under a number of extraordinary corporate actions, including an amalgamation with another unrelated corporation, certain amendments to a corporation’s articles of incorporation or the sale of all or substantially all of a corporation’s assets; under Delaware law, stockholders are entitled to dissent and appraisal rights for certain specified corporate transactions such as mergers or consolidations. If the domestication is approved, shareholders may be afforded less protection under the DGCL than they had under the ABCA in certain circumstances.

~~The proposed domestication will result in additional direct and indirect~~integration costs ~~whether or not it is completed.~~

~~The domestication will result in additional direct costs. We will incur attorneys’ fees, accountants’ fees, filing fees, mailing expenses and financial printing expenses~~ in connection with the ~~domestication. The domestication will also temporarily divert the attention~~acquisition of ~~our management and employees from the day-to-day management of the business to a limited extent.~~

~~The amount of corporate tax payable by us will be affected by the value of our property on the date of the domestication.~~

For Canadian tax purposes, on the date of the domestication we will be deemed to have a year end and to have disposed of all of our property for proceeds equal to the fair market value of those properties. We will also be subject to an additional corporate emigration tax imposed on the amount, if any, by which the fair market value of our property, net of certain liabilities, exceeds the paid-up capital of our issued and outstanding shares. We have completed certain calculations of our tax accounts with the assistance of tax advisors, and we have estimated that the domestication will not result in any Canadian tax liability.

Provisions in Zomedica Corp.’s certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Zomedica Corp.’s certificate of incorporation and bylaws will contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous.PulseVet. These ~~provisions:~~

~~establish a classified board of directors so that not all members of our board are elected at one time;~~

~~provide that directors may only be removed ‘‘for cause;’’~~

authorize the issuance of ‘‘blank check’’ preferred stock that our board of directors could issue from time to time to increase the number of outstanding shares and discourage a takeover attempt;

~~eliminate the ability of our stockholders to call special meetings of stockholders;~~

~~prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting of stockholders;~~

~~provide that the board of directors is expressly authorized to make, alter or repeal our bylaws;~~

~~establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and~~

~~require supermajority approvals to remove the protective provisions in our certificate of incorporation and bylaws listed above or to amend our bylaws.~~

Such provisions could impede any merger, consolidation, takeover or other business combination involving the company or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the company.

The certificate of incorporation of Zomedica Corp. will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Zomedica Corp.’s stockholders, which could limit the ability of Zomedica Corp.’s stockholders to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

~~The certificate of incorporation of Zomedica Corp. will require that, unless we consent in writing to the selection of an alternative forum:~~

~~any derivative action or proceeding brought on our behalf;~~

~~any action asserting a claim of breach of any fiduciary duty owed by any current or former director, officer, other employee or stockholder of ours to our company or our stockholders;~~

any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or

~~any action asserting a claim governed by the internal affairs doctrine;~~

the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the exclusive forum or if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.

Furthermore, Section 22 of the Securities Act of 1933, as amended (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, Zomedica Corp.’s certificate of incorporation will provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

The exclusive forum provisions described above will not apply to claims arising under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against Zomedica Corp., its directors, officers, or other employees in a venue other than in the federal district courts of the United States of America. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of Zomedica Corp.’s certificate of incorporation.

Although we believe this provision benefits Zomedica Corp. by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, this provision may limit or discourage a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Zomedica Corp. or its directors, officers or other employees, which may discourage such lawsuits against Zomedica Corp. and its directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the certificate of incorporation to be inapplicable or unenforceable in an action, Zomedica Corp. may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect its business and financial condition.

We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision will benefit Zomedica Corp. by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against Zomedica Corp.’s directors and officers.

~~The anticipated benefits of the domestication may not be realized.~~

We may not realize the benefits we expect from the domestication. If we do not, we will have expended considerable resources and management efforts in completing the domestication without benefiting the company or our shareholders. Such expenditure of time and resources would adversely affect our business, operating results, and financial condition if the anticipated benefits are not achieved.

~~Risks Related to our Business~~

~~We have a limited operating history, are not profitable and may never become profitable.~~

We have not generated any revenue to date, and we expect to continue to incur significant research and development costs and other expenses. Our net loss and comprehensive loss for (i) the three months ended September 30, 2020 and September 30, 2019 was approximately $5.0 million and $2.8 million, respectively, (ii) for the nine months ended September 30, 2020 and September 30, 2019 was approximately $12.7 million and $16.9 million, respectively, and (iii) for the years ended December 31, 2019 and December 31, 2018 was approximately $19.8 million and $16.6 million, respectively. Our accumulated deficit as of September 30, 2020 was approximately $64.7 million. As of September 30, 2020, we had total shareholders' equity of approximately $53.4 million. We expect to continue to incur losses for the foreseeable future, as we continue our product development and commercialization activities. Even if we succeed in developing and broadly commercializing one or more of our product candidates, we expect to continue to incur losses for the foreseeable future, and we may never become profitable. If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations.

~~We may need to raise additional capital to achieve our goals.~~

We do not have any products available for sale at this time. Although we believe that we do not require pre-market approval from the U.S. Food and Drug Administration’s Center for Veterinary Medicine, or the FDA-CVM, or the United States Department of Agriculture Animal and Health Inspection Service’s Center for Veterinary Biologics, or USDA-CVB, to market and sell TRUMFORMA^TM , our Raman spectroscopy-based point-of-care diagnostic platform, nor our circulating tumor cell, or CTC, diagnostic assay that we are developing, the COVID-19 pandemic has impacted our expected timing for the development and commercialization of our TRUFORMA™ platform and the five initial assays.

We are also seeking to identify potential complementary opportunities in the animal health sectors. We will continue to expend substantial resources for the foreseeable future to develop our existing products and any other product that we may develop or acquire. These expenditures will include: costs of developing and validating our diagnostic products and related assays and consumables; costs associated with conducting any required clinical trials; costs associated with completing other research and development activities; costs of identifying additional potential products; costs associated with payments to technology licensors and maintaining other intellectual property; costs of obtaining regulatory approvals; costs associated with securing contract manufacturers to meet our commercial manufacturing and supply capabilities; and costs associated with marketing and selling our products. In addition, our existing and future development agreements may require us to make significant cash milestone payments to our development partners and to pay certain development costs. We will not control the timing of these payments. We also may incur unanticipated costs. Because the outcome of our development activities and commercialization efforts is inherently uncertain, the actual amounts necessary to successfully complete the development and commercialization of our existing or future products may be greater or less than we anticipate.

As a result, we may need to obtain additional capital to fund the development of our business. Except for our unsecured working capital line we have no existing agreements or arrangements with respect to any financings, and any such financings may result in dilution to our shareholders, the imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business or the value of our common shares.

~~Our future capital requirements depend on many factors, including, but not limited to:~~

~~the scope, progress, results and costs of researching and developing our existing or future diagnostics and medical device products;~~

~~the extent to which any of our future diagnostic assays or medical devices may be subject to USDA-CVB pre-market regulation;~~

~~the timing of, and the costs involved in, obtaining regulatory approvals for any of our existing or future diagnostics or medical device products;~~

~~the number and characteristics of the diagnostics and/or medical device products we pursue;~~

~~the cost of contract manufacturers to manufacture our existing and future diagnostic and medical device products and any additional products we seek to commercialize;~~

~~the cost of commercialization activities, including marketing, sales and distribution costs;~~

~~the~~ expenses ~~needed to attract and retain skilled personnel;~~

~~the costs associated with being a public company;~~

~~our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements; and~~

~~the costs involved in preparing and filing patent applications, maintaining any successfully obtained patents and protecting and enforcing any such patents.~~

Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate one or more of our product development programs or any future commercialization efforts.

~~The “Novel Coronavirus Disease 2019” (“COVID-19”) pandemic has materially and adversely affected the development and commercialization of our TRUFORMA™ platform.~~

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 COVID-19 outbreak has disrupted our development partners and the COVID-19 pandemic, and any future outbreak of a health epidemic or other adverse public health developments~~ could materially and adversely affect our ~~business and operating results.~~results of operations.

We have incurred significant costs associated with the negotiation and consummation of the PulseVet acquisition and expect to incur additional significant costs in connection with the integration of its operations. The ~~COVID-19 outbreak disrupted~~substantial majority of these costs will be non-recurring expenses and will consist of transaction costs (e.g., legal, accounting), facilities and systems consolidation costs and employment-related costs. Additional unanticipated costs may be incurred in the integration of our ~~development partners and the COVID-19 pandemic, and any future outbreak of a health epidemic or other adverse public health developments~~businesses. These expenses could materially and adversely affect our business and operating results. For example, our development partner for our TRUFORMA™ platform and the related assays had reduced the number of employees working in its facility which significantly impacted our expected timing for the completion of the development and the commencement of the commercialization of our TRUFORMA™ platform and the related assays. If our suppliers are unable or fail to fulfill their obligations to us for any reason, we may not be able to manufacture our products and satisfy customer demand or our obligations under sales agreements in a timely manner, and our business could be harmed as a result. As noted above, there is continuing uncertainty relating to the potential effect of COVID-19 on our business. Infections may become more widespread and should that cause supply disruptions it would have a negative impact on our business, financial condition and operating results. In addition, a significant health epidemic could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect the market for our products, which could have a material adverse effect on our business, operating results and financial condition.

~~The COVID-19 pandemic and any future outbreak of a health epidemic or other adverse public health developments could materially and adversely affect the sales of our products.~~

The COVID-19 pandemic resulted in a significant spike in unemployment and a concomitant decline in economic activity in the U.S. and many other countries. A worsening of the COVID-19 pandemic, any future outbreak of a health epidemic or other adverse public health developments may have similar effects. Pet owners may be unwilling or unable to seek treatment for their pets in such circumstances, thereby decreasing demand for our products. In addition, as noted above, potential customers for our products have either shut down or limited their operations which has affected and may continue to affect our ability to perform on-site demonstrations and other marketing activities. Potential customers also may be unwilling or unable to invest in new equipment or to introduce new treatments for their patients. As a result, the COVID-19 pandemic and any future outbreak of a health epidemic or other adverse public health developments could materially and adversely affect the sales of our products.

~~The audit opinion on our financial statements contains a going concern modification.~~

As a result of our recurring losses from operations and our accumulated deficit, the opinion of our independent registered public accountants on our financial statements as of and for the year ended December 31, 2019 contains a going concern modification. If we are unable to continue as a going concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements. In addition, the inclusion of a going concern modification by our independent registered public accountants, our recurring losses, our accumulated deficit and our potential inability to continue as a going concern may materially adversely affect our share price and our ability to raise new capital or to enter into contractual relationships with third parties.

~~We have generated net operating loss carryforwards for U.S. income tax purposes, but our ability to use these net operating losses may be limited by our inability to generate future taxable income.~~

Our U.S. businesses have generated consolidated net operating loss carryforwards (“U.S. NOLs”) for U.S. federal and state income tax purposes of approximately $16.1 million as of December 31, 2019. These U.S. NOLs can be available to reduce income taxes that might otherwise be incurred on future U.S. taxable income. The utilization of these U.S. NOLs would have a positive effect on our cash flow. However, there can be no assurance that we will generate the taxable income in the future necessary to utilize these U.S. NOLs and realize the positive cash flow benefit. A portion of our U.S. NOLs have expiration dates. There can be no assurance that, if and when we generate taxable income in the future from operations or the sale of assets or businesses, we will generate such taxable income before such portion of our U.S. NOLs expire. Under the Tax Cuts and Jobs Act (the “TCJA”), federal NOLs generated in tax years ending after December 31, 2017 may be carried forward indefinitely. Under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal NOL carryforwards arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five tax years preceding the tax year of such loss. Due to our cumulative losses through September 30, 2020 we do not anticipate that such provision of the CARES Act will be relevant to us. The deductibility of federal NOLs, particularly for tax years beginning after December 31, 2020, may be limited. It is uncertain if and to what extent various states will conform to TCJA or the CARES Act.

~~We have generated U.S. NOLs, but our ability to reserve and use these U.S. NOLs may be limited or impaired by future ownership changes.~~

Our ability to utilize the U.S. NOLs after an “ownership change” is subject to the rules of Code Section 382. An ownership change occurs if, among other things, the shareholders (or specified groups of shareholders) who own or have owned, directly or indirectly, five (5%) percent or more of the value of our shares or are otherwise treated as five (5%) percent shareholders under Code Section 382 and the Treasury Regulations promulgated thereunder increase their aggregate percentage ownership of the value of our shares by more than 50 percentage points over the lowest percentage of the value of the shares owned by these shareholders over a three-year rolling period. An ownership change could also be triggered by other activities, including the sale of our shares that are owned by our five (5%) shareholders. In the event of an ownership change, Section 382 would impose an annual limitation on the amount of taxable income we may offset with U.S. NOLs. This annual limitation is generally equal to the product of the value of our shares on the date of the ownership change multiplied by the long-term tax-exempt rate in effect on the date of the ownership change. The long-term tax-exempt rate is published monthly by the IRS. Any unused Section 382 annual limitation may be carried over to later years until the applicable expiration date for the respective U.S. NOLs (if any). In the event an ownership change as defined under Section 382 were to occur, our ability to utilize our U.S. NOLs would become substantially limited. The consequence of this limitation would be the potential loss of a significant future cash flow benefit because we would no longer be able to substantially offset future taxable income with U.S. NOLs. There can be no assurance that such ownership change will not occur in the future.

~~We are substantially dependent on the success of our TRUMFORMA~~^TM ~~platform and cannot be certain that it will be successfully commercialized.~~

~~We are focused primarily on the development of our TRUMFORMA~~^TM diagnostic platform and the related assays. Accordingly, our near-term prospects, including our ability to generate material product revenue, or enter into potential strategic transactions, will depend heavily on the successful development and commercialization of this product and the related assays, which in turn will depend on a number of factors, including the following:

~~the successful completion of clinical validation and verification of our TRUMFORMA~~^TM diagnostic platform and the related assays, which may take significantly longer than we anticipate and will depend, in part, upon the satisfactory performance of our strategic partner and third-party contractors;

~~the ability of our strategic partner to manufacture supplies of our TRUMFORMA~~^TM diagnostic instrument and the related assays and to develop, validate and maintain viable commercial manufacturing processes that are compliant with Good Manufacturing Practices, or GMP, to the extent applicable;

~~our ability to successfully market our TRUMFORMA~~^TM ~~diagnostic platform and the related assays, whether alone or in partnership with others;~~

~~the availability, perceived advantages, relative cost, relative safety and relative efficacy of TRUMFORMA~~^TM ~~diagnostic platform and the related assays compared to alternative and competing products;~~

~~the acceptance of our TRUMFORMA~~^TM ~~diagnostic platform and the related assays by veterinarians, pet owners and the animal health community;~~

~~our ability to achieve and maintain compliance with all regulatory requirements applicable to our business; and~~

our ability to obtain and enforce intellectual property rights, and avoid or prevail in any third-party patent interference, patent infringement claims or administrative patent proceedings initiated by third parties or the United States Patent and Trademark Office (“USPTO”).

~~Many of these factors are beyond our control. Accordingly, we cannot assure you that we will be successful in developing or commercializing our TRUMFORMA~~^TM diagnostic platform and the related assays or any of our future products. If we are unsuccessful or are significantly delayed in developing and commercializing our products, our business and prospects will be materially adversely affected, and you may lose all or a portion of your investment.

~~We face unproven markets for our products.~~

The companion animal diagnostic and medical device markets are less developed than the related human markets and as a result no assurance can be given that our products will be successful. Veterinarians, pet owners or other veterinary health providers in general may not accept or utilize any products that we may develop. The companion animal care industry is characterized by rapid technological changes, frequent new product introductions and enhancements, and evolving industry standards, all of which could make our products obsolete. Our future success will depend on our ability to keep pace with the evolving needs of our customers on a timely and cost-effective basis and to pursue new market opportunities that develop as a result of technological and scientific advances. We must continuously enhance our product offerings to keep pace with evolving standards of care. If we do not update our product offerings to reflect new scientific knowledge or new standards of care, our products could become obsolete, which would have a material adverse effect on our business, financial condition, and results of operations.

~~Our ability to successfully develop and commercialize our existing and any future products will depend on several factors, including:~~

~~our ability to convince the veterinary community of the clinical utility of our products and their potential advantages over existing tests and devices;~~

~~the willingness or ability by pet owners to pay for our products and the willingness of veterinarians to recommend our products;~~

~~the willingness of veterinarians to utilize our diagnostic tests and devices; and~~

~~where applicable, the willingness of testing labs to buy our assay equipment.~~

~~Our dependence on suppliers could limit our ability to develop and commercialize certain products~~

We rely on third-party suppliers to provide components in our products, manufacture products that we do not manufacture ourselves and perform services that we do not provide ourselves. Because these suppliers are independent third parties with their own financial objectives, actions taken by them could have a materially negative effect on our results of operations. The risks of relying on suppliers include our inability to enter into contracts with third-party suppliers on reasonable terms, inconsistent or inadequate quality control, relocation of supplier facilities, supplier work stoppages and suppliers’ failure to ~~comply with applicable regulations or their contractual obligations. Problems with suppliers could materially negatively impact~~integrate PulseVet successfully into our ~~ability to complete development, supply the market, lead to higher costs or damage our reputation with our customers.~~

In addition, we currently purchase many products and materials from sole or single sources. Some of the products that we purchase from these sources are proprietary and, therefore, cannot be readily or easily replaced by alternative sources. To mitigate risks associated with sole and single source suppliers, we will seek when possible to enter into long-term contracts that provide for an uninterrupted supply of products at predictable prices. However, some suppliers may decline to enter into long-term contracts, and we are required to purchase products with short term contracts or on a purchase order basis. There can be no assurance that suppliers with which we do not have contracts will continue to supply our requirements for products, that suppliers with which we do have contracts will always fulfill their obligations under these contracts, or that any of our suppliers will not experience disruptions in their ability to supply our requirements for products. In cases where we purchase sole and single source products or components under purchase orders, we are more susceptible to unanticipated cost increases or changes in other terms of supply. In addition, under some contracts with suppliers we have minimum purchase obligations, and our failure to satisfy those obligations may result in loss of some or all of our rights under these contracts or require us to compensate the supplier. If we are unable to obtain adequate quantities of products in the future from sole and single source suppliers, we may be unable to supply the market, whichbusiness could have a material adverse effect on our results of operations and financial condition.

In order to realize the expected benefits of the PulseVet acquisition, we must successfully integrate the operations or PulseVet with our existing operations. The integration of PulseVet will be a time-consuming and expensive process and could significantly disrupt our business. The anticipated benefits of the transaction, including the realization of revenue, tax benefits, financial benefits or returns and expense and other synergies, may not be fully realized, or may take longer to realize than expected, and the integration may be more expensive or require more senior management involvement than expected or be more disruptive to our existing operations than anticipated. In addition, the COVID-19 pandemic-related risks may result in unanticipated regulatory, planning and/or operational delays that may adversely impact the anticipated timeline and achievement of our ongoing integration goals. The integration process may result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies. Our failure to successfully integrate the operations of PulseVet or to otherwise realize any of the anticipated benefits of the acquisition could have a material adverse effect on our results or operations.

The ~~commercial potential~~failure to realize the anticipated growth opportunities from our acquisition of ~~our products is difficult to predict. The market for any product, or for companion animal diagnostics and medical devices overall, is uncertain and may be smaller than we anticipate, which~~PulseVet could ~~significantly and negatively impact~~have a material adverse effect on our ~~revenue,~~ results of operations and financial condition.

We ~~believe that~~may not realize the ~~emerging nature~~expected growth opportunities from our acquisition of ~~our industry~~PulseVet even if we are able to integrate PulseVet’s business successfully. We may incur unanticipated costs related to the operation of PulseVet and ~~our unproven~~we may not achieve the growth potential for the PulseVet business ~~plan make it difficult to estimate the commercial potential of any of our proposed or future products. The market for any product~~ that we ~~seek to commercialize will depend on important factors such as~~expected at the ~~cost, utility and ease~~time of use of our products, changing standards of care, preferences of veterinarians, the willingness of pet owners to pay for such products, and the availability of competitive alternatives that may emerge either during the product development processacquisition or after commercial introduction. If the market potential for our proposed and future products is less than we anticipate due to one or more of these factors, it could negatively impact our business, financial condition and results of operations. Further, the willingness of pet owners to pay for the use of our products may be less than we anticipate and may be negatively affected by overall economic conditions. Because relatively few pet owners purchase insurance for their companion animals, pet owners are more likely to have to pay for the use of our products directly and may be unwilling or unable to pay for any such use.

~~Our proposed and future products will face significant competition and may be unable to compete effectively.~~

~~The development and commercialization of veterinary diagnostics and medical devices is highly competitive, and our success depends~~ on our ~~ability to compete effectively with other products in the market and identify potential partners for continued development and commercialization.~~

~~There are~~expected time schedule as a result of a number of ~~competitors~~factors, including our inability to successfully cross-market our or PulseVet’s products. Accordingly, the benefits from the proposed acquisition may be offset by costs incurred or delays in integrating the companies, which could cause our operational and growth assumptions to be inaccurate. Our failure to realize the anticipated growth opportunities from our acquisition of PulseVet could have a material adverse effect on our results of operations and financial condition.

The assumption of unknown liabilities in the ~~diagnostic market that~~PulseVet acquisition could have substantially greater financial and operational resources and established marketing, sales and service organizations. We expect to compete primarily with commercial clinical laboratories, hospitals’ clinical laboratories and other veterinary diagnostic equipment manufacturers. Our principal competitors in the veterinary diagnostic market are IDEXX Laboratories, Inc., Antech Diagnostics, a unit of VCA Inc., Abaxis, Inc., a wholly-owned subsidiary of Zoetis Inc., Heska Corporation and Zoetis Inc. We must develop our distribution channels and build our direct sales force in order to compete effectively in these markets. If we are unable to effectively manage our distribution channels in our highly competitive industry, we may fail to retain customers or obtain new customers and our business will suffer.

Many of our competitors and potential competitors have substantially more financial, technical and human resources than we do. Many also have far more experience than we have in the development, manufacture, regulation and worldwide commercialization of animal health diagnostics and medical devices. We also expect to compete with academic institutions, governmental agencies and private organizations that are conducting research in the fields of animal diagnostics and medical devices. If such competing products are commercialized prior to our products, or if our intellectual property protection fail to provide us with exclusive marketing rights for our products, we may be unable to compete effectively in the markets in which we participate. Contractual agreements between clinics and from competitors may limit practices’ ability to use other tests and technologies due to predetermined minimums in those agreements.

The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of our proposed and future products may be subject to extensive regulation. We may be unable to obtain regulatory approval for our proposed or future diagnostic or medical device products under applicable regulatory requirements or maintain any regulatory approval obtained. The denial, delay or loss of any regulatory approval would prevent or delay our commercialization efforts and adversely affectmaterial adverse effect on our financial condition and results of operations.

~~The research, testing, manufacturing, labeling, approval, sale, marketing and distribution~~Because we acquired all of ~~our product candidates may be~~the membership interests of PulseVet, we obtained ownership of PulseVet subject to ~~extensive regulation.~~all of its liabilities, including contingent and unknown liabilities. Pursuant to the transaction documents for the acquisition, there are limitations and conditions to our ability to recoup unanticipated losses from PulseVet’s former owners. We may not be able to market and sell any point-of-care diagnostic products or medical devices without pre-marketing approval from the USDA-CVB and/or FDA-CVM. To gain approval to market a pet point-of-care diagnostic product kit or a medical device, we must provide the results of specific tests required to be conducted in accordance with USDA-CVB and/or FDA-CVM’s guidance demonstrating data from Assay Validation Studiesalso learn additional information about PulseVet’s business that demonstrate the diagnostic accuracy, analytical sensitivity, analytical specificity and ruggedness, and stability. In addition, we must provide manufacturing data meeting Good Manufacturing Procedures (“GMP”). The USDA-CVB and/or FDA-CVM may also require us to conduct costly postapproval testing and/or collect post-approval safety data to maintain our approval for any diagnostic or medical device. The results of our development activities, and the results of any previous studies conducted by us or third parties, may not be predictive of future results of future studies, and failure can occur at any time during or after the completion of development activities by us or our contract research organizations or CROs.

~~The USDA-CVB and/or FDA-CVM can delay, limit, deny or revoke approval of any of our product candidates for many reasons, including:~~

~~if they disagree with our interpretation of data from our studies or other development efforts;~~

~~if they require additional studies or changes its approval policies or regulations;~~

~~if they do not approve of the specifications of our proposed and future products;~~

~~if they fail to approve the manufacturing processes of our third-party contract manufacturers; and~~

~~if any approved product subsequently fails post-approval testing required by them.~~

Further, even if we receive approval of our products, such approval may be for a more limited claim than we originally requested, the USDA-CVB may not approve the labeling that we believe is necessary or desirable for the successful commercialization of our products and we may be required to conduct costly post-approval testing. Any delay or failure in obtaining applicable regulatory approval for the intended claims of our product candidates would delay or prevent commercialization of such products and would materially adversely impact our business and prospects.

~~Our strategic partnerships are important to our business. If we are unable to maintain any of these partnerships, or if these partnerships are not successful, our business could be adversely affected.~~

We have entered into a number of strategic partnerships that are important to our business and we expect to enter into similar partnerships as part of our growth strategy. These partnerships may pose a number of risks, including:

~~partners may have significant discretion in determining the efforts and resources that they will apply to these partnerships;~~

~~partners may not perform their obligations as expected;~~

partners may not pursue development of our product candidates or may elect not to continue or renew development based on development results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;

partners could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours, which may cause partners to cease to devote resources to the development of our product candidates;

disagreements with partners, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research and development of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

partners may not properly maintain or defend their intellectual property rights or may use proprietary information in such a way as to invite litigation that could jeopardize or invalidate the intellectual property or proprietary information or expose us to potential litigation;

~~partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;~~

~~partners may learn about our technology and use this knowledge to compete with us in the future;~~

~~there may be conflicts between different partners that could negatively affect those partnerships and potentially others; and~~

~~the number and type of our partnerships could adversely affect our attractiveness to future partners or acquirers.~~

If any partnerships we enter into do not result in the successful development of our product candidates or if one of our partners terminates its agreement with us, we may not be able to successfully develop our product candidates, our continued development of our product candidates could be delayed and we may need additional resources to develop additional product candidates. All of the risks relating to our product development, regulatory approval and commercialization also apply to the activities of our partners and there can be no assurance that our partnerships will produce positive results or successful products on a timely basis or at all.

Additionally, subject to its contractual obligations to us, if a partner of ours is involved in a business combination or otherwise changes its business priorities, the partner might deemphasize or terminate the development of any technology licensed to it by us. If one of our partners terminates its agreement with us, we may find it more difficult to attract new partners and our perception in the business and financial communities and our stock price could be adversely affected.

We may in the future determine to partner with additional life science and technology companies for development of additional products. We face significant competition in seeking appropriate partners. Our ability to reach a definitive agreement for partnership will depend, among other things, upon our assessment of the partner’s resources and expertise, the terms and conditions of the proposed partnership and the proposed partner’s evaluation of a number of factors. If we are unable to reach agreements with suitable partners on a timely basis, on acceptable terms, or at all, we may not be able to access technologies that are important for the future development of our business. If we elect to fund and undertake development activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into partnerships and do not have sufficient funds or expertise to undertake the necessary development activities, we may not be able to further develop our product candidates and our business may be materially and adversely affected.

~~Under the terms of our partnership arrangements, we are required to make significant milestone and other payments to our strategic partners. The timing of any such payments is uncertain and~~ could adversely affect ~~our cash flows and results~~us, such as the existence of ~~operations. If we are not able to make such payments when due, our business could be materially and adversely affected.~~

~~In November 2018, we entered into a development and supply agreement with Qorvo Biotechnologies, LLC,~~unknown liabilities, or Qorvo, a wholly-owned subsidiary of Qorvo, Inc. Under this agreement, Qorvo is responsible for the development of certain assay cartridges and the related instrument. We agreed to pay the associated non-recurring engineering costs of up to $500,000 per assay cartridge and the instrument and are responsible for the validation of the assay cartridges and the instrument. Under the terms of this agreement, we were required to pay Qorvo additional milestone payments in cash or, if elected by Qorvo, additional unregistered common shares having a value calculated as specified in the agreement. All of the milestones under this agreement have been met and we paid Qorvo a total of $10.0 million in cash in connection therewith. Under the terms of the agreement, we will be responsible for the cost of additional development work undertaken by Qorvo on our behalf.

In May 2018, we entered into a development, commercialization and exclusive distribution agreement with Seraph Biosciences, Inc., or Seraph. Under this agreement, we are responsible for development and validation, and their associated costs. Seraph is entitled to additional payments for development costs. Seraph will be entitled to receive up to an additional $7,000,000, payable 50 percent in cash and 50 percent in additional unregistered common shares, upon the achievement of a series of staged, specified milestones, including completion of laboratory studies and field studies, production and commercial shipment of products. In addition, we have agreed to pay Seraph license fees based on a percentage of gross profit from commercial sales of ZM-020. At September 30, 2020, all milestone payments under our agreement with Seraph remain unpaid.

We will rely on third parties to conduct certain portions of our development activities. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize our product candidates.

We have used contract manufacturing organizations (“CMOs”) and contract research organizations (“CROs”) to conduct our manufacturing and research and development activities. We expect to continue to do so, including with respect to our manufacturing, clinical validation, verification and beta testing of our proposed and future diagnostic and medical device products. These CMOs and CROs are not our employees, and except for contractual duties and obligations, we have limited ability to control the amount or timing of resourcesmatters that they devote to our programs or manage the risks associated with their activities on our behalf. We are responsible to regulatory authorities for ensuring that products subject to regulatory authority are manufactured using good manufacturing practices and studies are conducted in accordance with the development plans and trial protocols, and any failure by our CMOs and CROs to do so may adverselypotentially affect our ability to ~~obtain regulatory approvals, subject us to penalties, or harm our credibility with regulators.~~

Our agreements with our CMOs and CROs may allow termination by the CMOs and CROs in certain circumstances with little or no advance notice to us. These agreements generally will require our CMOs and CROs to reasonably cooperate with us at our expense for an orderly winding down of the CMOs’ and CROs’ services under the agreements. If the CMOs and CROs conducting our manufacturing and studies do not comply with their contractual duties or obligations to us, or if they experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our development protocols or quality expectations or for any other reason, we may need to secure new arrangements with alternative CMOs and CROs, which could be difficult and costly. In such event, our studies also may need to be extended, delayed or terminated as a result, or may need to be repeated. If any of the foregoing were to occur, regulatory approval and commercialization of our product candidates may be delayed, and we may be required to expend substantial additional resources.applicable laws.

~~The failure of any CMO and CRO to perform adequately or the termination of any arrangements with any of them may adversely affect our business.~~

~~We will rely on third-party manufacturers to produce our products. If we experience problems with any of these suppliers, the manufacturing of our product candidates or products could be delayed.~~

We do not have the capability to manufacture our proposed and future products and do not intend to develop that capability. As a result, we will rely on CMOs to produce our proposed and future products. We expect to enter into contracts with CMOs for the commercial scale production of the products we intend to commercialize. Reliance on CMOs involves risks, including:

~~the inability to meet our product specifications and quality requirements consistently;~~

~~inability to access production facilities on a timely basis;~~

~~inability or delay in increasing manufacturing capacity;~~

~~manufacturing and product quality issues related to the scale-up of manufacturing;~~

~~costs and validation of new equipment and facilities required for commercial level activity;~~

~~a failure to satisfy any applicable regulatory requirements on a consistent basis;~~

~~the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;~~

~~termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;~~

~~the reliance on a single source of supply which, if unavailable, would delay our ability to complete the development and testing and commercialization of our products;~~

~~the lack of qualified backup suppliers for supplies that are currently purchased from a single source supplier;~~

~~operations of our CMOs or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the CMO or supplier;~~

~~carrier disruptions or increased costs that are beyond our control; and~~

~~the failure to deliver products under specified storage conditions and in a timely manner.~~

Any of these risks could cause the delay of validation studies, clinical trials, regulatory submissions, the receipt of any required approvals or the commercialization of our products, cause us to incur higher costs and prevent us from commercializing our product candidates successfully. Furthermore, if our CMOs fail to deliver the required commercial quantities of finished product on a timely basis and at commercially reasonable prices and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality and on a timely basis, we would likely be unable to meet demand for our products and could lose potential revenue.

~~Even if a product receives regulatory approval, it may never achieve market acceptance or commercial success.~~

Even if we obtain USDA-CVB or other regulatory approvals for a specific product, that product may not achieve market acceptance among veterinarians and pet owners and may not be commercially successful. Market acceptance of our products depends on a number of factors, including:

~~the claims for which our products are approved or intended;~~

~~the acceptance by veterinarians and pet owners of the product as safe and effective;~~

~~the proper training and use of our products by veterinarians;~~

~~the potential and perceived advantages of our products over alternative diagnostics or medical devices;~~

~~the cost of our products in relation to alternative diagnostics and willingness to pay for our products, if approved, on the part of veterinarians and pet owners;~~

~~the willingness of pet owners to pay for the use of our products, relative to other discretionary items, especially during economically challenging times;~~

~~the relative convenience and ease of use; and~~

~~the effectiveness of our sales and marketing efforts.~~

If PulseVet’s liabilities are greater than expected, or if there are material additional obligations of which we are not aware, and if we have no recourse against the former owners of PulseVet for such matters, such liabilities could have a material adverse effect on our ~~products fail~~financial condition and results of operations.

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Risks Related to ~~achieve market acceptance or commercial success,~~ our ~~business could fail and you could lose your entire investment.~~Business

If we are unable to establish an effective direct sales ~~capabilities on~~capability, our ~~own or through third parties, we may not be able~~ability to market and sell our existing orand future products orand our ability to generate product ~~revenue.~~revenue will be materially and adversely affected.

As a result of our experience with the initial commercialization of TRUFORMA^®, we have recently changed our sales strategy to focus on enhancing our internal capability to sell our existing and future products. As part of this strategic change, we are hiring additional sales personnel and sales support staff. We ~~do not currently have a fully staffed sales organization. We intend to commercialize~~expect that expanding our products with a direct sales force and through third-party distributors. To achieve this, we will be required to build a direct sales organization and to establish relationships with distributors of veterinary products. We also will have to build our marketing, sales, managerial and other non-technical capabilities and make arrangements with third parties for distribution and to perform certain of these other services, and we may not be successful in doing so. Building an internal sales ~~organization is time consuming and expensive and~~capability will ~~significantly~~ increase our compensation ~~expense. We may be unable to secure third-party distribution contracts with distributors on favorable terms or at all. We have no prior experience~~and other expenses. While members of our management team are experienced in the marketing, sale and distribution of animal diagnostic products, ~~or medical devices for companion animals~~we as a company have not previously commercialized any products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain and motivate qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively oversee a geographically dispersed sales ~~and marketing~~ team. If we are unable to build an effective sales organization, ~~and/~~our ability to sell our existing and future products and our ability to generate product revenue will be materially and adversely affected.

We have used third parties to assist in the sales and distribution of our products. If these third parties are not successful in selling our products or ~~if we~~do not adequately perform their obligations, our ability to market and sell our existing and future products and our ability to generate product revenue could be materially and adversely affected.

We cannot assure you that our third parties will be successful in selling our products or that they will satisfy their obligations to us. If our sales and distribution partners are ~~unable~~not successful in selling our products, or do not adequately perform their obligations, our ability to ~~secure relationships with~~sell our existing and future products and our ability to generate product revenue could be materially and adversely affected.

PulseVet will constitute a significant part of our business operations. Our failure to operate the PulseVet business successfully could have a material adverse effect on our financial condition and results of operations.

The acquisition of PulseVet was a material event for our company. We expect that the PulseVet business will constitute a significant part of our business operations in subsequent reporting periods. Our failure to operate the PulseVet business successfully could have a material adverse effect on our financial condition and results of operations.

Disruption in the global supply chain could increase our costs and delay, prevent or impair our ability to manufacture our products and satisfy customer demand,which could have a material adverse effect on our business, operating results and financial condition.

We rely on our developmental partners and third-party ~~distributors~~suppliers and manufacturers to develop and manufacture our products. Global supply chains have been significantly disrupted by the COVID-19 pandemic and other factors. For example, supply disruptions have led to a global shortage of semiconductor chips. In addition, shipping delays have increased and transportation costs have risen significantly. As a result, component costs have increased and the supply of materials has become less certain and more unpredictable. Any interruption or delay in the supply of parts and components for our products, ~~we will not be able~~or the inability to ~~successfully commercialize~~obtain those parts or components at acceptable prices and within a reasonable amount of time, could increase our costs and delay, prevent or impair our ability to manufacture our products and satisfy customer demand, which could have a material adverse effect on our ~~future product revenue will suffer~~business, operating results and ~~we would incur significant additional losses.~~financial condition.

In jurisdictions outside of the United States we intend to utilize companies with an established commercial presence to market our products in those jurisdictions, but we may be unable to enter into such arrangements on acceptable terms, it at all.

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop any of our existing or future product candidates, conduct our in-licensing and development efforts and commercialize any of our existing or future products.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management and scientific personnel. We are highly dependent upon our senior management, particularly ~~Robert Cohen,~~Larry Heaton, our ~~interim~~ Chief Executive Officer, Ann Marie Cotter, our Chief Financial Officer, ~~Stephanie Morley, DVM, our President~~ and ~~Chief Medical Officer, and Bruk Herbst, our Chief Commercial Officer.~~members of the PulseVet leadership team, including Adrian Lock. The loss of services of any of these individuals could delay or prevent the ~~successful development~~achievement of our existing or future product pipeline, completion of our planned development efforts or the commercialization of our product candidates. Although we have entered employment agreements with Dr. Morley and Mr. Herbst for one-year terms (automatically extending for one-year terms thereafter) there can be no assurance that either of Dr. Morley or Mr. Herbst will extend their terms of service. We have also entered into an employment agreement with Mr. Cohen without a fixed term of service.business objectives.

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International operations expose us to risks inherent in international activities.

~~Consolidation of our customers~~Operating in international markets requires resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States. We face risks in doing business internationally that could ~~negatively~~adversely affect ~~the pricing of our products.~~

Veterinarians will be our primary customers for our proposed and future products. In recent years, there has been a trend towards the consolidation of veterinary clinics and animal hospitals. If this trend continues, these large clinics and hospitals could attempt to leverage their buying power to obtain favorable pricing from us and other similar companies. Any resulting downward pressure on the prices of any of our products could have a material adverse effect on our results of operations and financial condition.

~~We will need to increase the size of our organization and may not successfully manage our growth.~~

~~We will need to significantly expand our organization and systems to support our future expected growth. If we fail to manage our growth effectively, we will not be successful, and~~ our business, ~~could fail.~~

We may seek to raise additional funds in the future through debt financing which may impose operational restrictions on our business and may result in dilution to existing or future holders of our common shares.

We expect that we will need to raise additional capital in the future to help fund our business operations. Debt financing, if available, may require restrictive covenants, which may limit our operating flexibility and may restrict or prohibit us from:including:

	·	~~paying dividends and/~~foreign exchange risk;
	·	import and export restrictions and changes in trade regulation, including uncertainty regarding renegotiation of international trade agreements and partnerships;
	·	sales and customer service challenges associated with operating in different countries;
	·	enhanced difficulties of integrating foreign acquisitions;
	·	difficulties in staffing and managing foreign operations and working with foreign partners;
	·	different pricing environments, longer sales cycles, longer accounts receivable payment cycles, and collections issues;
	·	compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including the US Foreign Corrupt Practices Act of 1977 and applicable laws of other jurisdictions, employment, ownership, trade, tax, privacy and data protection laws and regulations;
	·	limitations on enforcement of intellectual property rights;
	·	more restrictive or ~~making certain distributions, investments~~otherwise unfavorable government regulations;
	·	increased financial accounting and reporting burdens and complexities;
	·	restrictions on the transfer of funds;
	·	withholding and other ~~restricted payments;~~tax obligations on remittance and other payments made by our subsidiaries; and

~~incurring additional indebtedness or issuing certain preferred shares;~~unstable regional, economic and political conditions.

~~selling some or all of our assets;~~

~~entering into transactions with affiliates;~~

~~creating certain liens or encumbrances;~~

~~merging, consolidating, selling or otherwise disposing of all or substantially all of our assets; and~~

~~designating our subsidiaries as unrestricted subsidiaries.~~

Debt financing may also involve debt instruments that are convertible into or exercisable for our common shares. The conversion of the debt to equity financing may dilute the equity position of our existing shareholders.

We may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage against potential liabilities in order to protect ourselves against product liability claims.

Our ~~business exposes us~~inability to ~~potential product liability~~manage any of these risks that are inherent in the testing, manufacturing and marketing of diagnostic products and medical devices. We may become subject to product liability claims resulting from the use of our product candidates. We do not currently have product liability insurance and we may not be able to obtainsuccessfully, or maintain this type of insurance for any future trials or product candidates. In addition, product liability insurance is becoming increasingly expensive. Being unable to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities could have a material adverse effect on our business.

~~We may acquire other businesses or form joint ventures that may be unsuccessful and could adversely dilute your ownership of our company.~~

As part of our business strategy, we may pursue in-licenses or acquisitions of other complementary assets and businesses and may also pursue strategic alliances. We have no experience in acquiring other assets or businesses and have limited experience in forming such alliances. We may not be able to successfully integrate any acquisitions into our existing business, and we could assume unknown or contingent liabilities or become subject to possible stockholder claims in connection with any related-party or third-party acquisitions or other transactions. We also could experience adverse effects on our reported results of operations from acquisition-related charges, amortization of acquired technology and other intangibles and impairment charges relating to write-offs of goodwill and other intangible assets from time to time following an acquisition. Integration of an acquired company requires management resources that otherwise would be available for ongoing development of our existing business. We may not realize the anticipated benefits of any acquisition, technology license or strategic alliance.

To finance future acquisitions, we may choose to issue shares of our common stock as consideration, which would dilute your ownership interest in us. Alternatively, it may be necessary for us to raise additional funds through public or private financings. Additional funds may not be available on terms that are favorable to us and, in the case of equity financings, may result in dilution to our stockholders.

~~Risks Related to Government Regulation~~

~~Various government regulations could limit or delay our ability to develop and commercialize our products or otherwise negatively impact our business.~~

In the U.S., the manufacture and sale of certain diagnostic products are regulated by agencies such as the USDA, the FDA or the EPA. While our point-of-care Bulk Acoustic Wave sensor-based diagnostic platform and Raman spectroscopy-based diagnostic platform and our reference lab-based diagnostic test for canine cancer do not require approval by the USDA-CVB prior to sale in the U.S., these diagnostic solutions will be subject to postmarketing oversight by the FDA-CVM. In addition, delays in obtaining regulatory approvals for new products or product upgrades could have a negative impact on our growth and profitability.

~~The manufacture and sale of our products, as well as our research and development processes, are subject to similar and potentially more stringent laws in foreign countries.~~

We are also subject to a variety of federal, state, local and international laws and regulations that govern, among other things, the importation and exportation of products; our business practices in the U.S. and abroad, such as anti-corruption and anti-competition laws; and immigration and travel restrictions. These legal and regulatory requirements differ among jurisdictions around the world and are rapidly changing and increasingly complex. The costs associated with compliance with these legal and regulatory requirements are significant and likely to increase in the future.

Any failure to comply with applicable legal and regulatory requirements could result in fines, penalties and sanctions; product recalls; suspensions or discontinuations of, or limitations or restrictions on, our ability to design, manufacture, market, import, export or sell our products; and damage to our reputation.

Even if we receive regulatory approval for a product candidate, we will be subject to ongoing FDA-CVM or USDA-CVB obligations and continued regulatory oversight, which may result in significant additional expense. Additionally, any product candidates, if approved, will be subject to labeling and manufacturing requirements and could be subject to other restrictions. Failure to comply with these ~~regulatory requirements or the occurrence of unanticipated problems with our products could result in significant penalties.~~

If the FDA-CVM or USDA-CVB approves any of our existing or future diagnostic product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotionlaws and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include post-marketing information and reports, establishment registration, and product listing, as well as continued compliance with GMP, GLP and GCP for any studies that we conduct post-approval. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

~~restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary product recalls;~~

~~fines, warning letters or holds on promotional materials and claims;~~

refusal by the FDA-CVM or USDA-CVB to approve pending applications or supplements to approved applications filed by us or our strategic collaborators, or suspension or revocation of product license approvals;

~~product seizure or detention, or refusal to permit the import or export of products; and~~

~~injunctions or the imposition of civil or criminal penalties.~~

~~The FDA-CVM’s or USDA-CVB’s policies may change and additional government~~ regulations, may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Legislative or regulatory reforms with respect to veterinary diagnostics, medical devices and test kits may make it more difficult and costly for us to obtain regulatory clearance or approval of any of our existing or future product candidates and to produce, market, and distribute our products after clearance or approval is obtained.

From time to time, legislation is drafted and introduced in the U.S. Congress that could significantly change the statutory provisions governing the testing, regulatory clearance or approval, manufacture, and marketing of regulated and/or licensed products. In addition, FDA-CVM and USDA-CVB regulations and guidance are often revised or reinterpreted by the FDA-CVM and USDA-CVB in ways that may significantly affect our business and our products. Similar changes in laws or regulations can occur in other countries. Any new regulations or revisions or reinterpretations of existing regulations in the United States may impose additional costs or lengthen review times of any of our existing or future product candidates. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require:

~~changes to manufacturing methods;~~

~~recall, replacement or discontinuance of certain products; and~~

~~additional record-keeping.~~

Each of these would likely entail substantial time and cost and could materially harm our financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products would harm our business, financial condition, and results of operations.

~~Risks Related to Intellectual Property~~

~~Our ability to obtain intellectual property protection for our products is limited.~~

Some of our products may or may not be covered by a patent. Further if an application is filed, it is not certain that a patent will be granted or if granted whether it will be held to be valid. All of which may impact our market share and ability to prevent others (competitor third parties) from making, selling, or using our products.

We intend to rely upon a combination of patents, trade secret protection, confidentiality agreements, and license agreements to protect the intellectual property related to our proposed and future products. We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others. In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, customers and suppliers to protect our know-how and trade secrets. However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. In the future, we may also rely on litigation to enforce our intellectual property rights and contractual rights, and, if not successful, we may not be able to protect the value of our intellectual property. Any litigation could be protracted and costly and could have a material adverse effect on our business, operating results and financial condition.

If we are not able to manage growth successfully, this could adversely affect our business, financial condition, and results of ~~operations regardless of its outcome.~~operations.

~~If we are unable~~Continued growth may place a significant strain on financial, operational, and managerial resources. We must continue to ~~obtain trademark registrations for~~implement and enhance our ~~products~~managerial, operational and financial systems, expand our ~~business could~~operations, and continue to recruit and train qualified personnel. There can be ~~adversely affected.~~

~~We have pending trademark applications for~~no assurance that our ~~company name~~strategic and ~~composite marks comprised of our company name, logo and/or slogan in the U.S., Canada, European Union, the United Kingdom, and Mexico.~~operational planning will allow us to adequately manage anticipated growth. In addition, ~~we have approved pending trademark applications for~~the expense associated with increased manufacturing and sales/marketing may exceed our “Voice of the Vet” mark in the U.S. and Canada. We have secured two registrations in the European Union for our company name, company name and logo, and for the mark “Voice of the Vet powered by Zomedica” (and Design). We also have secured registrations in Brazil for our company name and logo. While we cannot make assurances that any pending trademark applications will matureexpectations. Any inability to ~~registration, most of these applications are now poised to mature to registration.~~

We have also filed for protection of several product names in the U.S., Canada and European Union. Currently, no significant hurdles have been encountered in the registration process. Moreover, any name we propose to use with our product candidates in the United States must be approved by the FDA-CVM or the USDA-CVB if it is a regulated product. The FDA-CVM typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA-CVM or the USDA-CVB object to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA-CVM and the USDA-CVB.

Third parties may have intellectual property rights, which may require us to obtain a license or other applicable rights to make, sell or use our products. If such rights are not granted or obtained, itsuccessfully manage growth could have a material adverse effect on our business, operating results and financial ~~condition and results of operations.~~condition.

Our success depends in part on our ability to obtain, or license from third parties, patents, trademarks, trade secrets and similar proprietary rights without infringing on the proprietary rights of third parties. Although we believe our intellectual property rights are sufficient to allow us to conduct our business without incurring liability to third parties, our products may infringe on the intellectual property rights of such persons. Furthermore, no assurance can be given that we will not be subject to claims asserting the infringement of the intellectual property rights of third parties seeking damages, the payment of royalties or licensing fees and/or injunctions against the sale of our products. Any such litigation could be protracted and costly and could have a material adverse effect on our business, financial condition and results of operations.

Our diagnostic technologies depend on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent us from marketing our diagnostic product candidates.

Our diagnostic technologies are dependent on intellectual property developed by our strategic partners and licensed to us. We do not own the intellectual property rights that underlie these licenses. Our rights to use the technology we license are subject to the negotiation of, continuation of and compliance with the terms of our licenses. We do not control the prosecution, maintenance or filing of the patents and other intellectual property licensed to us, or the enforcement of these intellectual property rights against third parties. The patents and patent applications underlying our licenses were not written by us or our attorneys, and we do not have control over the drafting and prosecution of such rights. Our partners might not have given the same attention to the drafting and prosecution of patents and patent applications as we would have if we had been the owners of the intellectual property rights and had control over such drafting and prosecution. We cannot be certain that drafting and/or prosecution of the licensed patents and patent applications has been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.

Our intellectual property agreements with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.

Certain provisions in our intellectual property agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could affect the scope of our rights to the relevant intellectual property or technology, or affect financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact conceives or develops intellectual property that we regard as our own. Our assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

~~We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.~~

We have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed at other pharmaceutical or animal health companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers. Litigation may be necessary to defend against any such claims. Even if we are successful in defending against any such claims, such litigation could result in substantial cost and be a distraction to our management and employees.

~~Risks Related to Our Preferred Shares~~

We will be obligated to pay a significant portion of our net sales to the holders of our Series 1 Preferred Shares. This payment obligation will materially and adversely affect our liquidity and capital resources, may adversely impact our ability to raise additional capital, and could adversely affect the trading price of our common shares.

We are obligated to make annual payments to the holders of our Series 1 Preferred Shares in an amount equal to nine percent of the net sales (as defined in the Series 1 Preferred Shares), if any, of our company and our affiliates (the “Net Sales Payments”) until such time as the holders have received total Net Sales Payments equal to nine times the aggregate stated value of the outstanding Series 1 Preferred Shares. Such payments will materially and adversely affect our liquidity and capital resources which could result in a shortage of capital necessary to fund our operations or to take advantage of business opportunities as they arise. Our obligation to make these payments may make it more difficult for us to raise additional capital on terms acceptable to us, or at all. This payment obligation also may adversely affect investor perceptions of our company which could adversely affect the trading price of our common shares.

In the event of a sale of our company, holders of our Series 1 Preferred Shares will be entitled to a substantial premium on the purchase price they paid for their Series 1 Preferred Shares, which will reduce the sale proceeds to be received by holders of our common shares.

In the event that our company is the subject of a “fundamental transaction” (defined in the Series 1 Preferred Shares to include an amalgamation, merger or other business combination transaction involving our company in which our shareholders do not have the right to cast more than 50% of the votes that may be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of our company as an entirety or substantially as an entirety to a third party) the holders of the Series 1 Preferred Shares will have the right, in preference to the holders of our common shares, to receive a portion of the aggregate consideration paid in the fundamental transaction that will represent a substantial premium on the purchase price they paid for their Series 1 Preferred Shares. Such premium will reduce the proceeds of any such fundamental transaction that would be received by holders of our common shares.

In the event of the liquidation, dissolution or winding up of our company, holders of the Series 1 Preferred Shares will have a liquidation preference over holders of our common shares and if the net assets of our company available for distribution to holders of our equity securities is not sufficient to pay this liquidation preference in full, holders of our common shares would receive no liquidating distribution in respect of their common shares.

In the event of the liquidation, dissolution or winding up of our company, holders of the Series 1 Preferred Shares will have a liquidation preference equal to the stated value of the Series 1 Preferred Shares less the Net Sales Returns (as defined in the Series 1 Preferred Shares) paid on the Series 1 Preferred Shares before holders of our common shares would be entitled to any proceeds of such liquidation, dissolution or winding up. If the net assets of our company available for distribution to holders of our equity securities is not sufficient to pay this liquidation preference in full, holders of our common shares would receive no liquidating distribution in respect of their common shares.

Our Series 1 Preferred Shares will be reclassified as a liability on our consolidated balance sheet once we begin to recognize revenues which may cause us to fail to meet the NYSE American’s continued listing requirements.

Because we are obligated to make annual payments to the holders of our Series 1 Preferred Shares in an amount equal to nine percent of the Net Sales (as defined in the Series 1 Preferred Shares), if any, of our company and our affiliates, once we begin to recognize revenues from our commercial activities, we will be required under United States general accounting principles to reclassify the Series 1 Preferred Shares as a liability on our consolidated balance sheet. The reclassification will significantly increase our total liabilities and significantly reduce our shareholders’ equity. Under the NYSE American’s continued listing requirements, we are required to maintain shareholders’ equity of at least $4.0 million, which will increase to $6.0 million after December 31, 2020. As a result of the reclassification, we may fail to meet this continued listing requirement. If we are unable to satisfy the NYSE American’s continued listing requirements, our common shares could be delisted from the NYSE American which could adversely affect the liquidity and market price of our common shares.

~~Risks Related to Our Common Shares~~

If securities or industry analysts do not publish research or reports about our company, or if they issue adverse or misleading opinions regarding us or our stock, our stock price and trading volume could decline.

Although we have research coverage by securities and industry analysts, if coverage is not maintained, the market price for our stock may be adversely affected. Our stock price also may decline if any analyst who covers us issues an adverse or erroneous opinion regarding us, our business model, our intellectual property or our stock performance, or if our product validations and operating results fail to meet analysts’ expectations. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline and possibly adversely affect our ability to engage in future financings.

~~We expect that the price of our common shares will fluctuate substantially.~~

You should consider an investment in our common shares risky and invest only if you can withstand a significant loss and wide fluctuations in the market value of your investment. The price of our common shares that will prevail in the market after the sale of our common shares by a selling shareholder may be higher or lower than the price you have paid. Numerous factors, including many over which we have no control, may have a significant impact on the market price of our common shares. These risks include those described or referred to in this “Risk Factors” section and elsewhere in this report as well as, among other things:

~~any delays in, or suspension or failure of, our existing and future studies;~~

~~announcements of regulatory approval or disapproval of any of our existing or future product candidates or of regulatory actions affecting us or our industry;~~

~~delays in the commercialization of our existing or future product candidates;~~

~~manufacturing and supply issues related to our development programs and commercialization of our existing or future product candidates;~~

~~quarterly variations in our results of operations or those of our competitors;~~

~~changes in our earnings estimates or recommendations by securities analysts or adverse publicity about us or our product candidates;~~

~~announcements by us or our competitors of new product candidates, significant contracts, commercial relationships, acquisitions or capital commitments;~~

~~announcements relating to future development or license agreements including termination of such agreements;~~

~~adverse developments with respect to our intellectual property rights or those of our principal collaborators;~~

~~commencement of litigation involving us or our competitors;~~

~~any major changes in our board of directors or management;~~

~~new legislation in the United States relating to the prescription, sale, distribution or pricing of pet pharmaceuticals or diagnostic products;~~

~~product liability claims, other litigation or public concern about the safety of our product candidates or future products;~~

~~market conditions in the animal health industry, in general, or in the pet therapeutics sector, in particular, including performance of our competitors; and~~

~~general economic conditions in the United States and abroad.~~

In addition, the stock market, in general, or the market for stocks in our industry, in particular, may experience broad market fluctuations, which may adversely affect the market price or liquidity of our common shares. Any sudden decline in the market price of our common shares could trigger securities class-action lawsuits against us. If any of our shareholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the time and attention of our management would be diverted from our business and operations. We also could be subject to damages claims if we are found to be at fault in connection with a decline in our stock price.

We are an “emerging growth company,” as defined under the JOBS Act and if we take advantage of reduced disclosure requirements applicable to “emerging growth companies,” our common shares could be less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, or SOX, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. We cannot predict if investors will find our common shares less attractive if we choose to continue to rely on these exemptions. If some investors find our common shares less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common shares and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to “opt out” of such extended transition period, however, and, as a result, we are required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Our Articles of Amalgamation (as amended) authorize us to issue an unlimited number of common shares and preferred shares without shareholder approval and we may issue additional equity securities, or engage in other transactions that could dilute your ownership interest, which may adversely affect the market price of our common shares

Our Articles of Amalgamation (as amended) authorize our Board of Directors, subject to the provisions of the ABCA, to issue an unlimited number of common shares and preferred shares without shareholder approval. Our Board of Directors may determine from time to time to raise additional capital by issuing common shares, preferred shares or other equity securities. We are not restricted from issuing additional securities, including securities that are convertible into or exchangeable for, or that represent the right to receive, common shares or preferred shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future offerings, or the prices at which such offerings may be affected. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common shares, or both. Holders of our common shares are not entitled to pre-emptive rights or other protections against dilution. New investors also may have rights, preferences and privileges that are senior to, and that adversely affect, the then-current holders of our common shares. Additionally, if we raise additional capital by making offerings of debt or preference shares, upon our liquidation, holders of our debt securities and preferred shares, and lenders with respect to other borrowings, may receive distributions of our available assets before the holders of our common shares.

~~We have incurred significant costs as a result of operating as a U.S. public company, and our management will continue to devote substantial time to new compliance initiatives.~~

As a U.S. publicly traded company, we have incurred significant legal, accounting and other expenses and will incur additional expenses after we are no longer an “emerging growth company” as defined under the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, as well as under the Sarbanes-Oxley Act, the JOBS Act, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, have created uncertainty for U.S. public companies and increased our costs and time that our board of directors and management must devote to complying with these rules and regulations. We expect these rules and regulations to increase our legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities.

For as long as we remain an “emerging growth company” as defined in the JOBS Act, we may choose to take advantage of certain exemptions from various reporting requirements that are applicable to other U.S. public companies that are not “emerging growth companies.” These exceptions provide for, but are not limited to, relief from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved and an extended transition period for complying with new or revised accounting standards. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We may remain an “emerging growth company” for up to five years. To the extent we are no longer eligible to use exemptions from various reporting requirements under the JOBS Act, we may be unable to realize our anticipated cost savings from those exemptions.

~~Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.~~

As a Canadian public company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of U.S. public companies required by Section 404 of the Sarbanes-Oxley Act, or Section 404. We were required to meet these standards in the course of preparing our financial statements as of and for the year ended December 31, 2019, and our management has reported on the effectiveness of our internal control over financial reporting for such year. Additionally, under the JOBS Act, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company.” The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the implementation of any requested improvements and receiving a favorable attestation in connection with the attestation provided by our independent registered public accounting firm. We will be unable to issue securities in the public markets through the use of a shelf registration statement if we are not in compliance with Section 404. Furthermore, failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and share price and could limit our ability to report our financial results accurately and timely.

~~If we sell common shares in future financings, shareholders may experience immediate dilution and, as a result, our share price may decline.~~

We may from time to time issue additional common shares at a discount from the existing trading price of our common shares. As a result, our shareholders would experience immediate dilution upon the sale of any shares of our common shares at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred shares or common shares. If we issue common shares or securities convertible into common shares, our common shareholders would experience additional dilution and, as a result, our share price may decline.

~~Future sales of our common shares by our shareholders or the perception that these sales may occur could cause our stock price to decline.~~

As of November 11, 2020, we had 564,051,438 common shares outstanding. Substantially all of our outstanding common shares have been registered for resale or other disposition by the holders thereof or are otherwise freely tradable by the holders thereof.

Sales of a substantial number of our common shares by our shareholders or the perception that these sales may occur, could depress the market price of our common shares and could impair our ability to raise capital through the sale of additional equity securities, even if there is no relationship between such sales and the performance of our business.

We have never and do not, in the future, intend to pay dividends on our common shares, and your ability to achieve a return on your investment will depend on appreciation in the market price of our common shares.

We have never paid and do not expect to pay dividends on our common shares in the future. We intend to invest our future earnings, if any, to fund our growth and not to pay any cash dividends on our common shares. Since we do not intend to pay dividends, your ability to receive a return on your investment will depend on any future appreciation in the market price of our common shares. There is no assurance that our common shares will appreciate in price.

~~An active, liquid and orderly market for our common shares may not develop or be sustained, and you may not be able to sell your common shares~~.

Our common shares trade on the NYSE American exchange. We cannot assure you that an active trading market for our common shares will develop or be sustained. The lack of an active market may impair your ability to sell the common shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling common shares and may impair our ability to acquire other businesses, applications or technologies using our common shares as consideration, which, in turn, could materially adversely affect our business.

We are subject to the continued listing requirements of the NYSE American. If we are unable to comply with such requirements, our common shares would be delisted from the NYSE American, which would limit investors’ ability to effect transactions in our common shares and subject us to additional trading restrictions.

Our common shares are currently listed on the NYSE American. In order to maintain our listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders. In addition to these objective standards, the NYSE American may delist the securities of any issuer if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE American inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an operating company; if an issuer fails to comply with the NYSE American’s listing requirements; if an issuer’s common stock sells at what the NYSE American considers a “low selling price” (generally trading below $0.20 per share for an extended period of time); or if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable. On April 10, 2020, we received a deficiency letter from the NYSE American indicating that the we are not compliance with Section 1003(f)(v) of the NYSE American Company Guide, because our common shares have been selling for a low price per share for a substantial period time. In addition, the NYSE American has advised us that if the trading price of our common shares falls below $0.06 per share, our common shares may be immediately suspended from further trading on the exchange.

Our shareholders failed to approve a proposal to effect a reverse split of our common shares at our annual and special meeting of shareholders held on September 25, 2020. If shareholders approve the domestication and the domestication is effected, we intend to seek stockholder approval for a reverse split of our common stock promptly thereafter to regain compliance with the NYSE American’s continued listing standards, although no assurance can be given that stockholders will approve a reverse stock split.

If the NYSE American delists our common shares from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our common shares would qualify to be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

~~a limited availability of market quotations for our securities;~~

~~reduced liquidity for our securities;~~

a determination that our common shares are a “penny stock” which will require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

~~a limited amount of news and analyst coverage; and~~

~~a decreased ability to issue additional securities or obtain additional financing in the future.~~

Item 6. Exhibits.

The exhibits listed on the accompanying index to exhibits immediately preceding the exhibits are filed as part of, or hereby incorporated by reference into, this Quarterly Report.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Zomedica Corp.

Date: November 12, 2021	By:	/s/ ~~Robert Cohen~~Larry Heaton
	Name:	~~Robert Cohen~~ Larry Heaton
	Title:	~~Interim~~ Chief Executive Officer

Date: November 12, 2021	By:
	~~By:~~	/s/ Ann Marie Cotter
	Name:	Ann Marie Cotter
	Title:	Chief Financial Officer

Table of Contents

EXHIBIT INDEX

Exhibit No.		Description

2.1		Stock Purchase Agreement, dated October 1, 2021, by and between Zomedica Inc. and Branford PVT Mid-Hold, LLC (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Commission on October 1, 2021 (File No. 001-38298))

3.1		Articles of Amalgamation of Zomedica ~~Pharmaceuticals~~ Corp. and all amendments thereto, as well as all Certificates issued in respect thereto (incorporated by reference to Exhibit 3.1 to the Company's ~~Registration Statement on Form S-1 filed with the Commission on April 21, 2017 (File No. 333-217409))~~
~~3.2~~		Certificate of Amendment and Registration of Restated Articles of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-1 filed with the Commission on April 21, 2017 (File No. 333-217409))
~~3.3~~		Certificate of Amalgamation of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 filed with the Commission on April 21, 2017 (File No. 333-217409))
~~3.4~~		~~Articles of Amendment to the Articles of Incorporation of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.5 to the Company’s~~ Quarterly Report on Form 10-Q filed with the Commission on May ~~10, 2019~~12, 2021 (File No. 001-38298))
~~3.5~~
3.2		Amended and Restated By-Law No. 1 (2nd Version) of Zomedica ~~Pharmaceuticals~~ Corp. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Commission on August 7, 2020 (File No. 001-38298))
~~10.9^~~
~~Amendment,~~10.1		Executive Employment Agreement, dated ~~August 14, 2020, to Development~~October 1, 2021, among Zomedica Inc., Zomedica Corp. and ~~Supply Agreement with Qorvo Biotechnologies, LLC~~Larry Heaton (incorporated by ~~referent~~reference to Exhibit ~~10.9~~10.1 to the ~~company’s Registration Statement~~Company's Current Report on Form ~~S-4~~8-K filed with the Commission on October ~~9, 2020~~4, 2021 (File No. ~~333-249401)~~001-38298))
~~10.10~~
~~Letter~~10.2*		Second Lease Agreement, effective September 15, 2021, by and between Zomedica Inc. and Wickfield Phoenix LLC.

10.3*		Executive Employment Agreement, dated September ~~3, 2020, with Qorvo Biotechnologies,~~6, 2019, by and between Pulse Veterinary Technologies, LLC ~~(incorporated by referent to Exhibit 10.10 to the company’s Registration Statement on Form S-4 filed with the Commission on October 9, 2020 (File No. 333-249401))~~and Adrian Lock

31.1		Certification of ~~Interim~~ Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of ~~Interim~~ Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
~~101.INS~~
101.INS		Inline XBRL Instance Document.*Document (the Instance Document does not appear in the Interactive Data File because its XBRL (1)
~~101.SCH~~
101.SCH		Inline XBRL Taxonomy Extension Schema Document.*Document (1)
~~101.CAL~~
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.*Document (1)
~~101.DEF~~
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*Document (1)
~~101.LAB~~
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*Document (1)
~~101.PRE~~
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.*Document (1)

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)

(1) These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

* Filed herewith.

** This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.

~~^ Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.~~

			Page
	PART I
	FINANCIAL INFORMATION
~~FINANCIAL INFORMATION~~
Item 1.
1. Condensed Financial Statements	2	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38	34
Item 4.	Controls and Procedures	38	34
~~PART II~~
	PART II
	OTHER INFORMATION

Item 1.	Legal Proceedings	38	35
Item 1A.	Risk Factors	39	35
Item 6.	Exhibits	63	37

		September 30,			December 31,
	Note	2020			2019

Assets

Current assets:
Cash and cash equivalents		$	52,032,640		$	510,586
Prepaid expenses and deposits	5		932,408			1,228,585
Tax credits			129,269			67,618
			53,094,317			1,806,789

Prepaid expenses and deposits	5		1,000,000			-
Property and equipment	6		720,701			729,142
Right-of-use asset	8		1,380,744			1,103,658
Intangible assets	7		408,583			543,395
		$	56,604,345		$	4,182,984


Liabilitites and shareholders' equity

Current liabilities:
Accounts payable and accrued liabilities		$	1,827,761			2,087,525
Current portion of lease obligations	8		242,491			-
			2,070,252			2,087,525

Lease obligations	8		1,154,304			-
			3,224,556			2,087,525

Shareholders' equity
Capital stock
Series 1 preferred shares, without par value; 20 shares authorized (2019 - 20) Issued and outstanding 12 series 1 preferred shares (2019 - 12)	10		11,961,397			11,961,397
Unlimited common shares without par value; Issued and outstanding 564,051,438 common shares (2019 - 108,308,398)	11		87,958,137			38,566,820
Additional paid-in capital	13		18,256,678			3,625,083
Accumulated deficit			(64,796,423	)		(52,057,841	)
			53,379,789			2,095,459

		$	56,604,345		$	4,182,984

		Three months ended September 30,						Nine months ended September 30,
	Note	2020			2019			2020			2019

Expenses:
Research and development	17	$	2,702,103		$	962,463		$	7,205,674		$	9,555,345
General and administrative	17		1,335,085			1,377,252			3,607,346			5,490,928
Professional fees	17		839,646			306,937			1,413,118			1,296,884
Amortization - right-of-use asset	8		-			127,345			42,448			382,035
Amortization - intangible assets	7		45,399			273			135,425			810
Depreciation	6		78,200			70,096			232,475			201,075
Loss from operations			5,000,433			2,844,366			12,636,486			16,927,077
Interest income			(21,238	)		-			(21,566	)		-
Interest expense			-			-			732			18,338
Loss on disposal of property and equipment	6		-			-			69,834			1,308
Loss on right-of-use-asset	8		-			-			59,097			-
Gain on settlement of liabilities			-			-			-			(19,737	)
Other income			(1,963	)		-			(7,463	)		-
Foreign exchange loss (gain)			2,743			1,313			1,462			30
Loss before income taxes			4,979,975			2,845,679			12,738,582			16,927,016
Income tax expense			-			-			-			-
Net loss and comprehensive loss		$	4,979,975		$	2,845,679		$	12,738,582		$	16,927,016

Weighted average number of common shares - basic and diluted			550,541,878			108,038,398			291,314,002			105,711,459

Loss per share - basic and diluted		$	(0.01	)	$	(0.03	)	$	(0.04	)	$	(0.16	)

			Series 1 preferred stock				Common stock
	Note		Shares		Amount		Shares		Amount			Common stock subscribed			Additional paid-in capital			Accumulated deficit			Total

Balance at December 31, 2018				-	$	-		97,598,898	$	30,410,648		$	4,280,000		$	1,240,139		$	(32,273,787	)	$	3,657,000
Stock issuance for services		11		-		-		707,236		792,104			-			-			-			792,104
Stock-based compensation		12		-		-		-		-			-			2,539,092			-			2,539,092
Stock issuance for financing, net of cost		10,11		12		11,961,397		9,337,529		6,690,922			(4,280,000	)		-			-			14,372,319
Stock issued due to exercise of options		11,12		-		-		394,735		754,148			-			(154,148	)		-			600,000
Net loss				-		-		-		-			-			-			(16,927,016	)		(16,927,016	)
Balance at September 30, 2019				12	$	11,961,397		108,038,398	$	38,647,822		$	-		$	3,625,083		$	(49,200,803	)	$	5,033,499

Balance at December 31, 2019				12	$	11,961,397		108,038,398	$	38,566,820		$	-		$	3,625,083		$	(52,057,841	)	$	2,095,459
Stock, warrants and prefunded warrant issued for financing		11		-		-		337,830,001		32,275,266			-			24,221,017			-			56,496,283
Stock issuance costs		11		-		-		-		(2,979,594	)		-			(2,128,021	)		-			(5,107,615	)
Placement agent warrants		11		-		-		-		(154,767	)		-			154,767			-			-
Stock-based compensation		12		-		-		-		-			-			478,835			-			478,835
Stock issued due to exercise of warrants and prefunded warrants		11		-		-		118,183,039		20,250,412						(8,095,003	)		-			12,155,409
Net loss				-		-		-		-			-			-			(12,738,582	)		(12,738,582	)
Balance at September 30, 2020				12	$	11,961,397		564,051,438	$	87,958,137		$	-		$	18,256,678		$	(64,796,423	)	$	53,379,789

		Three months ended September 30,						Nine months ended September 30,
	Note	2020			2019			2020			2019

Cash flows used in operating activities:
Net loss for the period		$	(4,979,975	)	$	(2,845,679	)	$	(12,738,582	)	$	(16,927,016	)
Adjustments for
Depreciation	6		78,200			70,096			232,475			201,075
Amortization - intangible assets	7		45,399			273			135,425			810
Amortization - right-of-use-asset	8		-			127,345			42,448			382,035
Loss on disposal of property and equipment	6		-			-			69,834			1,308
Loss on right-of-use asset	8		-			-			59,097			-
Non-cash portion of rent expense	8		6,019			-			16,051			-
Stock issued for services	11		-			-			-			792,104
Stock-based compensation	12		187,969			197,988			478,835			2,539,092
Change in non-cash operating working capital
Tax credits and other receivables			53,228			19,558			(61,651	)		(22,333	)
Prepaid expenses			(243,461	)		(122,315	)		(175,553	)		140,695
Deposits			(906,300	)		21,366			(827,538	)		(76,709	)
Accounts payable and accrued liabilities			96,292			(1,378,710	)		(787,124	)		(798,994	)
			(5,662,629	)		(3,910,078	)		(13,556,283	)		(13,767,933	)

Cash flows from financing activities:
Proceeds from financing of preferred shares	10		-			-			-			12,000,000
Proceeds from issuance of common shares, warrants and pre-funded warrants	11,13		29,997,500			-			56,496,283			3,000,000
Cash received from warrant exercises	13		863,550			-			12,155,409			600,000
Cash paid on stock issuance costs	11,13		(2,268,217	)		(1,414	)		(5,107,615	)		(627,681	)
Cash received for government loan	9		-			-			527,360			-
			28,592,833			(1,414	)		64,071,437			14,972,319

Cash flows (used in) from investing activities:
Cash from sale of property and equipment	6		-			-			5,400			-
Investment in intangibles			-			(501,487	)		-			(501,487	)
Investment in property and equipment	6		(613	)		(80,950	)		(613	)		(155,513	)
Cash from lease repurchase	8		-			-			1,002,113			-
			(613	)		(582,437	)		1,006,900			(657,000	)

Increase in cash and cash equivalents			22,929,591			(4,493,929	)	��	51,522,054			547,386

Cash and cash equivalents, beginning of period			29,103,049			6,981,580			510,586			1,940,265

Cash and cash equivalents, end of period		$	52,032,640		$	2,487,651		$	52,032,640		$	2,487,651

Supplemental cash flow information:

Interest paid		$	-		$	12,164		$	651		$	18,338
Interest received		$	14,347		$	-		$	14,347		$	-

2020	$	46,009
2021		180,144
2022		180,144
2023		1,089
2024		1,089
2025		108
Total	$	408,583

Right-of-use asset	Premise lease
Cost
Aggregate lease commitments	$	2,067,505
Less: impact of present value		(513,894	)
Balance at September 30, 2020		1,553,611

Reduction in right-of-use asset
Straight line amortization		275,667
Interest		(102,800	)
Balance at September 30, 2020		172,867

Net book value as of:
September 30, 2020	$	1,380,744

2020	$	97,357
2021		400,133
2022		412,137
2023		424,501
2024		437,236
2025		36,525
Total	$	1,807,889


	Number of
	preferred		Preferred
	stock		stock amount
Balance at December 31, 2018		-	$	-
Stock issued from financing (i)		12		11,961,397
Balance at December 31, 2019		12	$	11,961,397
Balance at September 30, 2020		12	$	11,961,397

	Common		Common
	stock amount		stock value
Balance at December 31, 2018		97,598,898	$	30,410,648
Stock issuance for services (i and ii)		707,236		792,104
Stock issued from financing (iii and iv)		9,337,529		6,690,922
Stock issued due to exercise of options		394,735		754,148
Balance at September 30, 2019		108,038,398	$	38,647,822

Balance at December 31, 2019		108,038,398	$	38,566,820
Stock issued from financing (v,vi,vii,viii)		337,830,001		29,140,905
Stock issued from the financing and exercise of prefunded warrants (viii)		37,146,984		3,410,276
Stock issued from the exercise of warrants (ix and xi)		81,036,055		16,840,136
Balance at September 30, 2020		564,051,438	$	87,958,137

	Number of options			Weighted avg exercise price
Balance at December 31, 2019		7,040,265		$	1.28
Stock options forfeited January 23, 2020		(50,000	)		1.52
Stock options forfeited February 25, 2020		(5,000	)		1.12
Stock options forfeited March 1, 2020		(50,000	)		1.52
Stock options granted March 14, 2020		5,056,000			0.19
Stock options forfeited April 21, 2020		(150,000	)		0.19
Stock options forfeited May 4, 2019		(15,000	)		0.19
Stock options forfeited May 5, 2020		(30,000	)		1.52
Stock options forfeited May 7, 2020		(15,000	)		1.52
Stock options forfeited June 11, 2020		(15,000	)		1.52
Stock options granted June 16, 2020		2,000,000			0.19
Stock options granted July 9, 2020		175,000			0.18
Stock options forfeited July 20, 2020		(400,000	)		1.52
Stock options forfeited July 20, 2020		(50,000	)		0.19
Stock options forfeited July 31, 2020		(3,750	)		0.19
Stock options forfeited August 2, 2020		(10,000	)		1.52
Stock options forfeited August 2, 2020		(5,000	)		0.19
Stock options forfeited August 14, 2020		(675,000	)		0.19
Stock options forfeited August 19, 2020		(75,375	)		0.19
Stock options granted August 25, 2020		40,000			0.13
Stock options forfeited September 25, 2020		(37,500	)		0.19
Stock options granted September 29, 2020		300,000			0.11
Balance at September 30, 2020		13,024,640		$	0.72
Vested at September 30, 2020		9,136,348		$	0.95

Grant date	Exercise price		Number of options issued and outstanding		Number of vested options outstanding		Number of unvested options outstanding		Weighted Avg Remaining Life outstanding (years)
January 10, 2019	$	1.52		4,965,265		4,965,265		-		0.28
August 19, 2019		0.26		500,000		500,000		-		0.88
August 19, 2019		0.35		100,000		100,000		-		0.88
August 19, 2019		0.45		100,000		100,000		-		0.88
August 19, 2019		0.55		100,000		100,000		-		0.88
August 19, 2019		0.65		100,000		100,000		-		0.88
August 19, 2019		0.75		100,000		100,000		-		0.88
September 16, 2019		0.43		500,000		500,000		-		0.96
March 14, 2020		0.19		4,044,375		1,209,000		2,835,375		4.45
June 16, 2020		0.19		2,000,000		1,333,334		666,666		4.71
July 9, 2020		0.18		175,000		43,750		131,250		4.78
August 25, 2020		0.13		40,000		10,000		30,000		4.90
September 29, 2020		0.11		300,000		75,000		225,000		5.00
Balance at September 30, 2020				13,024,640		9,136,349		3,888,291


	Series A Warrants February 14, 2020	Series A Placement Agent Warrants February 14, 2020
Volatility	87%	87%
Risk-free interest rate	1.42%	1.42%
Expected life (years)	5.5	5
Dividend yield	0%	0%
Common share price	$0.12	$0.12
Strike price	$0.20	$0.15
Forfeiture rate	nil	nil


	Series B Warrants April 9, 2020	Series B Placement Agent Warrants April 9, 2020
Volatility	99%	99%
Risk-free interest rate	0.41%	0.41%
Expected life (years)	5	5
Dividend yield	0%	0%
Common share price	$0.14	$0.14
Strike price	$0.15	$0.15
Forfeiture rate	nil	nil

									December 31, 2019
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		2,087,525		-		-		-		-		2,087,525
		2,087,525		-		-		-		-		2,087,525