| Business Combinations | 7. Business Combinations All of the Company’s acquisitions of businesses have been accounted for under ASC 805. Accordingly, the assets of the acquired companies reflect the fair values and have been included in the Company’s Condensed Financial Statements from their respective dates of acquisition. The results of operations of Revo Squared LLC, Assisi Animal Health, LLC, Structured Monitoring Products, Inc, and Qorvo Biotechnologies, LLC have been included in the Company’s Condensed Financial Statements since the dates of acquisition on June 14, 2022, July 15, 2022, September 4, 2023, and October 4, 2023 respectively. 2022 Acquisitions Asset Purchase Agreement with Revo Squared LLC On June 14, 2022, Zomedica Corp. and its wholly owned subsidiary Zomedica Inc. entered into an Asset Purchase Agreement with Revo Squared LLC (“Revo Squared”) and its majority member pursuant to which Zomedica Inc. agreed to acquire substantially all of the assets of Revo Squared. Revo Squared, based in Marietta, Georgia, was in the business of developing, manufacturing, marketing, distributing, and selling diagnostic imaging products and services for use in animal health, including its SuperView™, Sonoview ® ® On July 1, 2022, the parties consummated the acquisition. At the closing, Zomedica Inc. paid Revo Squared a base purchase price of $6,011 in cash, which was subject to adjustments based on the amount of Revo Squared’s working capital at the closing. On this date, $500 of the purchase price was deposited into a third-party escrow account for a period of fifteen months to support Revo Squared’s indemnification obligation under the Purchase Agreement. No indemnification claims were made during this period resulting in the $500 being released from the escrow to the seller. The Company also issued to Revo Squared a ten-year warrant to purchase an aggregate of 10,000,000 of the Company’s common shares at a per share exercise price equal to $0.2201 . The warrants may be exercised on a cash or cashless basis, at the election of the warrant holder. In addition, Zomedica Inc. has agreed to pay Revo Squared aggregate earn-out payments ranging from $0 to $4,000 based on the achievement of milestones related to future net sales from Revo Squared Products. One -time earn-out payments of $2,000 each will be payable upon net sales from Revo Squared Products exceeding $5,000 and $10,000 during any calendar year ending on or prior to December 31, 2027. The fair value of the earnout liability was adjusted from $2,000 to $374 at June 30, 2024. Fair value of the earnout was determined using Level 3 inputs. As a result of total consideration exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $6,528 was recorded in connection with this acquisition, which will be deductible for US tax purposes. The goodwill largely results from our ability to market and sell their respective products and services through our established customer base. The Company finalized the allocation of the purchase price for Revo Squared as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows: Initial Measurement Allocation of Period Updated Consideration Adjustments Allocation Trade receivables, net $ 8 $ — $ 8 Prepaid expenses and deposits 10 — 10 Intangible Assets (estimated useful life) Trade name ( 5 years) 200 — 200 Developed technology ( 10 years) 2,300 — 2,300 Customer relationships ( 16 years) 1,200 — 1,200 Total assets acquired 3,718 — 3,718 Earnout liabilities 2,458 (458) 2,000 Total liabilities assumed 2,458 (458) 2,000 Net assets acquired, excluding goodwill 1,260 458 1,718 Goodwill 6,528 (458) 6,070 Net assets acquired $ 7,788 $ — $ 7,788 Purchase price consideration was made up of the following: Cash $ 6,011 Fair value of warrants 1,777 Total $ 7,788 Asset Purchase Agreement with Assisi Animal Health LLC On July 15, 2022, Zomedica Corp. and its wholly owned subsidiary Zomedica Inc. entered into an Asset Purchase Agreement with Assisi Animal Health LLC (“Assisi”), its wholly owned subsidiary, AAH Holdings LLC, and certain of Assisi’s members (collectively the “Seller”) pursuant to which Zomedica Inc. agreed to acquire substantially all of the assets related to the Assisi® product lines. The Sellers were in the business of developing, manufacturing, marketing, distributing and selling animal health products which use targeted Pulsed Electromagnetic Field (PEMF) therapy to decrease pain and inflammation, accelerate healing, and reduce anxiety that include the Assisi Loop ® ® ® Zomedica Inc. paid Assisi a purchase price of $18,293 in cash, which was subject to adjustments based on, among other things, the value of Assisi’s inventory and prepaid expenses at the closing of the acquisition. A portion of the purchase price ($1,400) was deposited into a third-party escrow account. The balance of the escrow account was released to seller on the 18-month anniversary of the Closing Date as there were no indemnification claims. The Company also issued to Assisi a ten-year warrant to purchase an aggregate of 22,000,000 of the Company’s common shares at a per share exercise price equal to $0.252 . The warrants may be exercised on a cash or cashless basis, at the election of the warrant holder. As a result of total consideration exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $14,329 was recorded in connection with this acquisition, which will be deductible for US tax purposes. The goodwill largely results from our ability to market and sell their respective products and services through our established customer base. The Company finalized the allocation of the purchase price for Assisi as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows: Initial Measurement Allocation of Period Updated Consideration Adjustments Allocation Inventory, net $ 220 $ — $ 220 Prepaid expenses and deposits 271 — 271 Other receivables 406 (206) 200 Right of use asset — 260 260 Intangible Assets (estimated useful life) E-commerce technology ( 2 years) 200 — 200 Trade name ( 5 years) 300 — 300 Developed technology ( 10 years) 4,500 — 4,500 Customer relationships ( 19 years) 2,800 — 2,800 Total assets acquired 8,697 54 8,751 Current portion of lease obligations — 49 49 Non current portion of lease obligations — 211 211 Other non current liabilities 45 — 45 Total liabilities assumed 45 260 305 Net assets acquired, excluding goodwill 8,652 (206) 8,446 Goodwill 14,329 206 14,535 Net assets acquired $ 22,981 $ — $ 22,981 Purchase price consideration was made up of the following: Cash $ 18,293 Fair value of warrants 4,688 Total $ 22,981 2023 Acquisitions Stock Purchase Agreement with Structured Monitoring Products, Inc. On September 4, 2023, Zomedica Inc., a wholly owned subsidiary of Zomedica Corp. (the “Company”), entered into a Stock Purchase Agreement with Structured Monitoring Products, Inc. pursuant to which Zomedica Inc. acquired 100% of the capital stock of Structured Monitoring Products, Inc., a Florida corporation (“SMP”). SMP is the maker of VetGuardian ® In connection with the Acquisition, the Company converted $2,750 in convertible debt and accrued interest of $171 owed by SMP to the Company into equity totaling 28.7% outstanding equity of SMP, which has an implied value of $5,095 based upon the SMP’s enterprise value of $18,000 . Zomedica paid a purchase price of $12,952 for the balance of 71.3% equity of SMP. The cash purchase price was funded through a $250 deposit previously paid to SMP and $12,702 of cash on hand. At closing, Zomedica deposited $1,295 in escrow. $215 was released at 90 days as there were no adjustments to the working capital, cash, indebtedness, and transaction expenses. The remaining balance will be released 18 months following the date of closing less the amount of any pending or prior indemnification claims. As a result of total consideration exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $9,796 was recorded in connection with the Acquisition, none of which will be deductible for U.S tax purposes. The goodwill is mainly attributable to skills and technical talent of SMP’s work force and the synergies expected to be achieved from integrating SMP into the Company’s existing business. The previously held equity interests were remeasured to its fair value as of the acquisition date. The Company computed the fair value based upon the SMP’s enterprise value of $18,000 and the fair value of previously held 28.7% equity interests were determined to be $5,095. The Company recognized an amount of $2,174 as a gain on the fair valuation of Company’s previously held equity interest in SMP and was included in other income (loss) in our 2023 Form 10-K as part of our consolidated statements of operations and comprehensive loss for the period ended December 31, 2023. The following table summarizes the fair value amounts of identifiable assets acquired and liabilities assumed at the acquisition date: Initial Allocation of Consideration Cash and cash equivalents $ 42 Trade receivables, net (1) 11 Inventory, net 316 Other receivables 1 Intangible assets (estimated useful life) Developed technology ( 10 years) 9,400 Non-competition agreement ( 3 years) 200 Total assets acquired 9,970 Accounts payable 6 Deferred tax liabilities 1,713 Total liabilities assumed 1,719 Net assets acquired, excluding goodwill 8,251 Goodwill 9,796 Net assets acquired $ 18,047 (1) The “trade receivables, net” comprise gross contractual amounts due of $11 , of which no amounts were expected to be uncollectable at the date of acquisition. The Company evaluated the disclosure requirements under ASC 805 and determined SMP was not considered a material business combination for purposes of disclosing the earnings of SMP since the date of acquisition and supplemental pro forma information. Purchase price consideration was made up of the following: Cash $ 12,702 Fair value of previously held interest 5,095 Prepaid deposits 250 Net assets acquired $ 18,047 Cash $ 12,702 Less: cash acquired (42) Investment in acquisitions, net of cash acquired $ 12,660 The determination of the final purchase price allocation to specific assets, primarily intangibles, is incomplete and may change in future periods. LLC Membership Interest Purchase Agreement for the Acquisition of Qorvo Biotechnologies, LLC On October 4, 2023, Zomedica Inc., a wholly owned subsidiary of Zomedica Corp. (the “Company”), entered into an LLC Membership Interest Purchase Agreement with Qorvo US, Inc. (“Qorvo”) pursuant to which Zomedica Inc. acquired 100% of the membership interests of Qorvo Biotechnologies, LLC, a Delaware limited liability company (“QBT”) from Qorvo. QBT develops the TRUFORMA ® Zomedica paid Qorvo a purchase price of $7,646, which comprised of cash of $11,300 and settlement of pre-existing relationship of $3,654. The cash purchase price was funded through the cash on hand. The following table summarizes the fair value amounts of identifiable assets acquired and liabilities assumed at the acquisition date: Initial Measurement Allocation of Period Updated Consideration Adjustments Allocation Inventory, net $ 1,674 $ (201) $ 1,473 Other receivables 52 — 52 Property and equipment, net 6,495 201 6,696 Right-of-use asset 1,202 — 1,202 Other assets 19 — 19 Total assets acquired 9,442 — 9,442 Accounts payable and accrued liabilities 594 — 594 Current portion of lease obligations 249 — 249 Lease obligations 953 — 953 Total liabilities assumed 1,796 — 1,796 Net assets acquired, excluding goodwill 7,646 — 7,646 Net assets acquired $ 7,646 $ — $ 7,646 The Company incurred $499 in acquisition costs that were expensed in the period incurred and are included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss. The Company evaluated the disclosure requirements under ASC 805 and determined QBT was not considered a material business combination for purposes of disclosing the earnings of QBT since the date of acquisition and supplemental pro forma information. Purchase price consideration was made up of the following: Cash $ 11,300 Settlement of pre-existing relationship (1) (3,654) Total $ 7,646 (1) The Company had entered into a Development and Manufacturing License Agreement with QBT on January 17, 2023 and the Company had an intangible asset and liability balance of $6,945 and $3,654 , respectively as of the acquisition date related to this agreement. The effect of the pre-existing liability (i.e., $3,654 ) is included in the consideration transferred. The determination of the final purchase price allocation to specific assets, primarily fixed assets, is incomplete and may change in future periods in the event that the intended uses of the assets change as we continue to deploy and integrate operations. |
