Property and equipment consisted of the following (in thousands):

Accrued liabilities consisted of the following (in thousands):

We lease certain office space under a non-cancelable operating lease. This lease does not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses. Further this lease does not contain contingent rent provisions. This lease terminates on August 31, 2022 and we do not have an option to renew. This lease does include both lease (e.g., fixed rent) and non-lease components (e.g., common-area and other maintenance costs). The non-lease components are deemed to be executory costs and are therefore excluded from the minimum lease payments used to determine the present value of the operating lease obligation and related right-of-use asset.

This lease does not provide an implicit rate and, due to the lack of a commercially salable product, we are generally considered unable to obtain commercial credit. Therefore, we estimated our incremental borrowing rate to be 9%, considering the quoted rates for the lowest investment-grade debt and the interest rates implicit in recent financing leases. We used our estimated incremental borrowing rate and other information available at the lease commencement date in determining the present value of the lease payments.

Our operating lease cost and variable lease costs were $49,000$34,000 and $40,000,$28,000, respectively, for the ninesix months ended SeptemberJune 30, 2020. 2021. Variable lease costs consist primarily of common area maintenance costs, insurance and taxes which are paid based upon actual costs incurred by the lessor.

Maturities of our operating lease obligation are as follows as of SeptemberJune 30, 2020 (in2021 (in thousands):

Authorized capital stock

The Company has authorized share capital of an unlimited number of voting common shares and the shares do not have a stated par value.

Common shareholders are entitled to receive dividends as declared by the Company, if any, and are entitled to one vote per share at the Company's annual general meeting and any special meeting.

Equity issued during the six months ended June 30, 2021

During the six months ended June 30, 2021, 40,000 common shares were issued upon the exercise of options for gross proceeds of $244,000 with an aggregate intrinsic value of $132,000 and no warrants were exercised.

Equity issued during the ninesix months endedSeptemberJune 30, 2020

On August 10, 2020, we issued and sold an aggregate 4,600,000 common shares in a public, underwritten offering at a public offering price of $5.00 per share. As a result of the offering, we received gross proceeds of $23.0 million, which resulted in net proceeds to us of approximately $21.2 million, after deducting the underwriting discount and offering expenses.

On February 13, 2020, we issued and sold an aggregate of 2,125,000 common shares in a public, underwritten offering at a public offering price of $4.00 per share. As a result of the offering, we received gross proceeds of $8.5 million, which resulted in net proceeds to us of approximately $7.7 million, after deducting the underwriting discount and offering expenses.

On September 11, 2020, we issued a warrant to purchase up to 10,000 common shares at an exercise price equal to $4.00 per share to Craig-Hallum Capital Group LLC in consideration for certain strategic advisory services. The warrant is exercisable until October 1, 2024, unless terminated earlier pursuant to the terms thereof.

During the ninesix months ended SeptemberJune 30, 2020, 7,200 common shares were issued onupon the exercise of options for gross proceeds of $16,000 and no0 warrants were exercised.

Equity issued during the nine months endedSeptember 30, 2019

During the nine months ended September 30, 2019, 50,000 common shares were issued on the exercise of options for gross proceeds of $75,000 and no warrants were exercised.

Shares reserved

Common shares reserved for future issuance are as follows:

We compute net loss per share by dividing our net loss (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period, if any, are weighted for the portion of the period that they were outstanding. The computation of diluted earnings per share, or EPS, is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Our diluted EPS is the same as basic EPS due to common equivalent shares being excluded from the calculation, as their effect is anti-dilutive.

The following table summarizes our calculation of net loss per common share for the periods (in thousands, except share and per share data):

The following outstanding potential common shares were not included in the diluted net loss per share calculations as their effects were not dilutive:

2019 Omnibus Incentive Plan

The DiaMedica Therapeutics Inc. 2019 Omnibus Incentive Plan (2019(2019 Plan) was adopted by the Board of Directors in March 2019 and approved by our shareholders at our annual general and special meeting of shareholders held on May 22, 2019. The 2019 Plan permits the Board, or a committee or subcommittee thereof, to grant to the Company’s eligible employees, non-employee directors and consultants non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards and other stock-based awards. We grant options to purchase common shares under the 2019 Plan at no less than the fair market value of the underlying common shares as of the date of grant. Options granted to employees and non-employee directors have a maximum term of ten years and generally vest in approximately equal quarterly installments over one to three years. Options granted to non-employees have a maximum term of five years and generally vest in approximately equal quarterly installments over one year. Subject to adjustment as provided in the 2019 Plan, the maximum number of the Company’s common shares authorized for issuance under the 2019 Plan is 2,000,000 shares. As of SeptemberJune 30, 2020, 2021, options to purchase 866,515930,682 common shares were outstanding and there were 26,05450,959 common shares were reserved for issuance upon settlement of deferred stockshare units (DSUs) outstanding under the 2019 Plan.

Prior stock option plan

The DiaMedica Therapeutics Inc. Stock Option Plan, Amended and Restated November 6, 2018 (Prior(Prior Plan), was terminated by the Board of Directors in conjunction with the shareholder approval of the 2019 Plan. Awards outstanding under the Prior Plan remain outstanding in accordance with and pursuant to the terms thereof. Options granted under the Prior Plan have terms similar to those used under the 2019 Plan. As of SeptemberJune 30, 2020, 2021, options to purchase 528,884490,410 common shares were outstanding under the Prior Plan.

As the TSX Venture Exchange was the principal trading market for the Company’s common shares, all options granted prior to December 31, 2018 were priced in Canadian dollars. Options granted after December 31, 2018 have been priced in United States dollars.

Prior deferred share unit plan

The DiaMedica Therapeutics Inc. Amended and Restated Deferred Share Unit Plan (DSU Plan) was terminated by the Board of Directors in conjunction with the shareholder approval of the 2019 Plan. Awards outstanding under the DSU Plan remain outstanding in accordance with and pursuant to the terms thereof. As of SeptemberJune 30, 2020, 2021, there were 21,183 common shares reserved for DSUs outstanding under the DSU Plan.

The aggregate number of common shares reserved for issuance for awards granted under the 2019 Plan, the Prior Plan and the DSU Plan as of September 30, 2020 was 1,442,636.outstanding.

Share-based compensation expense for each of the periods presented is as follows (in thousands):

We recognize share-based compensation based on the fair value of each award as estimated using the Black-Scholes option valuation model. Ultimately, the actual expense recognized over the vesting period will only be for those shares that actually vest.

A summary of option activity is as follows (in thousands except share and per share amounts):

Information about stock options outstanding, vested and expected to vest as of SeptemberJune 30, 2020, 2021, is as follows:

During 2020,2021, we have engaged a consulting firm owned by our Vice President of Regulatory Affairs to perform certain tasks supporting our quality and regulatory activities. The work is performed as required by us and all services are invoiced on an hourly basis with no minimum commitment. Total charges invoiced were approximately $90,000 and $137,000 for$149,000 during the three and nine-monthssix-months ended SeptemberJune 30, 2020, 2021, and are recorded as research and development expenses, of which $11,000 isapproximately $8,500 was outstanding and included in accounts payable as of SeptemberJune 30, 2020.2021.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon accounting principles generally accepted in the United States of America and discusses the financial condition and results of operations for DiaMedica Therapeutics Inc. and its subsidiaries for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019.2020.

This discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2019,2020, which includes additional information about our critical accounting policies and practices and risk factors. The following discussion contains forward-looking statements that involve numerous risks and uncertainties. Our actual results could differ materially from the forward-looking statements as a result of these risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” for additional cautionary information.

Business Overview

We are a clinical stage biopharmaceutical company primarily focused on developing novel treatments for neurological disorders and kidney diseases. Currently, our primary focus is on developing DM199, a proprietary recombinant KLK1 protein for the developmenttreatment of novel recombinant, or synthetic, proteins.acute ischemic stroke (AIS) and chronic kidney disease (CKD). Our goal is to use our patented and licensed technologies to establish our Company as a leader in the development and commercialization of therapeutic treatments from novel recombinant proteins. Our current focus is on the treatment of chronic kidney disease (CKD) and acute ischemic stroke (AIS). We plan to advance DM199, our lead drug candidate, through required clinical trialsstudies to create shareholder value by establishing its clinical and commercial potential as a therapy for CKDAIS and AIS.CKD.

DM199 is a recombinant form of human tissue kallikrein-1 (KLK1). KLK1 is a serine protease (protein), produced primarily in the kidneys, pancreas and salivary glands, whichthat plays a critical role in the regulation of local blood flow and vasodilation (the widening of blood vessels which decreases blood pressure) in the body, as well as an important role in inflammation and oxidative stress (an imbalance between potentially damaging reactive oxygen species, or free radicals, and antioxidants in the body). We believe DM199 has the potential to treat a variety of diseases where healthy functioning requires sufficient activity of KLK1 and its system, the kallikrein-kinin system.

Our DM199 product candidate is in clinical development as follows:

AIS Phase 2/3 ReMEDy2 Study

In December 2020, we received written responses from the FDA following a Type B Pre-IND meeting request that we submitted in October 2020 regarding our development plan for DM199 in the treatment of AIS. In the FDA’s written responses to the questions we provided, the FDA agreed with our proposals regarding key elements of a pivotal Phase 2/3 study for DM199 in patients with AIS, including plans for an adaptive study design with a primary endpoint based upon the modified Rankin Scale at day 90 and acknowledged that, provided the study results qualify, a single study may support a Biologics License Application submission.

In April 2021, we submitted an Investigational New Drug (IND) application to the FDA detailing a proposed protocol for this clinical study. The FDA accepted our IND in May 2021, allowing us to proceed with this pivotal Phase 2/3 study which we have named ReMEDy2. This clinical study follows our Phase 2 study in AIS patients that demonstrated an improvement in stroke outcomes and reduction in severe stroke recurrence. The upcoming pivotal ReMEDy2 study will evaluate whether DM199, a recombinant investigational agent, can improve three-month outcomes in AIS patients who have no treatment option other than supportive care. Initial preparations are underway and initiation of the study is expected later this summer.

REDUX Clinical TrialStudy

In October 2019, the U.S. Food and Drug Administration (FDA) accepted our Phase II2 clinical trialstudy protocol for the treatment of CKD caused by rare or significant unmet diseases. The trialstudy named REDUX, Latin for restore, is a multi-center, open-label investigation targeting enrollment of approximately 90 participants with mild or moderate CKD (Stage II or III) and albuminuria, who are being enrolled in three cohorts (30 participants per cohort).equal cohorts. The study is being conducted in the United States at 1413 sites and is focused on participants with CKD: Cohort I is focused on non-diabetic, hypertensive African Americans (AA) with Stage II or III CKD. African Americans are at greater risk for CKD than Caucasians, and those African Americans who have the APOL1 gene mutation are at an even higher risk. The study is designed to captureevaluate the APOL1 gene mutation as an exploratory biomarker in this cohort. Cohort II is focused on participants with IgA Nephropathy (IgAN). Cohort III, which was added after the completion of our August 2020 public offering, is focused on diabetic kidney disease (DKD) participants with Type II2 diabetes mellitus with CKD, hypertension and albuminuria. The study will evaluate two dose levels of DM199 within each cohort. Study participants will receive DM199 by subcutaneous injection twice weekly for 95 days. The primary study endpoints include safety, tolerability, blood pressure, albuminuria and kidney function, which will be evaluated by changes from baseline in estimated glomerular filtration rate (eGFR) and albuminuria, as measured by the urinary albumin to creatinine ratio. Participant enrollment and dosing for this study commenced in December 2019.

In June 2021, we announced interim results indicating that DM199 is demonstrating clinically meaningful improvements in kidney function in Cohorts I and II, as measured by simultaneously stabilizing estimated glomerular filtration rate (eGFR) and decreasing urine albumin-to-creatinine ratio (UACR). In participants who were hypertensive (Cohorts I and III), DM199 also reduced blood pressure by clinically significant levels and importantly, there was no effect on participants who were not hypertensive (Cohort II). We reported the following preliminary data:

DM199 was safe and well tolerated across all cohorts, with no DM199 related severe adverse events (SAEs) or discontinuations due to drug-related adverse events (AEs). AEs were generally mild to moderate in severity, with the most common being local injection site irritation that resolved.

As of October 30, 2020,July 31, 2021, we had enrolled 4975 subjects, including 1120 African American subjects into Cohort I, 1322 subjects with IgAN into Cohort II and 25completed enrollment with 33 subjects with Type II2 diabetes, hypertension and albuminuria into Cohort III of the REDUX study. Due to actions implemented at our clinical study sites to combat the COVID-19 pandemic, weIII. We have continued to experience slower than expected enrollment in the first two cohorts of the REDUX trial.study. We believe this is due to the reduction or suspensioncontinued concerns of activities at our clinicalpotential study sites as they address staff and patient safety concerns and patient concernssubjects related to visiting clinical study sites in lightsites. We are evaluating the effects of the recent surge in COVID-19 pandemic. We have added two additional study sites to increase the enrollment rates in these cohorts. The enrollment rate for Cohort III has been much more rapid, which is likely dueinfections  related to the large population of potential subjects. We anticipate that the COVID-19 pandemic will likely continue to adversely affect our ability to recruit or enroll subjects,Delta variant and we cannotwill provide any assurance as toan update on the anticipated completion of  Cohort I and Cohort II when clinical sites will bewe are able to resume enrollment in Cohorts I and II at a normal rate or any guidance at this time as to when we will complete enrollment in the study. DiaMedica expects enrollment in Cohort III to complete by the end of the year with topline results available in the first half of 2021.reasonably estimate.

ReMEDy Clinical Trial

Enrollment in the ReMEDy study began in February 2018 and concluded in October 2019. We enrolled 92 participants to assess DM199 in the treatment of participants who experienced an AIS. The study drug (DM199 or placebo) was administered as an intravenous (IV) infusion within 24 hours of stroke symptom onset, followed by subcutaneous injections later that day and once every 3 days for 21 days. The study was designed to measure safety and tolerability along with multiple tests designed to investigate DM199’s therapeutic potential including plasma-based biomarkers and standard functional stroke measures assessed at 90 days post-stroke. Standard functional stroke measurements include the Modified Rankin Scale, National Institutes of Health Stroke Scale, the Barthel Index and C-reactive protein, a measure of inflammation. Positive top-line results, including the achievement of primary safety and tolerability endpoints and no DM199-related serious adverse events, were announced on May 13, 2020. In addition, there was also a demonstrated therapeutic effect in participants that received tissue plasminogen activator (tPA) prior to enrollment but not in participants receiving mechanical thrombectomy prior to enrollment according to top-line phase II results.

On October 5, 2020, we submitted a pre-IND meeting request to the FDA. We have requested an initial meeting with the FDA to review our proposed strategy and plan for conducting the safety/toxicology studies and human clinical trials required for approval of DM199 for the treatment of AIS.

From a strategic perspective, we continue to believe that strategic alternatives with respect to our DM199 product candidate, including licenses and business collaborations, with other regional and global pharmaceutical and biotechnology companies can be important in advancing the clinical development of DM199. Therefore, as a matter of course and from time to time, we engage in discussions with third parties regarding these matters.

Financial Overview

We have not generated any revenues from product sales. Since our inception, we have financed our operations from public and private sales of equity, the exercise of warrants and stock options, interest income on funds available for investment and government grants. We have incurred losses in each year since our inception. Our net losses were $8.1$6.9 million and $8.2$4.9 million for the ninesix months ended September 30,June, 2021 and 2020, and 2019, respectively. As of SeptemberJune 30, 2020,2021, we had an accumulated deficit of $64.7$75.8 million. Substantially all of our operating losses resulted from expenses incurred in connection with the development of our DM199 product candidate, our primary research and development (R&D) activities, and general and administrative (G&A) support costs associated with our operations.

On August 10, 2020, we issued and sold an aggregate of 4,600,000 common shares in a public underwritten offering at a public offering price of $5.00 per share, receiving gross proceeds of $23.0 million and net proceeds of approximately $21.2 million, after deducting the underwriting discount and offering expenses.

We expect to continue to incur significant expenses and continuingincreased operating losses in 2020, which we believe will be up slightly from 2019. Our expenses will increase further if we progress to advanced stages of clinical development overfor at least the next several years. In the near term, we anticipate that our expenses will increase as we:

While we expect our rate of future negative cash flow per month will vary due to the timing of expenses incurred, we expect our current cash and marketable securities resources will be sufficient to allow us to complete all threethe remaining two cohorts in our REDUX Phase II2 study in patients with CKD, initiate our pending Phase 2/3 study in patients with AIS and to otherwise fund our currently planned operations forinto the third quarter of 2022, but not at least the next twelve months from the date of issuance of these condensed consolidated financial statements. However, the amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, including enrollment in our clinical trials,studies, the potential expansion of our current development programs, potential new development programs, related G&A support and the effects of the COVID-19 pandemic. We may require significant additional funds earlier than we currently expect and there is no assurance that we will not need or seek additional funding prior to such time. We may elect to raise additional funds even before we need them if market conditions for raising additional capital are favorable.

Overview of Expense Components

Research and Development Expenses

R&D expenses consist primarily of fees paid to external service providers such as contract research organizations; contractual obligations for clinical development including clinical sites, outside nursing services and laboratory testing, and preclinical trials;studies; development of manufacturing processes, costs for production runs of DM199; salaries, benefits, and share-based compensation and other personnel costs.

At this time, due to the risks inherent in the clinical development process and the clinical stage of our product development programs, we are unable to estimate with any certainty the costs we will incur in the continued development of DM199 or any of our preclinical development programs. WeAlthough as previously discussed, we have experienced a delay and expect to continue to expectexperience a delay in the timing of costs incurred in the REDUX trialstudy as a result of the COVID-19 pandemic. Wepandemic, we do not however, expect to experience a significant overall increase in costs. We intend to continue to assess the effect of the pandemic on our REDUX trialstudy and our future studies by monitoring the continued spread of the COVID-19 virus, and the actions implemented to combat the virus.virus, the availability and effectiveness of vaccines and the number of people vaccinated. Our R&D expenses have increased beginning with the second quarter of 2021 as compared to prior year periods as we commenced preparation for our ReMEDy2 clinical study. We expect that our R&D expenses will continue to increase in the future as we initiate the ReMEDy2 clinical study and if we are successful in advancing DM199, or any of our preclinical programs, into advanced stages of clinical development. The process of conducting clinical trialsstudies necessary to obtain regulatory approval and manufacturing scale-up to support expanded development and potential future commercialization is costly and time consuming. Any failure by us or delay in completing clinical trials,studies, manufacturing scale-up or in obtaining regulatory approvals could lead to increased R&D expenses and, in turn, have a material adverse effect on our results of operations.

General and Administrative Expenses

G&A expenses consist primarily of salaries and related benefits, including share-based compensation related to our executive, finance, business development and support functions. Other G&A expenses also include insurance, rent and utilities, travel expenses, patent costs and professional fees for auditing, tax and legal services. We expect our G&A expenses will continue to increase in the future as we expand our development and operating activities.

We have instituted a number of procedural changes related to protecting the health and safety of our employees in response to the COVID-19 pandemic. Duringpandemic.Our office was closed in the thirdsecond quarter of 2020 our officeand remained closed during the first quarter of 2021 and our employees worked remotely. In addition, all non-essentialthe second quarter of 2021, we opened our office and allowed, but did not require, employees to work in the office two days of each week. Non-essential travel remainedcontinues to be on hold. We have encouragedhold and we encourage our employees to interact with each other and vendors through audio and video conferencing. We did not incur significant additional G&A expenses during the third quarter of 2020three and six months ended June 30, 2021 related to these changes, or the COVID-19 pandemic, nor do we expect to incur significant additional G&A expenses related to the COVID-19 pandemic going forward. WeProvided conditions related to COVID-19 do not deteriorate, we expect to continue to work remotelyon a modified in-person/remote schedule and restrict non-essential travel for the foreseeable future.

Other (Income) Expense

Other (income) expense consists primarily of governmental assistance – research incentives, interest income and foreign currency exchange gains and losses.

Related Party Transactions

For In past years, governmental assistance – research incentives, which were associated with the ReMEDy Phase 2 stroke study, were a discussionsignificant component of related party transactions, see Note 13 to the Company’s condensed consolidated financial statements included herein.this line item.

Results of Operations

Comparison of the ThreeThree and NineSix Months endedSeptember June 30, 20202021 and 20192020

The following table summarizes our unaudited results of operations for the three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 (in thousands):