UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

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

For the quarterly period ended ~~March 31, 2018.~~September 30, 2021.

☐

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

For the transition period ~~from~~to.from________ to_________.

Commission File Number: 001-38298

~~Zomedica Pharmaceuticals 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 ~~190~~
125 Ann Arbor, Michigan		48108
(Address of principal executive offices)		(Zip code)

~~(734) 369-2555~~
~~(Registrant’s telephone number, including area code)~~

(734) 369-2555

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a ~~non- accelerated~~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	~~☐ (Do not check if a smaller reporting company)~~ ☒	Smaller reporting company	☒

		Emerging growth company	☒

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

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value	ZOM	NYSE American

As of ~~May 14, 2018, 92,649,582~~November 12, 2021, 979,894,668 shares of the registrant’s common shares, without par value, were issued and outstanding.

Zomedica Corp.

~~ZOMEDICA PHARMACEUTICALS CORPORATION~~ FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31, 2018~~

SEPTEMBER 30, 2021

TABLE OF CONTENTS

Page
PART I

FINANCIAL INFORMATION

1. Condensed Financial Statements 3
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
3. Quantitative and Qualitative Disclosures about Market Risk 29
4. Controls and Procedures 29

PART II

OTHER INFORMATION

1. Legal Proceedings 30
1A. Risk Factors 30
2. Unregistered Sales of Equity Securities and Use of Proceeds 35
3. Defaults Upon Senior Securities 35
4. Mine Safety Disclosures 35
5. Other Information 35
6. Exhibits 35

Table of Contents

PART I — FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements.~~

Item 1. Financial Statements.

Zomedica ~~Pha~~~~rmaceuticals~~ Corp.

Condensed ~~unaudited interim~~ consolidated balance sheets

As ~~at March 31, 2018~~of September 30, 2021, and December 31, ~~2017~~2020

~~(Stated in United States dollars)~~

(Unaudited) (Stated in United States dollars)

Note

March 31,
2018

December 31,
2017

Assets

Current assets:
Cash and cash equivalents $ 3,134,920 $ 3,448,147
Prepaid expenses and deposits 5 810,839 786,273
Trade and other receivable 69,381 28,272
4,015,140 4,262,692

Prepaid expenses and deposits 5 518,286 566,832
Property and equipment 6 347,677 371,157
Intangible assets 7 14,455 15,141
$ 4,895,558 $ 5,215,822

Liabilities and shareholders' equity

Current liabilities:
Accounts payable and accrued liabilities $ 1,266,324 828,737
1,266,324 828,737

Shareholders' equity:
Capital stock
Authorized
Unlimited common shares without par value
Issued and outstanding
91,853,865 common shares (2017 - 90,225,869) 9 20,003,883 18,244,659
Additional paid-in capital 10 1,422,779 1,768,526
Accumulated deficit (17,797,428 ) (15,626,100 )
3,629,234 4,387,085

$ 4,895,558 $ 5,215,822

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

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

Note

March 31,
2018

March 31,
2017

Expenses:
Research and development 14 $ 600,341 $ 616,449
General and administrative 14 1,160,171 827,025
Professional fees 14 371,947 381,536
Amortization 7 686 699
Depreciation 6 36,699 20,308
Loss from operations 2,169,844 1,846,017
Gain on settlement of liabilities - (5,000 )
Foreign exchange loss (gain) 1,484 (8,281 )
Loss before income taxes
2,171,328 1,832,736
Income tax expense - -
Net loss and comprehensive loss $ 2,171,328 $ 1,832,736

Weighted average number of common shares - basic and diluted 90,517,702 84,418,182

Loss per share - basic and diluted $ (0.02 ) $ (0.02 )

~~Nature of operations and going concern (Note 1)~~

~~Commitments and contingencies (Note 11)~~

	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.

Table of Contents

Zomedica ~~Pharmaceuticals~~ Corp.

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

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

(Unaudited) (Stated in United States dollars)

	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 consolidated financial statements.

Table of Contents

Zomedica Corp.

Condensed consolidated statements of shareholders’ equity

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020

(Unaudited) (Stated in United States dollars)

	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

~~(Stated in United States dollars)~~

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

Note

Number of
capital stock

Capital stock

Additional paid-in
capital

Accumulated
deficit

Total
Balance at December 31, 2016 83,964,569 $ 10,189,973 $ 1,205,456 $ (7,561,028 ) $ 3,834,401
Stock to be issued 9 - 250,000 - - 250,000
Stock issuance costs 9 - (8,864 ) - - (8,864 )
Stock issuance for services 9 43,613 45,000 - - 45,000
Stock-based compensation 10 - - 161,591 - 161,591
Stock issued due to exercise of options 9 410,000 25,523 (8,374 ) - 17,149
Net loss - - - (1,832,736 ) (1,832,736 )
Balance at March 31, 2017 84,418,182 $ 10,501,632 $ 1,358,673 $ (9,393,764 ) $ 2,466,541

Balance at December 31, 2017 90,225,869 18,244,659 1,768,526 (15,626,100 ) 4,387,085
Stock-based compensation - - 5,691 - 5,691
Stock issued due to exercise of options 10 1,627,996 1,759,224 (351,438 ) - 1,407,786
Net loss - - - (2,171,328 ) (2,171,328 )
Balance at March 31, 2018 91,853,865 20,003,883 1,422,779 (17,797,428 ) 3,629,234

Table of Contents

Zomedica Corp.

Condensed consolidated statements of cash flows

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

(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

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

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

Note

March 31,
2018

March 31,
2017

Cash flows used in operating activities:
Net loss $ (2,171,328 ) $ (1,832,736 )
Adjustments for
Depreciation 6 36,699 20,308
Amortization 7 686 699
Stock issued for services - 45,000
Stock-based compensation 5,691 161,591
Change in non-cash operating working capital
Trade and other receivable (41,109 ) (4,179 )
Prepaid expenses (6,494 ) (37,965 )
Deposits 30,474 (216,813 )
Accounts payable and accrued liabilities 437,587 310,293
(1,707,794 ) (1,553,802 )
Cash flows from financing activities:
Cash received for stock issuance - 250,000
Cash received from stock option exercises 1,407,786 17,149
Stock issuance costs - (8,864 )
Repayments (advances) of shareholder loan - (6,726 )
1,407,786 251,559
Cash flows used in investing activities:
Investment in property and equipment 6 (13,219 ) (157,402 )
(13,219 ) (157,402 )
Decrease in cash and cash equivalents (313,227 ) (1,459,645 )
Cash and cash equivalents, beginning of period 3,448,147 3,226,680
Cash and cash equivalents, end of period $ 3,134,920 $ 1,767,035

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

Table of Contents

Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020

(Unaudited) (Stated in United States dollars)

~~(Stated in United States dollars)~~

1. Nature of operations

1.	~~Nature of operations and going concern~~

Zomedica Pharmaceuticals Corp. (the “Company”) was incorporated on January 7, 2013 under the Alberta Business Corporations Act 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.

On April 21, 2016, the Company closed its qualifying transaction (“Transaction”) with ZoMedica Pharmaceuticals Inc. (“ZoMedica”), and filed Articles of Amalgamation and amalgamated with 9674128 Canada Inc. which was wholly-owned by WOW. The amalgamated company changed its name to Zomedica Pharmaceuticals Ltd. and WOW subsequently changed its name to Zomedica Pharmaceuticals Corp. The shares of Zomedica Pharmaceuticals Corp. began trading under the new symbol “ZOM” on Monday May 2, 2016 on the TSX Venture Exchange. On June 21, 2016, the Company filed Articles of Amalgamation and vertically amalgamated with its wholly-owned subsidiary, Zomedica Pharmaceuticals Ltd.

Zomedica has one corporate subsidiary, ZoMedica Pharmaceuticals Inc., a Delaware company whose results and operations are included in these condensed unaudited interim consolidated financial statements. Zomedica Pharmaceuticals Corp. had no operations from May 14, 2015 to the qualifying transaction date on April 21, 2016. The January 1, 2016 to March 31, 2016 comparative period represent the results of the operations of the predecessor, Zomedica Pharmaceuticals Inc. The Company is a ~~biopharmaceutical~~veterinary health company ~~targeting health~~creating point-of-care diagnostics products for dogs and ~~wellness solutions for the companion pet through a ground-breaking approach~~cats, that focuses on the needs of the veterinarians themselves. ~~Zomedica's head office is located at 100 Phoenix Drive, Suite 190, Ann Arbor, MI 48108 and its registered office is located at Suite 1250, 639 – 5th Avenue S.W., Calgary, Alberta T2P 0M9.~~

~~Going concern~~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 ~~condensed~~measures include the implementation of travel bans, self-imposed quarantine periods and social distancing. The closure of businesses has caused material disruption to businesses resulting in an economic slowdown. Governments and central banks have responded with significant monetary and fiscal interventions designed to stabilize the financial markets.

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

2. Basis of preparation

The accompanying unaudited ~~interim~~ consolidated financial statements have been prepared ~~on a going concern basis, which contemplates that the Company will be able to realize its assets and discharge its liabilities~~ in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated financial statements. Such adjustments could be material.

2.	~~Basis of preparation~~

~~The accounting policies set out below have been applied consistently in the condensed unaudited interim consolidated financial statements.~~

~~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 Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

3.	~~Significant accounting policies~~

~~Use of estimates~~

~~The preparation of the condensed unaudited interim consolidated financial statements in conformity~~accordance with accounting principles generally accepted in the United States ~~of America~~ (“U.S. GAAP”) ~~requires~~for the presentation of interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the financial position, results of operations and cash flows for the periods presented. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for the three 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 fiscal year ended December 31, 2020. The Consolidated Balance Sheet as of December 31, 2020, was derived from audited financial statements.

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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)

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 ~~liabilities~~expenses. These estimates and ~~disclosure~~assumptions are based on our historical experience, the terms of ~~contingent~~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 ~~liabilities~~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 ~~date~~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 ~~condensed unaudited interim consolidated financial statements~~Company’s website are expensed as incurred. Expenditures related to the website application and infrastructure development are capitalized and amortized over the ~~reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.~~website’s estimated useful life.

Areas where significant judgment is involved in making estimates are: the fair values of financial assets and liabilities; the determination of fair value of stock-based compensation; the useful lives of property and equipment; and forecasting future cash flows for assessing the going concern assumption.

Revenue recognition

~~Basis of measurement~~

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

~~Functional and reporting currencies~~

~~The Company’s and subsidiary’s functional currency, as determined by management, is US dollars, which is also~~total consideration we expect to receive in exchange for the ~~Company’s reporting currency.~~transferred goods or services.

The ~~accounting policies set out below have been applied consistently~~Company allocates revenue to ~~all periods~~each performance obligation in proportion to the relative standalone selling prices and ~~companies presented in~~recognizes revenue when control of the ~~condensed unaudited interim consolidated financial statements.~~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.

~~Research and development~~

~~Research and development costs related to continued research and development programs~~The Company’s contracts with customers are ~~expensed as incurred in accordance with ASC topic 730.~~

~~Translation~~generally comprised of ~~foreign currencies~~

~~In respect of other transactions denominated in currencies other than~~purchase orders for the Company and its wholly owned operating subsidiaries’ functional currencies, the monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. Allsale of the ~~exchange gains~~point of care diagnostic instrument, consumable products, and warranties, or ~~losses resulting from these other transactions are recognized~~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 ~~condensed unaudited interim consolidated statements of operations and comprehensive loss.~~

~~Stock-based compensation~~

~~The Company measures the cost of equity-settled transactions by reference~~product to the ~~fair value of the equity instruments at the date at~~customer which ~~they are granted if the fair value~~is typically upon receipt of the goods ~~or services received~~ by the ~~Company cannot be reliably estimated.~~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.

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Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020

(Unaudited) (Stated in United States dollars)

~~(Stated~~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 ~~United States dollars)~~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)	Deposits include payments made to vendors in advance and are primarily associated with inventory, warranties, and research activity. As of September 30, 2021, and December 31, 2020, the Company classified $168,020 and $13,924 as a non-current asset, with the remainder classified as a current asset in the consolidated balance sheets.
(ii)	Other is comprised of deferred financing costs, subscription payments, utilities, travel costs, and software licensing. As of September 30, 2021, and December 31, 2020, the Company classified all amounts as a current asset in the consolidated balance sheets.

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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)

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 was $60,445 and $78,200, respectively and for the nine months ended September 30, 2021 and 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.

3.	~~Significant accounting policies (continued)~~
10

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~~Stock-based compensation (continued)~~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 lease with Wickfield Phoenix LLC. and entered a new lease. The new lease period was 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 ~~calculates stock-based compensation using~~received a refund of prepaid rent in the ~~fair value method, under which the fair~~amount of $1,002,113. The carrying value of the ~~options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period~~right of the option. 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.

use asset was $1,061,210 upon cancellation. 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 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 to purchase common shares of the Company during the period were not included in the computation of diluted EPS because the Company has incurredrecorded a loss ~~for~~on right-of-use asset of $59,097 during the three months ended March 31, ~~2018 as~~2020 in the ~~effect would be anti-dilutive.~~consolidated statements of comprehensive loss.

~~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 ~~follows ASC topic 220. This statement establishes standards for reporting and display~~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) income~~loss.

On February 1, 2021, the Company recorded a right-of-use asset and ~~its components. Comprehensive loss~~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 ~~net loss plus certain items that are~~for 41 months, commencing on September 15, 2021, and ending on January 31, 2025, with a monthly rent payment of recorded ~~directly~~a right-of-use asset and a corresponding lease liability in the amount of $4,580 for the first month and escalating to ~~shareholders' equity.~~$10,009 over the lease period. The Company ~~has no other comprehensive loss items.~~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 comprehensive loss.

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Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~

~~(Stated in United States dollars)~~

2020

3.	~~Significant accounting policies (continued)~~ (Unaudited) (Stated in United States dollars)

~~Future accounting pronouncements~~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

Additions	$	1,647,449		$	1,553,611
Payments		(198,385	)		(356,972	)
Interest		27,901			144,147
Total lease liabilities	$	1,476,965		$	1,340,786

Current portion of lease liabilities		407,278			252,788
Long term portion of lease liabilities		1,069,687			1,087,998
Total lease liabilities	$	1,476,965		$	1,340,786

~~In February 2016, the FASB issued new guidance, ASU No. 2016-02, Leases (Topic 842). The main difference between current U.S. GAAP and the new guidance is the recognition of~~Total remaining undiscounted lease liabilities ~~based on~~related to the ~~present value of remaining~~above lease ~~payments and corresponding lease assets for operating leases under current U.S. GAAP with limited exception. Additional qualitative and quantitative disclosures~~ are also required by the new guidance. Topic 842 is effective for annual reporting periods (including interim reporting periods) beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of evaluating the amendments to determine if they have a material impact on the Company’s financial position, results of operations, cash flows or disclosures.as follows:

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which will make eight targeted changes to how cash receipts and cash payments are presented and classified in the Statement of Cash Flows. ASU 2016-15 will be effective on May 1, 2018 and will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is in the process of evaluating the amendments to determine if they have a material impact on the Company’s financial position, results of operations, cash flows or disclosures.

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

4.	~~Critical accounting judgments and key sources~~Table of ~~estimation uncertainty~~Contents

The preparation of financial statements 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.

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

~~Going concern~~

These condensed unaudited interim consolidated financial statements have been prepared in accordance with U.S GAAP on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgment in determining assumptions for cash flow projections, such as anticipated financing, anticipated sales and future commitments to assess the Company’s ability to continue as a going concern. A critical judgment is that the Company continues to raise funds going forward and satisfy their obligations as they become due.

Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~

~~(Stated in United States dollars)~~

2020

4.(Unaudited) (Stated in United States dollars)

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

~~Useful lives of property and equipment~~8. Loan arrangements

As described in Note 3 above, 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 month period ended March 31, 2018 and March 31, 2017, the Company was not required to adjust the useful lives of any assets based on the factors described above.

~~Deferred income taxes~~

The calculation of deferred income taxes is based on assumptions which are subject to uncertainty as to timing and which tax rates are expected to apply when temporary differences reverse. Deferred tax recorded is also subject to uncertainty regarding the magnitude of non-capital losses available for carry forward and of the balances in various tax pools. By their nature, these estimates are subject to measurement uncertainty, and the effect on the financial statements from changes in such estimates in future period could be material. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets are reviewed at each balance sheet date and adjusted to the extent that it is no longer probable that the related tax benefit will be realized.

~~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, expected volatility and expected dividends.

5.	~~Prepaid expenses and deposits~~

The Company entered into a lease agreement with Wickfield Phoenix LLC effective on August 23, 2016. The Company prepaid the full outstanding balance of $801,973 on August 26, 2016 and recorded the prepaid rent due within a year as current. As at March 31, 2018, the Company has classified $155,220 as a current asset in the condensed unaudited interim consolidated balance sheet (December 31, 2017 - $155,220).

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

6.	~~Property and equipment~~

Computer
equipment

Furniture and
equipment

Laboratory
equipment

Leasehold
improvements
Total
Cost
Balance at December 31, 2016 61,598 7,364 243,529 25,672 338,163
Additions 89,557 68,694 2,200 11,285 171,736
Balance at December 31, 2017 151,155 76,058 245,729 36,957 509,899
Additions 9,048 4,171 - - 13,219
Balance at March 31, 2018 160,203 80,229 245,729 36,957 523,118
Accumulated depreciation
Balance at December 31, 2016 13,858 1,490 29,783 3,998 49,129
Depreciation 28,944 10,355 45,092 5,222 89,613
Balance at December 31, 2017 42,802 11,845 74,875 9,220 138,742
Depreciation 8,149 2,837 11,119 14,594 36,699
Balance at March 31, 2018 50,951 14,682 85,994 23,814 175,441

Net book value as at:
December 31, 2017
$ 108,353 $ 64,213 $ 170,854 $ 27,737 $ 371,157
March 31, 2018 $ 109,252 $ 65,547 $ 159,735 $ 13,143 $ 347,677

7.	~~Intangible assets~~

Computer
software

Trademarks
Total
Cost
Balance at December 31, 2016 5,143 16,236 21,379
Additions - - -
Balance at December 31, 2017 5,143 16,236 21,379
Additions -- -
Balance at March 31, 2018 5,143 16,236 21,379
Accumulated amortization
Balance at December 31, 2016 2,428 1,013 3,441
Amortization 1,715 1,082 2,797
Balance at December 31, 2017 4,143 2,095 6,238
Amortization 419 267 686
Balance at March 31, 2018 4,562 2,362 6,924

Net book value as at:
December 31, 2017
$ 1,000 $ 14,141 $ 15,141
March 31, 2018 $ 581 $ 13,874 $ 14,455

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

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 ~~March 31, 2018,~~September 30, 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.

~~Capital stock~~

In April of 2020, the Company received $527,360 under the program. The receipt 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 accrued interest.

9. Preferred shares

The Company is authorized to issue ~~an unlimited number~~up to 20 shares of ~~common stock,~~its Series 1 Preferred Shares, all without par ~~value.~~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 Returns (“Net Sales Returns” is defined as annual payments equal to 9 percent of net sales) until such time as the holders have received total Net Sales 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 Returns paid (the “Redemption Amount”).

Issued and outstanding common stock:

Number of
common
stock

Capital
stock

Balance at December 31, 2016 83,964,569 10,189,973
Stock issuance for services 43,613 45,000
Stock issued due to exercise of options 410,000 25,523
Share issuance costs - (8,864 )
Stock to be issued - 250,000
Balance at March 31, 2017 84,418,182 $ 10,501,632

Balance at December 31, 2017 90,225,869 $ 18,244,659
Stock issued due to exercise of options (Note 10) 1,627,996 1,759,224
Balance at March 31, 2018 91,853,865 $ 20,003,883

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 Returns paid on the Series 1 Preferred Shares.

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Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020

(Unaudited) (Stated in United States dollars)

~~(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 our company in which 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 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.

Issued and outstanding preferred 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 exchanged the issued and outstanding shares of its Series 1 Preferred Shares on March 7, 2021, for 24,719,101 of common shares 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.

10. Common shares

~~10.~~(i)

~~Stock-based compensation~~

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 5.5 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 (“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, 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

During the three months ended March 31, 2018, an aggregate of 1,627,996 options were exercised. During the three months ended March 31, 2017, the Company issued 535,000 stock options, each option entitling the holder to purchase one common share of the Company. During the three months ended March 31, 2017, 10,000 options were exercised on February 15, 2017, and 400,000 options were exercised on February 21, 2017.

During the year ended December 31, 2017, the Company issued 1,815,000 stock options, each option entitling the holder to purchase one common share of the Company. During the year ended December 31, 2017, an aggregate of 1,700,000 options were exercised.

The continuity of stock options are as follows: Number of
Weighted Avg
Exercise Price

Options (CDN$)
Balance at December 31, 2016 7,975,000 $ 0.84
Stock options exercised on February 21, 2017 (10,000 ) $ 0.25
Stock options exercised on February 21, 2017 (400,000 ) $ 0.05
Options issued on February 24, 2017 535,000 $ 1.50
Stock options exercised on May 8, 2017 (7,060 ) $ 1.50
Stock options cancelled on May 17, 2017 (10,000 ) $ 1.50
Stock options exercised on May 23, 2017 (80,000 ) $ 0.25
Stock options exercised on July 6, 2017 (200,000 ) $ 0.05
Stock options exercised on July 17, 2017 (220,000 ) $ 0.25
Options issued on August 14, 2017 1,280,000 $ 2.75
Stock options exercised on August 29, 2017 (7,940 ) $ 1.50
Stock options exercised on December 19, 2017 (25,000 ) $ 0.25
Stock options exercised on December 19, 2017 (750,000 ) $ 1.50
Balance at December 31, 2017 8,080,000 $ 1.21
Stock options exercised on January 8, 2018 (124,000 ) $ 0.25
Stock options exercised on January 26, 2018 (100,000 ) $ 0.25
Stock options exercised on March 8, 2018 (50,000 ) $ 0.25
Stock options exercised on March 13, 2018 (176,000 ) $ 0.25
Stock options exercised on March 22, 2018 (50,000 ) $ 0.25
Stock options exercised on March 26, 2018 (240,000 ) $ 0.25
Stock options exercised on March 28, 2018 (325,000 ) $ 0.25
Stock options exercised on March 29, 2018 (562,996 ) $ 2.75
Balance at March 31, 2018 6,452,004 $ 1.23

Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020

(Unaudited) (Stated in United States dollars)

~~(Stated in United States dollars)~~10. Common shares (continued)

(ii)	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 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.

(iii)	On May 29, 2020 the Company completed a public offering of its common shares or common share equivalents (“Series C pre-funded warrants”), and warrants (“Series C Warrants”) in a fixed combination of one common share or Series C 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 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 and related Series C warrant. Each Series C 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

(Unaudited) (Stated in United States dollars)

10. Common shares (continued)

(iv)	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.

(v)	All Series C 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)	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.

	The Company raised $199,525,000 in gross proceeds as part of the offering. The Company recorded $199,525,000 as the value of common shares under common shares. The direct cash costs related to the issuance of 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.

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)

11. Stock-based compensation

During the three and nine months ended September 30, 2021, the Company issued stock options to purchase an aggregate of 2,900,000 and 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, 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 7,571,000 common shares. The options vest over a period of four years and have an expiration period of five years. During the three and nine months ended September 30, 2020, no stock options were exercised.

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

The continuity of stock options are as follows:

	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

~~10.~~

~~Stock-based compensation (continued)~~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)

11. Stock-based compensation (continued)

As ~~at March 31, 2018,~~of September 30, 2021, details of the issued and outstanding stock options ~~are~~were as follows:

Grant date

Exercise
price
(CDN$)

Number of
options issued
and outstanding

Number of
vested options
outstanding

Weighted Avg
Remaining Life
(years)

March 28, 2016 $ 0.25 2,100,000 2,100,000 0.06
December 21, 2016 $ 1.50 3,100,000 3,100,000 0.73
February 24, 2017 $ 1.50 535,000 535,000 0.90
August 14, 2017 (a) $ 2.75 642,004 642,004 1.37
August 14, 2017 (b) $ 2.75 75,000 71,978 0.37

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 ~~March 31, 2018~~September 30, 2021 was estimated using the Black-Scholes option pricing model to determine the fair value of options granted using the following assumptions:

March 28, 2016 April 21, 2016 December 21, 2016
Volatility 63% 63% 58%
Risk-free interest rate 0.56% 1.12% 0.81%
Expected life (in years) 2.06 1 2
Dividend yield 0% 0% 0%
Common share price CDN $0.20 CDN $0.20 CDN $1.45
Strike price CDN $0.25 CDN $0.25 CDN $1.50
Forfeiture rate nil nil nil

Table of Contents

February 24, 2017 August 14, 2017 (a) August 14, 2017 (b)
Volatility 59% 59% 83%
Risk-free interest rate 0.81% 1.22% 1.22%
Expected life (in years) 2 2 1
Dividend yield 0% 0% 0%
Common share price CDN $1.35 CDN $2.40 CDN $2.40
Strike price CDN $1.50 CDN $2.75 CDN $2.75
Forfeiture rate nil nil nil

The Company recorded $5,691 of stock-based compensation for the three months ended March 31, 2018. The Company recorded the cash receipt of $1,407,786 as capital stock and reclassified $351,438 of stock- based compensation to capital stock due to the exercise of 1,627,996 options disclosed above.

Volatility is determined based on volatilities of comparable companies when the Company does not have its own sufficient trading history. 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 Canadian 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 as the Company is not expected to pay dividends in the foreseeable future. The Company has estimated its stock option forfeitures to be Nil for the three months ended March 31, 2018 (three months ended March 31, 2017 - $Nil).

Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~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

~~(Stated in United States dollars)~~

12. Warrants

In connection with the February 14, 2020 registered direct offering, the Company issued 20,833,334 five and one half-year Series A warrants to purchase one share of common stock at an exercise price of $.20. The Company also issued 1,041,667 warrants to purchase a share of common stock at an exercise price of $0.15 per 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 common 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 December 31, 2020, all of the Series C Pre-Funded Warrants have been exercised.

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

~~11.~~

~~Commitments and Contingencies~~Table of Contents

Zomedica Corp.

~~Total future annual lease payments for~~Notes to the ~~premises are~~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, 2021, details of the outstanding warrants were as follows:

2018 21,740
Total $ 21,740

Original Issue date	Exercise Price		Warrants Outstanding		Weighted Average Remaining Life

February 14, 2020		0.20		-		-
February 14, 2020		0.15		197,917		3.37
April 9, 2020		0.15		363,501		3.52
May 29, 2020		0.15		276,500		0.66
July 7, 2020		0.16		231,000		0.77
Balance at September 30, 2021				1,068,918

Cumulative warrant exercises as of the nine months ended September 30, 2021 were 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

13. Commitments and 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:

~~12.~~	~~Financial instruments~~ ●	1^st payment: $3,500,000 in cash payment upon the achievement of future development milestones

	●	2^nd payment: $3,500,000 in equity, determined by dividing the amount due by the 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, 2021, none of the future development milestones related to the above agreement 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.

~~(a)~~20

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 September 20, 2021, Heska Corporation (“Heska”), Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and our company (collectively with Qorvo, the “Defendants”) entered into a settlement agreement pursuant to which the litigation previously commenced by Heska against the Defendants 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 the settlement agreement, the parties also provided mutual releases of 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 settlement.

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)

14. 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; 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 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.

~~(i) The Company calculates expected volatility based on historical volatility of the Company’s peer group that is publicly traded for options.~~

~~An increase/decrease in the volatility would have resulted in an increase/decrease in the fair value of the options.~~

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.

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

~~12.~~

~~Financial instruments (continued)~~

~~(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 related parties due to the short-term nature of these balances.

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~~

~~(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 ~~at March 31, 2018~~of September 30, 2021 and December 31, ~~2017:~~2020:

March 31, 2018
Less than
3 months 3 to 6
months 6 to 9
months 9 months
1 year Greater than
1 year Total
$ $ $ $ $ $
Third parties
Accounts payable and accrued liabilities 1,266,324 - - - - 1,266,324
1,266,324 - - - - 1,266,324

December 31, 2017
Less than
3 months 3 to 6 months 6 to 9 months 9 months
1 year Greater than 1 year Total
$ $ $ $ $ $
Third parties
Accounts payable and accrued liabilities 828,737 - - - - 828,737
828,737 - - - - 828,737

									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

~~Zomedica Pharmaceuticals Corp.~~

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

~~For the three months ended March 31, 2018 and 2017~~

~~(Stated in United States dollars)~~

~~13.~~

~~Segmented information~~

The ~~Company's~~Company’s operations comprise a single reportable segment engaged in the research, development targeting health and wellness solutions for the companion ~~pet.~~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 segmented amounts. In addition, all of the ~~Company's~~Company’s long-lived assets are in the United States of America (“US”).

March 31,
2018 December 31,
2017
Total assets $ $
Canada 3,189,706 3,519,918
US 1,705,852 1,695,904

Total property and equipment
US 347,677 371,157

	September 30,		December 31,
	2021		2020
Canada	$	172,945,051	$	53,160,701
US		104,557,100		12,983,333
Total assest	$	277,502,151	$	66,144,034

Total US property and equipment	$	706,266	$	583,007
Total US right-of-use asset		1,419,790		1,318,716
	$	2,126,056	$	1,901,723

~~14.~~

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

For the three months ended March 31,
2018
Research and Development Professional Fees General and Administrative

Salaries, bonus and benefits $ 152,372 $ - $ 643,288
Contracted expenditures 269,523 - -
Marketing and investor relations - - 81,193
Travel and accommodation 1,789 - 121,404
Insurance 15,960 - 80,460
License fees 25,000 - -
Office 6,517 - 76,947
Consultants 37,116 371,947 -
Regulatory 18,788 - 103,558
Rent 7,826 - 43,019
Supplies 65,450 - 10,302
Total $ 600,341 $ 371,947 $ 1,160,171

For the three months ended March 31,
2017
Research and Development Professional Fees General and Administrative

Salaries, bonus and benefits $ 170,912 $ - $ 556,863
Contracted expenditures 247,845 - 5,610
Marketing and investor relations - - 40,097
Travel and accommodation 1,967 - 78,342
Insurance 17,467 - 41,520
Office 8,100 - 30,268
Consultants 92,444 381,536 -
Regulatory 25,775 - 14,454
Rent 7,224 - 43,621
Supplies 44,715 - 16,250
Total $ 616,449 $ 381,536 $ 827,025

Zomedica ~~Pharmaceuticals~~ Corp.

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

For the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~

~~(Stated in United States dollars)~~

2020

~~15.~~Unaudited) (Stated in United States dollars)

~~Capital risk management~~

The capital of the Company includes equity, which is comprised of issued common capital stock, 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

~~16.~~

~~Loss per share~~

For the three months ended
March 31, 2017

For the three months ended
March 31, 2018

Numerator
Net loss for the period $ 2,171,328 $1,832,736
Denominator
Weighted average shares - basic 90,517,702 84,418,182
Stock options - -
Denominator for diluted loss per share 90,517,702 84,418,182

Loss per share - basic and diluted $ (0.02 ) $ (0.02 )

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

Numerator
Net loss for the period	$	(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		978,494,076			550,541,878			948,664,410			291,314,002
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted loss per share		978,494,076			550,541,878			948,664,410			291,314,002

Loss per share - basic and diluted	$	(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.~~

~~17.~~

~~Related party transactions and key management compensation~~

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:anti‑dilutive.

For the three months
ended March 31, 2018 For the three months
ended March 31, 2017
Salaries and benefits, including bonuses $ 344,891 $ 322,786
Stock-based compensation - 151,020
Total $ 344,891 $ 473,806

17. Subsequent Events

~~18.~~

~~Subsequent events~~

~~Subsequent to March 31, 2018, 154,000 stock options were exercised for cash proceeds~~On October 1, 2021, Zomedica Inc., the wholly-owned subsidiary of ~~$24,005. On May 10, 2018, the Company~~Zomedica Corp. entered into a ~~development, commercialization~~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 ~~exclusive distribution agreement~~indirect wholly-owned subsidiaries include Georgia, United States-based Pulse Veterinary Technologies, LLC, which, together with ~~Seraph Biosciences, Inc. Under~~its consolidated subsidiaries, is a leading provider of non-invasive shock wave therapy treatment devices to the ~~terms~~veterinary industry. The purchase price for the Acquisition was $71.9 million in cash, which was subject to adjustments based on the amount of ~~this agreement,~~ the ~~Company will have exclusive global veterinary industry rights to develop~~Target’s cash and ~~market a novel pathogen detection system in~~net working capital at the ~~form~~closing of ~~an innovative point-of-care diagnostic instrument. On May 15, 2018,~~ the Company announced it commenced a private offering of its common shares offering an aggregate of up to 4,651,162 common shares at a price of $2.15 per share (for aggregate gross proceeds of up to $10,000,000 in the United States to accredited investors). The offering is also being made in Canada in reliance upon prospectus and registration exemptions in accordance with applicable Canadian securities laws. As of May 15, 2018, the Company had sold an aggregate of 255,815 common shares for gross proceeds of $550,000 in the offering. The Company expects to close the offering in one or more tranches on or before~~June 28, 2018.~~acquisition.

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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

~~Item 2.~~

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

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 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. Forward-looking~~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 ~~include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions~~under “Risk Factors,” “Management’s Discussion and ~~future performance,~~Analysis of Financial Condition and ~~involve known~~Results of Operations” and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by suchelsewhere in this Report contain forward-looking statements. ~~All statements other than statements of historical fact are statements that could be forward-looking statements. You~~In some cases, you can identify ~~these~~ 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:

the success, cost and timing of our research and development activities, validation studies and pivotal trials, including with respect to our lead product candidates, ZM-020, ZM-017, ZM-012, ZM-006, ZM-007 and ZM-011;

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

	·	our ability to successfully integrate our recent acquisition of PulseVet (as defined below) and the 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 thereof;

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

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

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

	·	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 and other important geographical markets;

	·	the loss of key personnel;

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

	·	the impact of the novel coronavirus pandemic on our operations, including the development, manufacturing, and selling of our TRUFORMA^®platform and related 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.

~~our ability to obtain regulatory approval from the FDA-CVM and/or the USDA-CVB for our pharmaceutical and diagnostic product candidates, as applicable;~~

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

~~the ability of our CROs to appropriately conduct our safety studies and certain development activities;~~

~~the ability of our CMOs to manufacture and supply our product candidates in accordance with cGMP and our clinical needs;~~

~~our plans to develop and commercialize any product candidates for which we receive regulatory approval;~~

~~our ability to develop and commercialize product candidates that can compete effectively against the product candidates developed and commercialized by our competitors;~~

~~the size and growth of the veterinary diagnostics and therapeutics markets;~~

~~our ability to obtain and maintain intellectual property protection for our current and future product candidates;~~

~~regulatory developments in the United States;~~

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~~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; and~~

~~our status as a PFIC for U.S. federal income tax purposes.~~

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.~~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.~~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.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATION~~

Overview

We are a ~~development stage~~ veterinary ~~diagnostic and pharmaceutical~~health company creating products for companion animals ~~(canine, feline, and equine)~~ by focusing on the unmet needs of clinical veterinarians. We ~~believe~~expect that ~~we have identified and are developing~~our product portfolio will include innovative diagnostics and ~~therapeutics~~medical devices that ~~have~~emphasize patient health and practice health. With a team that includes clinical veterinary professionals, our goal is to provide veterinarians the ~~potential~~opportunity to ~~significantly improve~~increase productivity and grow revenue while better serving the ~~diagnosis~~animals in their care.

Our strategic focus has been on the commercialization of our TRUFORMA^® diagnostic biosensor platform and ~~treatment of various diseases affecting companion animals. We believe that there are significant unmet medical needs for pets,~~the final development and ~~that the pet diagnostic and therapeutic segments~~commercialization of the ~~animal health industry are likely to grow substantially as new diagnostic tools and treatments are identified, developed, and marketed specifically for companion animals.~~

~~Together with our strategic partners, we are developing a Raman spectroscopy-based point-of-care diagnostic platform for the detection of pathogens, liquid biopsy~~first three assays for the detection of ~~cancer~~adrenal and related consumables. The regulatory pathway to obtain pre-market regulatory approval of companion animal diagnostics is significantly shorter than for similar diagnostic products intended for human use. In certain cases, pre-market regulatory approval may be unnecessary, dependingthyroid disorders in cats and dogs. We also have continued our efforts on the ~~intended use~~development of the ~~diagnostic.~~final two assays and will begin commercialization as soon as they are available. The 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 market acceptance of TRUFORMA^® has been adversely impacted by delays in the 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.

We are also ~~have identified~~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 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 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 ~~number~~leading provider of ~~drugs that have proven safe~~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 ~~effective in humans that we are developing for use~~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 ~~development approach enables us~~platform will enable the identification of biological and biochemical signatures in complex biological samples and has the potential to ~~reduce~~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 ~~risks associated with obtaining~~need for extensive sample prep or the use of reagents. The diagnostic platform has automated analysis and does not require specialized staff training. We believe that this diagnostic platform does not require pre-market regulatory approval for ~~unproven product candidates and shortens~~use with companion animals in the development timeline necessary to bring our product candidates to market. We have four drug product candidates in early development and have identified several other potential product candidates for further investigation.United States.

~~In addition, we are investigating~~We have performed initial development work on a circulating tumor cell (CTC) “liquid biopsy” product for use in a reference lab setting as a canine cancer diagnostic. This 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 ~~alternative drug delivery technologies~~an assay that targets hard-to-diagnose canine cancers, such as hemangiosarcoma and osteosarcoma.

Consistent with our focus on the development of point-of-care diagnostic products, we intend to seek one or more partners for ~~our drug product candidates. Many~~the further development and commercialization of the human-approved therapeutics used in companion animals are only available in pill or injectable form. However, it can be difficult to give a companion animal an injection or to assure that the animal has swallowed a pill. As a result, we believe that compliance with treatment regimens is a significant problem for veterinarians and pet owners. The challenges associated with medicating pets are unique, and we believe that developing product candidates that can be easily taken by the pet or easily administered by pet owners will help increase compliance.liquid biopsy 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 ~~$2,171,328~~approximately $6.3 million and ~~$1,832,736~~$15.1 million for the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~March 31, 2017, respectively,~~approximately $5.0 million and ~~$8,065,072 and $5,740,492~~$12.7 million for the ~~year~~three and nine months ended ~~December 31, 2017 and December 31, 2016, respectively.~~September 30, 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 ~~March 31, 2018,~~September 30, 2021, we had an accumulated deficit of ~~$17,797,428~~approximately $116.1 million and cash and cash equivalents of ~~$3,134,920.~~approximately $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 significantly 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 them if they do not require U.S. Food~~ and ~~Drug Administration’s Center for Veterinary Medicine, or FDA-CVM, pre-market approval,~~sales and ~~seek regulatory approvals for our product candidates where required from the FDA-CVM or the United States Department of Agriculture Center for Veterinary Biologics, or the USDA-CVB.~~marketing activities.

For further information on the regulatory, business and product pipeline, please see the “Business” section of ~~the~~our Annual Report on Form 10-K. For further information on the risk ~~factors,~~factorswe face, please see the “Risk Factors” section of ~~the~~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 and regulatory approval 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 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, ~~stock-based compensation expense,~~ fees paid to consultants, outside service providers, professional services, travel costs and materials used in ~~clinical trials~~testing and research and development.

We have a point-of-care diagnostic platform, ZM-020, for the detection of pathogens in urine and fecal samples, and a non-invasive diagnostic assay or blood test, ZM-017, that we are developing as an aid for veterinarians in diagnosing cancer in canines.

We have four drug product candidates in development. Our lead drug product candidate is ZM-012, a novel tablet formulation of metronidazole targeting the treatment of acute diarrhea in dogs. Our second drug product candidate is ZM-007, an oral suspension formulation of metronidazole and a complementary formulation to ZM-012, targeting the treatment of acute diarrhea in small breeds and puppies under nine pounds or four kilograms. Our third drug product candidate is ZM-006, a transdermal gel formulation of methimazole targeting hyperthyroidism in cats. Our fourth drug product candidate is ZM-011, a transdermal gel formulation of fluoxetine, most commonly known as Prozac®, its human pharmaceutical brand name.

We typically use our employee and infrastructure resources across multiple development programs. We track outsourced development costs by product candidate. We allocate personnel and other internal costs related to development of ZM-020 and ZM-017.

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, ~~2017,~~2020, we had net operating loss carryforwards for U.S. federal and state income tax purposes of ~~$5,008,180~~approximately $19.6 million and non-capital loss carryforwards for Canada of approximately ~~$6,526,850 respectively,~~$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, ~~2017,~~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 financial statements appearing elsewhere in this document, 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, we are in the process of evaluating the benefits of relying on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if as an “emerging growth company” we ~~choose to rely on such exemptions, we may~~are not be 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~~projections allow management to reasonably predict the ~~functional currency; the fair values of financial assets and liabilities; the determination of fair~~net realizable value of ~~stock-based compensation;~~current inventory based on expected demand. A decrease in the estimated sales forecasts would indicate the need to write-down excess and ~~forecasting future cash flows for assessing~~obsolete inventory. Management continuously monitors the ~~going concern assumption.~~market activity and assesses inventory levels.

Research and Development ~~Costs~~

Research and development expenses comprise costs incurred in performing research and development activities, including salaries and benefits, safety and efficacy studies and 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 translated at the period end exchange rates. Revenue and expenses are ~~translated~~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.~~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 expected to vest. We estimate forfeitures at the time of grant and ~~revised,~~revise these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. ~~Volatility is determined based on volatilities of comparable companies as Company does not have its own trading history.~~ 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 ~~Canadian~~U.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~~Revenue

Revenue for the three and nine months ended September 30, 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 ~~31, 2018 compared to~~15, 2021 and accordingly have had only limited sales activity in the first three ~~months ended March 31, 2017~~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 ~~31, 2018 and March 31, 2017 are~~15, 2021. We expect that cost of revenue will increase as ~~follows:~~we sell additional products in subsequent periods, inclusive of costs associated with PulseVet operations.

Three months ended
March 31, 2018 Three months ended
March 31, 2017 Change
$ $ $ %
Expenses
Research and development 600,341 616,449 (16,108 ) -3 %
General and administrative 1,160,171 827,025 333,146 40 %
Professional fees 371,947 381,536 (9,589 ) -3 %
Amortization 686 699 (13 ) -2 %
Depreciation 36,699 20,308 16,391 81 %
Loss from operations 2,169,844 1,846,017 323,827 18 %

Gain on settlement of liabilities - (5,000 ) 5,000 N/A
Foreign exchange loss (gain) 1,484 (8,281 ) 9,765 -118 %
Loss before income taxes 2,171,328 1,832,736 338,592 18 %

Income tax expense - - - N/A

Net loss and comprehensive loss 2,171,328 1,832,736 338,592 18 %

~~Revenue~~

~~We did not generate any revenue during the three months ended March 31, 2018 and March 31, 2017.~~

Research and Development

Research and development expense for the three and nine months ended ~~March 31, 2018~~September 30, 2021 was ~~$600,341~~approximately $0.3 million and approximately $1.0 million, respectively, compared to ~~$616,449~~approximately $2.7 million and $7.2 million for the three and nine months ended ~~March 31, 2017,~~September 30, 2020, respectively, representing a decrease of ~~$16,108~~approximately $2.4 million, or ~~3%.~~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 in both periods was ~~primarily due to~~ a result of an overall reduction in ~~consulting expenses~~research and development costs related to TRUFORMA^® as we ~~increased our internal R&D activities with the hiring of additional fulltime employees as part of our~~completed development of ~~ZM-017. However, there was also a reduction in salaries, bonuses~~the instrument and ~~benefits as we did not have a Chief Medical Officer in~~three of the ~~three months ended March 31, 2018. Significant expenditures include contracted outsourced activities of $269,523, salaries of $152,372, supplies of $65,450, consultant fees of $37,116,~~first five assays and ~~licensing fees of $25,000. These relate~~began transitioning to an increased level of lab activities, including in vitro and in vivo work, to support the further development of our product candidates ZM-017, ZM-012, ZM-006, ZM-007 and ZM-011. We expect that our R&D expenditures in 2018 will be significantly higher than in 2017, due to the initiation of pilot and pivotal studies related to our four investigational new animal drug applications, work related to verification and validation of ZM-020 and ZM-017, and additional veterinary pharmaceutical candidates, diagnostic developments and technologies.commercialization activities.

Selling, General and Administrative

~~General~~Selling, general and administrative expense for the three months ended ~~March 31, 2018~~September 30, 2021 was ~~$1,160,171,~~approximately $6.1 million, compared to ~~$827,025~~approximately $2.3 million for the three months ended ~~March 31, 2017,~~September 30, 2020, an increase of ~~$333,146~~approximately $3.8 million, or ~~40%~~166%. The increase primarily was ~~primarily~~ due to significant expenses related to the addition of personnel, accounting for salaries of $643,288. Other expenses included travel and accommodation of $121,404, regulatory expense of $103,558, marketing and investor relations costs of $81,193, insurance costs of $80,460, office expenses of $76,947, and rent of $43,019. We expect that general and administrative expense willan increase in ~~2018 and future periods as we increase our level of activity.~~

~~Professional Fees~~

~~Professional fees~~share-based compensation expense, which was approximately $1.5 million for the three months ended ~~March 31, 2018 were $371,947~~September 30, 2021, compared to ~~$381,536~~approximately $0.2 million for the ~~three~~comparable period in 2020. Other significant increases include professional fees of approximately $2.1 million relating to the PulseVet acquisition and increased fees associated with SEC compliance requirements, and salaries for administrative and sales personnel of approximately $0.4 million.

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Selling, general and administrative expense for the nine months ended ~~March 31, 2017, a decrease~~September 30, 2021 was approximately $14.6 million, compared to approximately $5.4 million for the nine months ended September 30, 2020, an increase of ~~$9,589~~approximately $9.2 million, or 3%169%. The ~~decrease~~increase primarily was ~~primarily~~ due to ~~completion~~an increase in share-based compensation expense, which was approximately $4.5 million for the nine months ended September 30, 2021, compared to approximately $0.5 million for the comparable period in 2020 as a result of stock option grants made during the ~~listing~~first quarter of 2021. Other significant increases include professional fees of approximately $2.9 million, related primarily to the PulseVet acquisition and the exchange of our ~~common shares on the NYSE American on November 21, 2017. Professional~~Series 1 preferred stock, increased fees associated with SEC compliance requirements, salaries of approximately $1.1 million, regulatory fees incurred for the ~~2018 period consisted primarily~~annual shareholders meeting of ~~consulting fees incurred~~approximately $0.8 million largely as a result of administrative costs related to increases in ~~connection with preparation~~the shareholder base, marketing, travel and ~~completion~~office expense of ~~additional SEC filings~~approximately $0.3 million, and ~~updates, and costs incurred in being a public company across two jurisdictions, Canada and U.S.~~contracted expenditures of approximately $0.1 million.

Net Loss

Our net loss for the three months ended ~~March 31, 2018~~September 30, 2021 was ~~$2,171,328,~~approximately $6.3 million, or ~~$0.02~~$0.01 per share, compared ~~with~~to a net loss of ~~$1,832,736,~~approximately $5.0 million, or ~~$0.02~~$0.01 per share, for the three months ended ~~March 31, 2017,~~September 30, 2020, an increase in losses of ~~$338,592~~approximately $1.3 million, or 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 as we have sufficient revenue to offset our operating expenses.

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 ~~from our product candidates~~ to offset our operating expenses.

Cash Flows

~~Three~~Nine months ended ~~March 31, 2018~~September 30, 2021 compared to ~~three~~nine months ended ~~March 31, 2017~~September 30, 2020

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

Three months ended Three months ended
March 31, 2018 March 31, 2017 Change
$ $ $ %
Cash flows used in operating activities (1,707,794 ) (1,553,802 ) (153,992 ) 10 %
Cash flows provided by financing activities 1,407,786 251,559 1,156,227 460 %
Cash flows used in investing activities (13,219 ) (157,402 ) 144,183 -92 %
Increase (decrease) in cash (313,227 ) (1,459,645 ) 1,146,418 -79 %
Cash and cash equivalents, beginning of period 3,448,147 3,226,680 221,467 7 %
Cash and cash equivalents, end of period 3,134,920 1,767,035 1,367,885 77 %

	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~~nine months ended ~~March 31, 2018~~September 30, 2021 was ~~$1,707,794,~~approximately $9.4 million, compared to ~~$1,553,802~~approximately $15.6 million for the ~~three~~nine months ended ~~March 31, 2017, an increase~~September 30, 2020, a decrease of ~~$153,992,~~approximately $4.2 million, or ~~10%~~40%. The ~~increase resulted primarily from our~~reduction in net loss of $2,171,328 for the three months ended March 31, 2018, compared to our net loss of $1,832,736 for the three months ended March 31, 2017. The largest uses of cash stemmed from an increase in salaries, bonus and benefits as we had 21 employees at March 31, 2018, compared to 16 employees at March 31, 2017. Other significant increases in uses of cash include regulatory and insurance expenses related to our listing on the NYSE American, and increased travel and accommodation expenses related to business development and pre-marketing activities.

~~Net~~ cash used in operating activities ~~for the three months ended March 31, 2017 was $1,553,802, which~~ resulted primarily from ~~our net~~a $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 ~~$1,832,736. The largest uses~~property of ~~cash~~$0.2 million, and an increase in accounts payable in the 2021 period of approximately $3.2 million. These amounts were ~~for employee salaries, bonus~~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 ~~benefits, professional fees and consulting expenses related to the preparation~~depreciation of ~~our initial U.S. registration statement, and work on our application to list our common shares on the NYSE American.~~approximately $0.3 million.

~~Financing Activities~~

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Net cash provided by financing activities for the three months ended March 31, 2018 was $1,407,786, compared to net cash provided by financing activities of $251,559 for the three months ended March 31, 2017, an increase of $1,156,227, or 460%. The increase resulted from the proceeds from the exercise of stock options for $1,407,786.

Net cash provided by financing activities for the three months ended March 31, 2017 was $251,559, which relates to the sale of $250,000 of our common shares, which was part of the private placement that closed in April 2017, and proceeds from the exercise of stock options for $17,149, which was partially offset by repayment on a shareholder loan of $6,726 and stock issuance costs of $8,864.

Investing Activities

Net cash used in investing activities for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 was ~~$13,219,~~approximately $0.3 million, compared to ~~$157,402~~net cash provided of approximately $1.0 million for the ~~three~~nine months ended ~~March 31, 2017, a decrease~~September 30, 2020, an increase in net cash used of ~~$144,183,~~approximately $1.3 million, or ~~92%~~134%. The ~~decrease resulted primarily from the completion of build-out of additional office space~~increase in ~~Ann Arbor.~~

~~Net~~net cash used in investing activities ~~for the three months ended March 31, 2017 was $157,402, which primarily~~ resulted from ~~leasehold improvements~~the receipt of cash from the modification of our lease in the first half of 2020, compared to investments of intangible and ~~the purchase of furniture~~other property and equipment ~~for our additional office space~~ in ~~Ann Arbor.~~the current period.

Financing Activities

Net cash from financing activities for the nine months ended September 30, 2021 was approximately $219.1 million, compared to approximately $64.1 million for the nine months ended September 30, 2020, an increase of approximately $155.1 million, or 242%. The increase resulted primarily from the sale of our equity securities in 2021 for total gross proceeds of approximately $199.5 million, cash received of approximately $32.1 million from warrant exercises, and cash received of approximately $1.4 million from stock option exercises, offset by stock issuance costs of approximately $14.3 million.

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 ~~March 31, 2018,~~September 30, 2021, we had an accumulated deficit of ~~$17,797,428~~.approximately $116.1 million. We have funded our working capital requirements primarily through the sale of our ~~common shares~~equity and equity-related securities and the exercise of stock ~~options. At March 31, 2018,~~options and warrants.

As of September 30, 2021, we had cash and cash equivalents of ~~$3,134,920.~~

~~Working~~approximately $271.4 million, inventory of approximately $1.4 million, prepaid expenses and deposits of approximately $1.6 million, accounts receivable of $6,938 and other receivables of approximately $.3 million. As of September 30, 2021, current assets amounted to approximately $274.8 million and current liabilities were approximately $4.9 million, resulting in working capital (defined as current assets minus current liabilities) of approximately $269.9 million.

Subsequent to September 30, 2021, warrants to purchase 156,500 common shares were exercised, resulting in additional cash proceeds of $23,475.

On October 1, 2021 we completed the acquisition of 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 ~~$2,748,816 as at March 31, 2018. This was primarily due~~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 ~~of $3,134,920 and prepaid expenses and deposits of $810,839, partially offset by accounts payables and accrued liabilities of $1,266,324.~~were approximately $202 million.

On October 17, 2017, we entered into a five-year $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 ~~borrowing~~borrowings per month under the Equidebt Facility, each of which must be for a minimum of $250,000. ~~The Equidebt Facility is unsecured; however Gerald A. Solensky Jr., our Chairman of the Board, President and Chief Executive Officer, has personally guaranteed our obligations~~No amounts were outstanding under the Equidebt ~~Facility.~~Facility at September 30, 2021.

~~On May 15, 2018,~~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.

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 announced it commenced a private offering of its common shares offering an aggregate of up to 4,651,162 common shares at a price of $2.15 per share (for aggregate gross proceeds of up to $10,000,000 inversus the ~~United States to accredited investors). The offering~~U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

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Liquidity risk is ~~also being made in Canada in reliance upon prospectus and registration exemptions in accordance with applicable Canadian securities laws. As of May 15, 2018,~~the risk that the Company ~~had sold an aggregate of 255,815 common shares for gross proceeds of $550,000 in~~will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the ~~offering. The~~ Company ~~expects to close the offering in one or more tranches on or before June 28, 2018.~~closely monitors its forecasted cash requirements with expected cash drawdown.

We believe that our existing cash ~~and available borrowings under the Equidebt Facility~~resources will be sufficient to fund our operations through the next twelve months. Our ability to continue as a going concern is ultimately dependent upon our ability to achieve sustainable positive cash flow from operations. However, we do not expect to generate revenue from the sale of our product candidates for the foreseeable future. To the extent that we do not generate sufficient cash flow from our operations, we intend to finance ourexpected working capital ~~requirements~~needs at least through equity and/or debt financings, development agreements or marketing license agreements, the collection of revenues resulting from future commercialization activities and/or new strategic partnership agreements. There can be no assurance that we will be able to obtain any such capital on terms or in amounts sufficient to meet our needs or at all. The availability of equity or debt financing will be affected by, among other things, the results of our research and development activities, our ability to obtain regulatory approvals, market acceptance of any products for which we receive marketing approval, conditions in the capital markets generally and in the veterinary products industry, strategic alliance agreements and other relevant commercial considerations.

December 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.

Based on the closing price of our common shares on March 31, 2018, the market price of our common shares exceeded the exercise price of our outstanding stock options. To the extent that some or all of such stock options are exercised, we would receive the proceeds of such exercises which would provide additional capital for our company. However no assurance can be given that any of such stock options will be exercised or as to the proceeds and timing of any exercises that do occur. The willingness of option holders to exercise their options depends on a number of factors, including, without limitation: the future market price of our common shares; the availability of capital to fund the payment of the exercise price of such options, the tax consequences of any such exercises and the ability of such option holders to resell some or all of the common shares received upon such exercises.

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 or future product candidates;~~

	·	the scope, progress, results and costs of researching and developing our current or future product candidates;

	·	the number and characteristics of the product candidates we pursue;

	·	the cost of manufacturing our current and future product candidates and any products we 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 collaborations, licensing or other arrangements and the financial terms of such agreements;

	·	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, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation; and

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

~~the timing of, and the costs involved in, obtaining regulatory approvals for any of our current or future product candidates;~~

~~the number and characteristics of the product candidates we pursue;~~

~~the cost of manufacturing our current and future product candidates and any products we successfully commercialize;~~

~~the cost of commercialization activities if any of our current or future product candidates are approved for sale, 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 collaborations, licensing or other arrangements and the financial terms of such agreements; and~~

~~the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.~~

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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~~Recent Accounting Pronouncements~~

Outstanding Share Data

~~In February 2016, the FASB issued new guidance, ASU No. 2016-02, Leases (Topic 842).~~ The ~~main difference between current U.S. GAAP and the new guidance is the recognition~~only class of lease liabilities based on the present value of remaining lease payments and corresponding lease assets for operating leases under current U.S. GAAP with limited exception. Additional qualitative and quantitative disclosures are also required by the new guidance. Topic 842 is effective for annual reporting periods (including interim reporting periods) beginning after December 15, 2018. Early adoption is permitted. We are in the process of evaluating the amendments to determine if they have a material impact on our financial position, results of operations, cash flows or disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which will make eight targeted changes to how cash receipts and cash payments are presented and classified in the Statement of Cash Flows. ASU 2016-15 will be effective on May 1, 2018, and will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively asoutstanding voting equity securities of the ~~earliest date practicable. We~~Company are in the ~~process~~common shares. As of ~~evaluating the amendments to determine if they have a material impact on our financial position, results of operations, cash flows or disclosures.~~November 12, 2021,

~~Item 3.~~	·	~~Quantitative~~ there are 979,894,668 common shares issued and ~~Qualitative Disclosures About Market Risk.~~outstanding.

	·	there are stock options outstanding under our Stock Option Plan to acquire an aggregate of 38,982,724 common shares.

	·	there are common share purchase warrants outstanding to acquire an aggregate of 197,917 common shares at an exercise price of $0.15 per share issued in February 2020.

	·	there are common share purchase warrants outstanding to acquire an aggregate of 363,501 common shares at an exercise price of $0.15 per share issued in April 2020.

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

	·	there are common share purchase warrants outstanding to acquire an aggregate of 231,000 common shares at an exercise price of $0.16 per share 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.~~

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 ~~March 31, 2018,~~September 30, 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 March 31, 2018.~~reporting.

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PART II — OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

~~We are not currently a party to any material legal proceedings.~~

~~Item 1A.~~

~~Risk Factors.~~

~~RISK FACTORS~~

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

Risks Related to Our ~~Business~~Recently Completed Acquisition of PulseVet

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

We are a development stage veterinary diagnostic and pharmaceutical company creating products for companion animals (canine, feline and equine) by focusing on the unmet needs of clinical veterinarians. Since the commencement of our business in May 2015, our operations have been primarily limited to the identification of product candidates and research and development of our diagnostic and drug product candidates, ZM-020, a Raman spectroscopy-based point-of-care diagnostic platform, ZM-017, a non-invasive diagnostic assay or blood test for the detection of certain cancers in canines, ZM-012 and ZM-007, an anti-diarrheal in pill form and oral suspension respectively that is intended for use in dogs, ZM-006, a transdermal gel treatment for hyperthyroidism, a metabolic disorder, which is intended for use in cats and ZM-011, a transdermal gel treatment for behavioral disorders intended for use in cats. As a result, we have limited historical operations upon which to evaluate our business and prospects and we have not yet demonstrated an ability to obtain approval for any of our product candidates or successfully overcome the risks and uncertainties frequently encountered by companies in emerging fields such as the companion animal pharmaceuticals and health care solutions industries.

~~We also have not generated any revenue to date, and we expect to~~will continue to incur significant ~~research~~transaction and ~~development~~integration costs in connection with the acquisition of PulseVet. These expenses could materially and adversely affect our 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 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 businesses. These expenses could materially and adversely affect our results of operations.

The failure to integrate PulseVet successfully into our business 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 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.

We may not realize the expected growth opportunities from our acquisition of PulseVet even if we are able to integrate PulseVet’s business successfully. We may incur unanticipated costs related to the operation of PulseVet and we may not achieve the growth potential for the PulseVet business that we expected at the time of acquisition or on our expected time schedule as a result of a number of 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 PulseVet acquisition could have a material adverse effect on our financial condition and results of operations.

Because we acquired all of the membership interests of PulseVet, we obtained ownership of PulseVet subject to 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 also learn additional information about PulseVet’s business that could adversely affect us, such as the existence of unknown liabilities, or matters that potentially affect our ability to comply with applicable laws.

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 financial condition and results of operations.

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Risks Related to our Business

If we are unable to establish an effective direct sales capability, our ability to market and sell our existing and future products and our ability to generate product 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 expect that expanding our internal sales capability will increase our compensation and other expenses. While members of our management team are experienced in the marketing, sale and distribution of animal diagnostic products, 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 team. If we are unable to build an effective sales organization, 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 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 not successful in selling our products, or do not adequately perform their obligations, our ability to 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 ~~net loss~~failure to operate the PulseVet business successfully could have a material adverse effect on our financial condition and ~~comprehensive loss~~results of operations.

The acquisition of PulseVet was a material event for the three months ended March 31, 2018 and March 31, 2017 was $2,171,328 and $1,832,736, respectively and for the years ended December 31, 2017 and December 31, 2016 was $8,065,072 and $5,740,492, respectively. Our accumulated deficit as of December 31, 2017 was $15,626,100. As of December 31, 2017, we had total shareholders' equity of $4,387,085.our company. We expect that the PulseVet business will constitute a significant part of our business operations in subsequent reporting periods. Our failure to ~~continue~~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 ~~incur losses for~~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 suppliers and manufacturers to develop and manufacture our products. Global supply chains have been significantly disrupted by the ~~foreseeable future, which will increase significantly from historical levels as we expand our product development activities (including conducting required clinical studies~~COVID-19 pandemic and ~~trials), seek necessary approvals~~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 ~~product candidates,~~products, or the inability to obtain those parts or components at acceptable prices and ~~begin commercialization activities. Even if we succeed in developing~~within a reasonable amount of time, could increase our costs and ~~broadly commercializing one~~delay, prevent or ~~more of~~impair our ~~product candidates, we expect~~ability to ~~continue to incur losses for the foreseeable future,~~manufacture our products and ~~we may never become profitable.~~ satisfy customer demand, which could have a material adverse effect on our business, operating results and financial condition.

If we fail to ~~achieve or maintain profitability, then~~attract and keep senior management and key scientific personnel, we may be unable to ~~continue our operations at planned levels and be forced to reduce or cease operations.~~

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

~~We do not have~~successfully develop any products approved for sale. 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, to market and sell ZM-020, our Raman spectroscopy-based point-of-care diagnostic platform, or ZM-017, the circulating tumor cell, or CTC, diagnostic assay that we are developing, we do not expect to commence marketing of these solutions until the second half of 2018.

Until, and unless, we receive approval from the FDA-CVM for our drug product candidates, we cannot market or sell our drug products in the United States and will have no material drug product revenue. Our lead drug product candidates, ZM-012, ZM-007, ZM-006 and ZM-011 are in the formulation, optimization and/or pilot study stage, and we have not yet begun pivotal trials. We anticipate that each of our drug product candidates will require from three to five years of development at a cost of approximately $3 million to $5 million per drug product candidate before we expect to be able to apply for marketing approval in the United States.

We are also seeking to identify potential complementary opportunities in the veterinary diagnostics and therapeutics sectors. We will continue to expend substantial resources for the foreseeable future to develop our existing product candidates and any other product candidates that we may develop or acquire. These expenditures will include: costs of identifying additional potential product candidates; costs associated with drug formulation; costs associated with conducting pilot and pivotal trials and clinical studies; costs associated with completing other research and development activities; 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 any of our products approved for sale. 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 product candidates, ~~may be greater or less than we anticipate.~~

~~As a result, we will need to obtain additional capital to fund the~~conduct our in-licensing and development ~~of our business. Except for our $5,000,000 unsecured working capital loan facility~~efforts and the private offering of our common shares offering up to 4,651,162 common shares at a price of $2.15 per share discussed above, 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 product candidates;~~

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

~~the number and characteristics of the diagnostics and/or product candidates we pursue;~~

~~the cost of contract manufacturers to manufacture our existing and future diagnostics and product candidates and any products we successfully commercialize;~~

~~the cost of commercialization activities if any of our existing or future diagnostics and product candidates are approved for sale, 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 collaborations, 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.

We are substantially dependent on the success of our lead product candidates, and cannot be certain that any of them will be approved for marketing, to the extent applicable, or successfully commercialized.

We have no products approved for sale in any jurisdiction and are focused primarily on the development of our lead diagnostic and drug product candidates, ZM-020, ZM-017, ZM-012, ZM-007, ZM-006 and ZM-011. 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 one or more of our lead candidates, which in turn will depend on a number of factors, including the following:

	•	the successful completion of clinical validation of our diagnostic product candidates, which may take significantly longer than we anticipate and will depend, in part, upon the satisfactory performance of third-party contractors;

	•	the successful completion of pilot testing and pivotal efficacy and safety trials of one or more of our drug product candidates, which may take significantly longer than we anticipate and will depend, in part, upon the satisfactory performance of third-party contractors;

our ability to demonstrate to the satisfaction of the FDA-CVM or the USDA Center for Veterinary Biologics, or USDA-CVB, as applicable, the safety and efficacy of our drug product candidates and to obtain regulatory approvals;

the ability of our third-party contract manufacturers to manufacture supplies of any of our product candidates and to develop, validate and maintain viable commercial manufacturing processes that are compliant with Good Manufacturing Practices or GMP;

~~our ability to successfully market any product candidate for which marketing approval is received, whether alone or in collaboration with others;~~

~~the availability, perceived advantages, relative cost, relative safety and relative efficacy of our product candidates compared to alternative and competing treatments;~~

~~the acceptance of our product candidates as safe and effective 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 our intellectual property rights and obtain marketing exclusivity for our product candidates, 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 any of our product candidates. If we are unsuccessful or are significantly delayed in developing and commercializing ZM-020, ZM-017, ZM-012, ZM-007, ZM-006 or ZM-011 or any of our other product candidates, our business and prospects will be materially adversely affected and you may lose all or a portion of your investment.

~~Our product candidates will face significant competition and may be unable to compete effectively.~~

The development and commercialization of veterinary diagnostics and pharmaceuticals is highly competitive and our success depends on our ability to compete effectively with other products in the market.

There are a number of competitors in the diagnostic market that 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., 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.

If our drug product candidates are approved, we expect to compete with large animal health companies including Merck Animal Health, the animal health division of Merck & Co., Inc.; Elanco, the animal health division of Eli Lilly and Company; Bayer Animal Health, the animal health division of Bayer AG; Novartis Animal Health, the animal health division of Novartis AG; Boehringer Ingelheim Animal Health, the animal health division of Boehringer Ingelheim GmbH; and Zoetis, Inc., as well as European companies such as Virbac S.A., Vetoquinol S.A. and Dechra Pharmaceuticals PLC We are also aware of several smaller early stage companies that are developing products for use in the pet therapeutics market, including Kindred Biosciences, Inc., Aratana Therapeutics, Inc., Parnell Pharmaceuticals Holdings Ltd. and Jaguar Animal Health, Inc. We also expect to compete with academic institutions, governmental agencies and private organizations that are conducting research in the field of animal health medicines.

We target drug product candidates for which the API, while having been approved for use in human drugs, has not been previously approved for use in animals. If we are the first to gain approval for the use of such API in animals, our drug products will benefit from between three and seven years of marketing exclusivity in the United States for the approved indication. We also plan to differentiate our products, where possible, with alternative drug delivery systems that are more conducive to dosing for the target companion animal species, but we cannot assure you that we will be able to prevent our competitors from developing substantially similar products and bringing those products to market earlier than we are able to.products.

Our ~~drug product candidates will face competition from various products approved for use~~success depends in ~~humans that are used off-label in animals, and all of~~part on our products will face potential competition from new products in development. These and other potential competing products may benefit from greater brand recognition and brand loyalty than our drug product candidates may achieve.

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 medicines, including pet therapeutics. We also expect to compete with academic institutions, governmental agencies and private organizations that are conducting research in the fields of animal diagnostics and animal health. If such competing products are commercialized prior to our product candidates, or if our intellectual property protection and efforts to obtain regulatory exclusivity fail to provide us with exclusive marketing rights for some of our therapeutic 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’continued ability to ~~use other tests~~attract, retain and ~~technologies due to predetermined minimums in those agreements.~~

~~Development~~motivate highly qualified management and scientific personnel. We are highly dependent upon our senior management, particularly Larry Heaton, our Chief Executive Officer, Ann Marie Cotter, our Chief Financial Officer, and members of ~~product candidates for use in companion animal health is an inherently expensive, time-consuming and uncertain, and any delay or discontinuance~~the PulseVet leadership team, including Adrian Lock. The loss of ~~validation or pivotal studies for our current or future product candidates would significantly harm our business and prospects~~.

Development of product candidates for use in companion animals is an inherently lengthy, expensive and uncertain process, and there is no assurance that our development activities will be successful. We do not know whether the validation studies of ZM-017 or ZM-020, or the pivotal studies of ZM-012, ZM-007, ZM-006 or ZM-011, orservices of any of these individuals could delay or prevent the achievement of our ~~other product candidates, will begin~~business objectives.

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International operations expose us to risks inherent in international activities.

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 adversely affect our business, including:

	·	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 otherwise unfavorable government regulations;
	·	increased financial accounting and reporting burdens and complexities;
	·	restrictions on the transfer of funds;
	·	withholding and other tax obligations on remittance and other payments made by our subsidiaries; and
	·	unstable regional, economic and political conditions.

Our inability to manage any of these risks successfully, or ~~conclude~~to comply with these laws and regulations, could have a material adverse effect on ~~time,~~our business, operating results and ~~they may be delayed or discontinued for a variety of reasons, including if~~financial condition.

If we are ~~unable to:~~

~~address any safety concerns that arise during the course of the studies;~~

~~complete the studies due~~not able to ~~deviations from the study protocols, the occurrence of adverse events or, in the case of our validation studies, sensitivity and selectivity results that vary from our expectations;~~

~~add new study sites;~~

~~address any conflicts with new or existing laws or regulations; or~~

~~reach agreement on acceptable terms with study sites, which can be subject to extensive negotiation and may vary significantly among different sites.~~

Any delays in completing our development efforts will increase our costs, delay our product candidate development and any regulatory approval process and jeopardize our ability to commence product sales and generate revenue. Any of these occurrences may significantly harmmanage growth successfully, this could adversely affect our business, financial condition, and ~~prospects.~~results of operations.

Continued growth may place a significant strain on financial, operational, and managerial resources. We must continue to implement and enhance our managerial, operational and financial systems, expand our operations, and continue to recruit and train qualified personnel. There can be no assurance that our strategic and operational planning will allow us to adequately manage anticipated growth. In addition, ~~factors that may cause a delay in~~ the commencement or completion of our development efforts may also ultimately lead to the denial of regulatory approval of our product candidates which, as described above, would materially, adversely impact our business and prospects.

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~~expense associated with increased manufacturing and ~~research and development activities. We expect~~sales/marketing may exceed our expectations. Any inability to continue to do so, including with respect to our manufacturing, clinical validation, pilot studies and pivotal trials of ZM-020, ZM-017, ZM-012, ZM-007, ZM-006 and ZM-011. 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 resources that they devote to our programs orsuccessfully manage the risks associated with their activities on our behalf. We are responsible to regulatory authorities for ensuring that each of our product candidates is 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 adversely affect our ability to obtain regulatory approvals, subject us to penalties, or harm our credibility with regulators. The FDA-CVM also requires us and our CMOs and CROs to comply with regulations and standards, commonly referred to as good manufacturing practices, or GMPs, good clinical practices, or GCPs, and good laboratory practices, or GLPs, collectively called GXPs, for conducting, monitoring, recording and reporting the results of our manufacturing and studies to ensure that the data and results are scientifically credible and accurate.

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 GXPs 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.

~~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.~~

~~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 Raman spectroscopy-based diagnostic solution and our diagnostic test for canine cancer do not require approval by the USDA prior to sale in the U.S., these diagnostic solutions will be subject to post-marketing oversight by the FDA-CVM. In addition, delays in obtaining regulatory approvals for new products or product upgradesgrowth could have a ~~negative impact~~material adverse effect on our ~~growth~~business, operating results 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.~~financial condition.

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.Item 6. Exhibits.

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.

~~Risks Related to Intellectual Property~~

Our diagnostic assay 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 Raman spectroscopy-based point-of-care diagnostic product is dependent on a license from Seraph Biosciences, Inc., while our canine cancer diagnostic assay technology is dependent on a license from Celsee, Inc. 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. Seraph and Celsee 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.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

~~None.~~

~~Item 3.~~

~~Defaults Upon Senior Securities.~~

~~Not applicable.~~

~~Item 4.~~

~~Mine Safety Disclosures.~~

~~Not applicable.~~

~~Item 5.~~

~~Other Information.~~

~~None.~~

~~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.

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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 ~~Pharmaceuticals~~ Corp.

Date: November 12, 2021	By:	~~By:~~	/s/ ~~Gerald Solensky Jr.~~Larry Heaton
	Name:	~~Name:~~ Larry Heaton	~~Gerald Solensky Jr.~~
	Title:	~~Title:~~	Chief Executive Officer

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


				38

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 Quarterly Report on Form 10-Q filed with the Commission on May 12, 2021 (File No. 001-38298))

3.2		Amended and Restated By-Law No. 1 (2nd Version) of Zomedica Corp. (incorporated by reference to Exhibit 3.1 to the Company's ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed with the Commission on ~~November 20, 2017~~August 7, 2020 (File No. ~~333-217409)~~001-38298))

~~3.2~~10.1		~~Amended~~Executive Employment Agreement, dated October 1, 2021, among Zomedica Inc., Zomedica Corp. and ~~Restated By-Law No. 1 of Zomedica Pharmaceuticals Corp.~~Larry Heaton (incorporated by reference to Exhibit ~~3.2~~10.1 to the Company's ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed with the Commission on ~~November 20, 2017~~October 4, 2021 (File No. ~~333-217409)~~001-38298))

~~3.3~~10.2*		~~Certificate of Amendment~~Second Lease Agreement, effective September 15, 2021, by and ~~Registration of Restated Articles of~~between 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 November 20, 2017 (File No. 333-217409))~~Inc. and Wickfield Phoenix LLC.

~~3.4~~10.3*		~~Certificate of Amalgamation of Zomedica Pharmaceuticals Corp. (incorporated~~Executive Employment Agreement, dated September 6, 2019, by ~~reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 filed with the Commission on November 20, 2017 (File No. 333-217409))~~and between Pulse Veterinary Technologies, LLC and Adrian Lock

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

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

32.1**		Certification of 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		Inline XBRL Instance Document.*Document (the Instance Document does not appear in the Interactive Data File because its XBRL (1)

101.SCH		Inline XBRL Taxonomy Extension Schema Document.*Document (1)

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.*Document (1)

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*Document (1)

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*Document (1)

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.

		Page
	PART I

	FINANCIAL INFORMATION

1.	Condensed Financial Statements	3
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
3.	Quantitative and Qualitative Disclosures about Market Risk	29
4.	Controls and Procedures	29

	PART II


	OTHER INFORMATION

1.	Legal Proceedings	30
1A.	Risk Factors	30
2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
3.	Defaults Upon Senior Securities	35
4.	Mine Safety Disclosures	35
5.	Other Information	35
6.	Exhibits	35

		Page
	PART I
	FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34

	PART II
	OTHER INFORMATION

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

	Note		March 31, 2018			December 31, 2017

Assets

Current assets:
Cash and cash equivalents		$	3,134,920		$	3,448,147
Prepaid expenses and deposits	5		810,839			786,273
Trade and other receivable			69,381			28,272
			4,015,140			4,262,692

Prepaid expenses and deposits	5		518,286			566,832
Property and equipment	6		347,677			371,157
Intangible assets	7		14,455			15,141
		$	4,895,558		$	5,215,822

Liabilities and shareholders' equity

Current liabilities:
Accounts payable and accrued liabilities		$	1,266,324			828,737
			1,266,324			828,737

Shareholders' equity:
Capital stock
Authorized
Unlimited common shares without par value
Issued and outstanding
91,853,865 common shares (2017 - 90,225,869)	9		20,003,883			18,244,659
Additional paid-in capital	10		1,422,779			1,768,526
Accumulated deficit			(17,797,428	)		(15,626,100	)
			3,629,234			4,387,085

		$	4,895,558		$	5,215,822

	Note		March 31, 2018			March 31, 2017
Expenses:
Research and development	14	$	600,341		$	616,449
General and administrative	14		1,160,171			827,025
Professional fees	14		371,947			381,536
Amortization	7		686			699
Depreciation	6		36,699			20,308
Loss from operations			2,169,844			1,846,017
Gain on settlement of liabilities			-			(5,000	)
Foreign exchange loss (gain)			1,484			(8,281	)
Loss before income taxes			2,171,328			1,832,736
Income tax expense			-			-
Net loss and comprehensive loss		$	2,171,328		$	1,832,736

Weighted average number of common shares - basic and diluted			90,517,702			84,418,182

Loss per share - basic and diluted		$	(0.02	)	$	(0.02	)

	Note	Number of capital stock		Capital stock			Additional paid-in capital			Accumulated deficit			Total
Balance at December 31, 2016		83,964,569	$	10,189,973		$	1,205,456		$	(7,561,028	)	$	3,834,401
Stock to be issued	9	-		250,000			-			-			250,000
Stock issuance costs	9	-		(8,864	)		-			-			(8,864	)
Stock issuance for services	9	43,613		45,000			-			-			45,000
Stock-based compensation	10	-		-			161,591			-			161,591
Stock issued due to exercise of options	9	410,000		25,523			(8,374	)		-			17,149
Net loss		-		-			-			(1,832,736	)		(1,832,736	)
Balance at March 31, 2017		84,418,182	$	10,501,632		$	1,358,673		$	(9,393,764	)	$	2,466,541

Balance at December 31, 2017		90,225,869		18,244,659			1,768,526			(15,626,100	)		4,387,085
Stock-based compensation		-		-			5,691			-			5,691
Stock issued due to exercise of options	10	1,627,996		1,759,224			(351,438	)		-			1,407,786
Net loss		-		-			-			(2,171,328	)		(2,171,328	)
Balance at March 31, 2018		91,853,865		20,003,883			1,422,779			(17,797,428	)		3,629,234

		Computer equipment		Furniture and equipment		Laboratory equipment		Leasehold improvements		Total
Cost
Balance at December 31, 2016		61,598		7,364		243,529		25,672		338,163
Additions		89,557		68,694		2,200		11,285		171,736
Balance at December 31, 2017		151,155		76,058		245,729		36,957		509,899
Additions		9,048		4,171		-		-		13,219
Balance at March 31, 2018		160,203		80,229		245,729		36,957		523,118
Accumulated depreciation
Balance at December 31, 2016		13,858		1,490		29,783		3,998		49,129
Depreciation		28,944		10,355		45,092		5,222		89,613
Balance at December 31, 2017		42,802		11,845		74,875		9,220		138,742
Depreciation		8,149		2,837		11,119		14,594		36,699
Balance at March 31, 2018		50,951		14,682		85,994		23,814		175,441

Net book value as at:
December 31, 2017	$	108,353	$	64,213	$	170,854	$	27,737	$	371,157
March 31, 2018	$	109,252	$	65,547	$	159,735	$	13,143	$	347,677

		Computer software		Trademarks		Total
Cost
Balance at December 31, 2016		5,143		16,236		21,379
Additions		-		-		-
Balance at December 31, 2017		5,143		16,236		21,379
Additions		--				-
Balance at March 31, 2018		5,143		16,236		21,379
Accumulated amortization
Balance at December 31, 2016		2,428		1,013		3,441
Amortization		1,715		1,082		2,797
Balance at December 31, 2017		4,143		2,095		6,238
Amortization		419		267		686
Balance at March 31, 2018		4,562		2,362		6,924

Net book value as at:
December 31, 2017	$	1,000	$	14,141	$	15,141
March 31, 2018	$	581	$	13,874	$	14,455

Issued and outstanding common stock:	Number of common stock		Capital stock
Balance at December 31, 2016	83,964,569		10,189,973
Stock issuance for services	43,613		45,000
Stock issued due to exercise of options	410,000		25,523
Share issuance costs	-		(8,864	)
Stock to be issued	-		250,000
Balance at March 31, 2017	84,418,182	$	10,501,632

Balance at December 31, 2017	90,225,869	$	18,244,659
Stock issued due to exercise of options (Note 10)	1,627,996		1,759,224
Balance at March 31, 2018	91,853,865	$	20,003,883

The continuity of stock options are as follows:	Number of			Weighted Avg Exercise Price
	Options			(CDN$)
Balance at December 31, 2016	7,975,000		$	0.84
Stock options exercised on February 21, 2017	(10,000	)	$	0.25
Stock options exercised on February 21, 2017	(400,000	)	$	0.05
Options issued on February 24, 2017	535,000		$	1.50
Stock options exercised on May 8, 2017	(7,060	)	$	1.50
Stock options cancelled on May 17, 2017	(10,000	)	$	1.50
Stock options exercised on May 23, 2017	(80,000	)	$	0.25
Stock options exercised on July 6, 2017	(200,000	)	$	0.05
Stock options exercised on July 17, 2017	(220,000	)	$	0.25
Options issued on August 14, 2017	1,280,000		$	2.75
Stock options exercised on August 29, 2017	(7,940	)	$	1.50
Stock options exercised on December 19, 2017	(25,000	)	$	0.25
Stock options exercised on December 19, 2017	(750,000	)	$	1.50
Balance at December 31, 2017	8,080,000		$	1.21
Stock options exercised on January 8, 2018	(124,000	)	$	0.25
Stock options exercised on January 26, 2018	(100,000	)	$	0.25
Stock options exercised on March 8, 2018	(50,000	)	$	0.25
Stock options exercised on March 13, 2018	(176,000	)	$	0.25
Stock options exercised on March 22, 2018	(50,000	)	$	0.25
Stock options exercised on March 26, 2018	(240,000	)	$	0.25
Stock options exercised on March 28, 2018	(325,000	)	$	0.25
Stock options exercised on March 29, 2018	(562,996	)	$	2.75
Balance at March 31, 2018	6,452,004		$	1.23

Grant date		Exercise price (CDN$)	Number of options issued and outstanding	Number of vested options outstanding	Weighted Avg Remaining Life (years)
March 28, 2016	$	0.25	2,100,000	2,100,000	0.06
December 21, 2016	$	1.50	3,100,000	3,100,000	0.73
February 24, 2017	$	1.50	535,000	535,000	0.90
August 14, 2017 (a)	$	2.75	642,004	642,004	1.37
August 14, 2017 (b)	$	2.75	75,000	71,978	0.37

March 31, 2018
	Less than 3 months	3 to 6 months	6 to 9 months	9 months 1 year	Greater than 1 year	Total
	$	$	$	$	$	$
Third parties
Accounts payable and accrued liabilities	1,266,324	-	-	-	-	1,266,324
	1,266,324	-	-	-	-	1,266,324

December 31, 2017
	Less than 3 months	3 to 6 months	6 to 9 months	9 months 1 year	Greater than 1 year	Total
	$	$	$	$	$	$
Third parties
Accounts payable and accrued liabilities	828,737	-	-	-	-	828,737
	828,737	-	-	-	-	828,737

	March 31, 2018	December 31, 2017
Total assets	$	$
Canada	3,189,706	3,519,918
US	1,705,852	1,695,904


Total property and equipment
US	347,677	371,157

		For the three months ended March 31, 2018		For the three months ended March 31, 2017
Salaries and benefits, including bonuses	$	344,891	$	322,786
Stock-based compensation		-		151,020
Total	$	344,891	$	473,806

	Three months ended March 31, 2018		Three months ended March 31, 2017			Change
	$		$			$			%
Expenses
Research and development		600,341		616,449			(16,108	)		-3	%
General and administrative		1,160,171		827,025			333,146			40	%
Professional fees		371,947		381,536			(9,589	)		-3	%
Amortization		686		699			(13	)		-2	%
Depreciation		36,699		20,308			16,391			81	%
Loss from operations		2,169,844		1,846,017			323,827			18	%

Gain on settlement of liabilities		-		(5,000	)		5,000			N/A
Foreign exchange loss (gain)		1,484		(8,281	)		9,765			-118	%
Loss before income taxes		2,171,328		1,832,736			338,592			18	%

Income tax expense		-		-			-			N/A

Net loss and comprehensive loss		2,171,328		1,832,736			338,592			18	%

	Three months ended			Three months ended
	March 31, 2018			March 31, 2017			Change
	$			$			$			%
Cash flows used in operating activities		(1,707,794	)		(1,553,802	)		(153,992	)		10	%
Cash flows provided by financing activities		1,407,786			251,559			1,156,227			460	%
Cash flows used in investing activities		(13,219	)		(157,402	)		144,183			-92	%
Increase (decrease) in cash		(313,227	)		(1,459,645	)		1,146,418			-79	%
Cash and cash equivalents, beginning of period		3,448,147			3,226,680			221,467			7	%
Cash and cash equivalents, end of period		3,134,920			1,767,035			1,367,885			77	%