Zomedica Corp._March 31, 2025

Three Months Ended March 31,

Depreciation expense

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2025.

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

For the transition period from __________ to __________.

Commission File Number: 001-38298

Zomedica Corp.

(Exact name of registrant as specified in its charter)


Alberta, Canada		N/A
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)


1101 Technology Drive, Suite 100 Ann Arbor, Michigan		48108
(Address of principal executive offices)		(Zip code)

(734) 369-2555

(Registrant’s telephone number, including area code)

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

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

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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

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


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

As of May 15, 2025, 979,949,668 shares of the registrant’s common shares, without par value, were issued and outstanding.

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PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Zomedica Corp.

Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024

(United States Dollars in Thousands)



	March 31,		December 31,
	2025		2024
Assets

Current assets
Cash and cash equivalents	$	8,837	$	7,021
Available-for-sale securities		54,770		64,332
Trade receivables, net		1,569		2,423
Inventory, net		5,358		5,058
Prepaid expenses and deposits		2,135		2,291
Other receivables		555		648
Total current assets		73,224		81,773

Prepaid expenses and deposits		185		193
Property and equipment, net		22,238		24,589
Right-of-use assets		2,488		1,611
Goodwill		—		45,556
Intangible assets, net		42,769		52,538
Noncurrent available-for-sale securities		966		—
Other assets		1,123		1,100
Total assets	$	142,993	$	207,360

Liabilities and shareholders’ equity

Current liabilities
Accounts payable	$	2,295	$	1,929
Accrued income taxes		143		117
Current portion of lease obligations		670		523
Customer contract liabilities		319		331
Accrued expenses and other current liabilities		3,978		6,431
Total current liabilities		7,405		9,331

Lease obligations		2,010		1,291
Deferred tax liabilities, net		435		456
Customer contract liabilities		251		219
Other liabilities		448		399
Total liabilities	$	10,549	$	11,696

Commitments and contingencies (Note 14)

Shareholders’ equity
Unlimited common shares, no par value; 979,949,668 issued and outstanding at March 31, 2025 and December 31, 2024	$	380,973	$	380,973
Additional paid-in capital		33,063		32,518
Accumulated deficit		(281,724)		(217,915)
Accumulated comprehensive income		132		88
Total shareholders' equity		132,444		195,664

Total liabilities and shareholders’ equity	$	142,993	$	207,360

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

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Zomedica Corp.

Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2025 and 2024

(Unaudited) (United States Dollars in Thousands, Except for Per Share Data)


	Three Months Ended March 31,
	2025		2024
Net revenue	$	6,500	$	6,262
Cost of revenue		2,093		2,145
Gross profit		4,407		4,117

Expenses
General and administrative		6,262		8,625
Research and development		1,853		1,771
Selling and marketing		5,007		4,107
Impairment expense		55,833		—
Loss from operations		(64,548)		(10,386)
Interest income		730		1,093
(Loss) gain on disposal of assets		(8)		12
Other (expense) income		(44)		84
Foreign exchange gain (loss)		4		(129)
Loss before income taxes		(63,866)		(9,326)
Income tax benefit		(57)		(166)
Net loss		(63,809)		(9,160)
Unrealized (loss), change in fair value of available-for-sale securities, net of tax		(18)		(11)
Change in foreign currency translation		62		(52)
Net loss and comprehensive loss	$	(63,765)	$	(9,223)

Weighted average number of common shares - basic and diluted		979,949,668		979,949,668

Loss per share - basic and diluted (Note 16)	$	(0.07)	$	(0.01)

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

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Zomedica Corp.

Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2025 and 2024

(Unaudited) (United States Dollars in Thousands)


	Three Months Ended March 31, 2025
				Additional				Accumulated
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income (Loss)		Total
Balance at December 31, 2024	979,949,668	$	380,973	$	32,518	$	(217,915)	$	88	$	195,664
Stock-based compensation	—		—		545		—		—		545
Net loss	—		—		—		(63,809)		—		(63,809)
Other comprehensive income	—		—		—		—		44		44
Balance at March 31, 2025	979,949,668	$	380,973	$	33,063	$	(281,724)	$	132	$	132,444


	Three Months Ended March 31, 2024
				Additional				Accumulated
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income (Loss)		Total
Balance at December 31, 2023	979,949,668	$	380,973	$	29,929	$	(170,933)	$	48	$	240,017
Stock-based compensation	—		—		1,101		—		—		1,101
Net loss	—		—		—		(9,160)		—		(9,160)
Other comprehensive loss	—		—		—		—		(63)		(63)
Balance at March 31, 2024	979,949,668	$	380,973	$	31,030	$	(180,093)	$	(15)	$	231,895

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

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Zomedica Corp.

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024

(Unaudited) (United States Dollars in Thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net loss	$	(63,809)	$	(9,160)
Adjustments for:
Depreciation		521		334
Amortization - intangible assets		1,693		1,597
Impairment loss		55,833		—
Loss (gain) on disposal of property and equipment		8		(12)
Stock-based compensation		618		1,101
Noncash portion of rent (expense) benefit		(11)		2
Accretion/amortization of available-for-sale securities		(288)		(543)
Equity in loss of nonconsolidated entities		40		—
Deferred tax expense		(82)		(184)
Change in assets and liabilities, net of acquisitions:
Purchased inventory		(334)		60
Prepaid expenses and deposits		166		450
Trade receivables		854		(452)
Other receivables		156		322
Accounts payable		423		958
Accrued income tax		26		1
Accrued expenses and other current liabilities		(2,530)		(2,039)
Customer contract liabilities		20		10
Other liabilities		48		(35)
Net cash used in operating activities		(6,648)		(7,590)

Cash flows from investing activities:
Securities matured		8,806		7,988
Investment in property and equipment		(280)		(2,335)
Acquisition of intangibles		(120)		(28)
Net cash provided by investing activities		8,406		5,625

Increase (decrease) in cash and cash equivalents		1,758		(1,965)
Effect of exchange rate changes on cash		58		(48)
Cash and cash equivalents, beginning of year		7,021		12,952
Cash and cash equivalents, end of period	$	8,837	$	10,939

Noncash activities:
Change in fair value of available-for-sale securities, net of tax	$	(18)	$	(11)
Property and equipment accrued for in accounts payable		44		151
Transfer of property and equipment into intangibles		39		1,007
Transfer of inventory into property and equipment		37		2
Intangible assets accrued for in accounts payable		61		—
Right-of-use assets obtained in exchange for operating lease obligations		1,056		—

Supplemental cash flow information:
Interest received on available-for-sale securities	$	591	$	708

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

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

1. Nature of Operations

Zomedica Corp. (“Zomedica” or the “Company”) is a veterinary health company creating products for companion animals by focusing on the unmet needs of clinical veterinarians. The Company consists of the parent company, Zomedica Corp., its wholly owned U.S subsidiary, Zomedica Inc., and the wholly owned subsidiaries of Zomedica Inc.

2. Basis of Preparation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries. Intercompany transactions and balances between consolidated businesses have been eliminated. The accounting policies set out below have been applied consistently in the condensed consolidated financial statements.

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements include all normal recurring adjustments necessary to present fairly the information required to be set forth therein. The Company’s management believes the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 13, 2025 (“2024 Form 10-K”).

3. Significant Accounting Policies

Basis of Measurement

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

Estimates and Assumptions

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

Functional and Reporting Currencies

The functional currency for Canada and our subsidiaries in the United States and Switzerland is U.S. dollars, which is also our reporting currency. The functional currency, as determined by management, for our Japanese subsidiary is Japanese Yen. Japanese Yen is translated for financial reporting purposes, with translation gains and losses recorded as a component of other comprehensive income or loss. In respect of transactions denominated in currencies other than the Company’s and its wholly owned operating subsidiaries’ functional currencies, the monetary assets and liabilities are remeasured at the period end rates. Revenue and expenses are measured at rates of exchange prevailing on the transaction dates. All exchange gains or losses resulting from these transactions are recognized in the consolidated statements of operations.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires additional disclosures to disaggregate costs and expense line items presented on the face of the consolidated statements of operations and comprehensive loss. These disclosures include: (a) amounts related to purchased inventory, employee compensation, depreciation, amortization, and other significant components of

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

costs and expenses; (b) an explanation of costs and expenses that are not disaggregated quantitatively; and (c) the definition and total amount of selling expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and has not yet determined its effect on the consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public entities with fiscal years beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and has not yet determined its effect on the consolidated financial statements.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The key amendments include: (a) introducing a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker (“CODM”), (b) extending certain annual disclosures to interim periods, (c) clarifying that single reportable segment entities must apply ASC 280 in its entirety, (d) permitting more than one measure of segment profit or loss to be reported under certain conditions, and (e) requiring disclosure of the title and position of the CODM. This ASU is effective for public entities with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance in the fourth quarter of fiscal 2024. The adoption did not have a material impact on the consolidated financial statements.

Segment Reporting

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company’s reportable segments consist of Diagnostics and Therapeutic Devices.

Cash and Cash Equivalents

The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. As of March 31, 2025 and December 31, 2024, the Company's cash balances exceeded federally insured limits by approximately $1,356 and $1,376.

Investment Securities

Our investment securities, which are comprised of corporate bonds/notes and US treasuries, are accounted for in accordance with ASC 320, Investments – Debt Securities (“ASC 320”). The Company considers all of its securities for which there is a determinable fair market value, and there are no restrictions on the Company’s ability to sell within the next twelve months, as available for sale. We classify these securities as both current and non-current depending on their time to maturity. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported as a component of comprehensive loss.

Accounts Receivable and Allowance for Credit Losses

Accounts receivables are recorded net of an allowance for credit losses and have payment terms of 30-60 days. Our policy for determining the allowance is based on factors that affect collectability, including: (a) historical trends of write-offs, recoveries, and credit losses; (b) the credit quality of our customers; and (c) projected economic and market conditions. As of March 31, 2025, December 31, 2024, and December 31, 2023, accounts receivable were $1,769, $2,794, and $1,300, respectively, net of allowance for doubtful accounts of $200, $371, and $103, respectively. While we believe that our allowance for credit losses is adequate and represents our best estimate as of March 31, 2025 we continue to closely monitor customer liquidity and industry and economic conditions, which may result in changes to these estimates.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

Inventories

Inventories are stated at the lower of cost or net realizable value. The Company utilizes the specific identification and First in, First out ("FIFO") method 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.

Property and Equipment

Property and equipment are carried at historical cost less accumulated depreciation and any accumulated impairment losses. Property and equipment acquired in a business combination are recorded at fair value as of the date of acquisition. Maintenance and repair expenditures that do not improve or extend the life are expensed in the period incurred. Depreciation is recognized so as to write off the cost less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Included in property and equipment is construction in progress (“CIP”), which consists of property and equipment that are purchased or constructed and require time before being ready for their intended use. CIP is recorded at acquisition cost, including directly attributable installation costs. No depreciation is recorded on CIP until assets are complete and ready for use, at which point CIP balances are transferred to the appropriate property and equipment accounts, and depreciation begins in accordance with our policy.

Intangible Assets

Definite-lived intangible assets include acquired customer relationships, developed technology, licenses, trademarks, and tradenames. These assets are capitalized at cost and amortized on a straight-line basis over their estimated useful lives. Definite-lived intangible assets, whether acquired in a business combination or separately, are recorded at cost, net of accumulated amortization and any impairment losses. The estimated useful lives and amortization methods are reviewed annually, with any changes applied prospectively.

Expenditures for the planning and ongoing operation of the Company’s website are expensed as incurred. Costs incurred for website application development and infrastructure enhancements are capitalized and amortized over their estimated useful life..

Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. These assets are not amortized but are assessed for impairment at least annually, or more frequently if events or circumstances indicate potential impairment..

Impairment of Long-Lived and Indefinite-Lived Intangible Assets

The Company evaluates long-lived assets, including property, equipment, and definite-lived intangible assets, for impairment whenever events or circumstances indicate that their carrying value may not be recoverable. If the sum of estimated undiscounted future cash flows expected to be generated by an asset or asset group is less than its carrying value, an impairment loss is recognized. The impairment loss is measured as the excess of the asset’s carrying amount over its fair value.

Indefinite-lived intangible assets, including goodwill, are tested for impairment at least annually or when impairment indicators arise. If the carrying amount exceeds the fair value, an impairment loss is recognized. During the three months ended March 31, 2025, the Company identified a triggering event and recorded a material impairment charge related to certain intangible assets. See Note 11, Goodwill and Intangible Assets, for further information.

Revenue Recognition

The Company enters into agreements which may contain multiple promises where customers purchase products, services, or a combination thereof. Determining whether products and services are considered distinct performance obligations that should be

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

accounted for separately requires judgment. We determine the transaction price for a contract based on the total consideration we expect to receive in exchange for the transferred goods or services.

The Company allocates revenue to each performance obligation in proportion to the relative standalone selling prices and recognizes revenue when control of the related goods or services is transferred for each obligation. We utilize the observable standalone selling price when available, which represents the price charged for the performance obligation when sold separately. The Company's contracts with customers are generally comprised of purchase orders for the sale of the point of care instrument, consumable products, and extended warranties, or some variation thereof. The instrument and consumables each represent a single performance obligation when sold separately, that is satisfied at a point in time upon transfer of control of the product to the customer which is typically upon receipt of the goods by the customer. The extended warranties are also a separate performance obligation, whereby revenue is recognized over time.

The Company also enters into contracts with customers where it receives payment for the consumable products and does not receive additional or separate consideration for the use of the point of care instrument furnished by the Company for the clinical veterinarian’s use. For these contracts, the Company considers the guidance under ASC 842, Leases (“ASC 842”), in order to determine if the furnishing of the point of care instrument to the customer during the period of use creates an embedded lease. If the point of care instrument is identified as a lease, it is classified as an operating lease as it does not meet any of the finance lease criteria per ASC 842. In these arrangements, the consumable products are classified as non-lease components. The Company allocates revenue to these lease and non-lease components based on standalone selling prices or, if not available, a cost-plus approach. Revenue related to the lease component is recognized ratably over the term of the contract. Revenue related to the non-lease components is recognized when control of the product has been transferred to the customer.

The nature of the Company’s PulseVet^® business gives rise to variable consideration, including discounts and applicator (“trode”) returns for refurbishment. Credits are issued for unused shocks on returned trodes, which can be used toward the purchase of replacement trodes. Discounts and the estimated unused shock credits decrease the transaction price, which reduces revenue. Variable consideration related to unused shock credits is estimated using the expected value method, which estimates the amount that is expected to be earned.

Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are based upon historical experience and known trends. These estimated credits are nonrefundable and may only be used towards the purchase of future trode refurbishments. These credits give rise to the contract liability contained on the balance sheet. This practice encourages refurbishment purchase prior to complete utilization of the previous trode, so the customer will always have a trode on hand with ample capacity to perform treatments.

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

Disaggregated revenue for the three months ended March 31, 2025 and 2024 is as follows:


		Three Months Ended March 31,
		Diagnostics				Therapeutic Devices				Consolidated
		2025		2024		2025		2024		2025		2024
Capital	$	156	$	450	$	1,800	$	1,774	$	1,956	$	2,224
Consumables		403		294		4,094		3,716		4,497		4,010
Other		-		-		47		28		47		28
Total revenue	$	559	$	744	$	5,941	$	5,518	$	6,500	$	6,262

Cost of Revenue

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

Research and Development

Research and development costs related to continued research and development programs are expensed as incurred.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, (“ASC 718”). Stock-based compensation expense is recognized for awards granted to employees and directors based on the fair value of the awards on the grant date. The Company’s stock-based compensation includes stock options, which are classified as equity awards, and stock appreciation rights (SARs), which are classified as liability awards.

The Company calculates stock-based compensation for stock options using the fair value method. The fair value of stock options at the grant date is determined using the Black-Scholes Option Pricing Model. The resulting fair value is recognized as compensation expense over the vesting period of the award using the graded vesting method. The Company’s stock option plans do not require the settlement of awards by transferring cash or other assets. Therefore, stock options are classified as equity awards. Compensation expense recognized during the period reflects the fair value of stock-based payment awards that are ultimately expected to vest. In accordance with ASC 718, the Company recognizes forfeitures of employee awards as they occur.

The Company accounts for SARs under ASC 718 as liability-classified awards because they are settled solely in cash and do not result in the issuance of equity. The fair value of SARs is measured at the grant date and remeasured at each reporting date until settlement. Changes in fair value are recognized as compensation expense in the consolidated statements of operations and comprehensive loss in the period of remeasurement. The fair value of SARs is determined using the Black-Scholes Option Pricing Model, incorporating significant assumptions such as expected stock price volatility, expected term of the award, and risk-free interest rate.

SARs vest over the defined vesting period, and compensation expense is recognized based on the proportion of the vesting period that has elapsed. Upon exercise, participants receive a cash payment equal to the excess of the fair market value of a share of common stock on the exercise date over the exercise price of the SAR.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), on a tax jurisdictional basis. The Company files income tax returns in Canada and the province of Alberta and its subsidiaries file income tax returns in Switzerland, Japan, the United States and various states within, including in Michigan where the Company’s headquarters are located. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and their financial statement reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company assesses the likelihood of the financial statement effect of an uncertain tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. The Company is subject to examination by taxing authorities in the United States, Canada, Japan, and Switzerland. The Company recognizes tax-related interest and penalties, if any, as a component separate from income tax expense.

Comprehensive Loss

Our comprehensive loss is reported in accordance with ASC 220, Income Statement — Reporting Comprehensive Income (“ASC 220”). Comprehensive loss is net loss plus certain items that are recorded directly to shareholders’ equity. The Company has recorded a currency translation adjustment associated with the translation of its Japanese subsidiary to the reporting currency.

Loss Per Share

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

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty

The preparation of financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and further periods if the revision affects both current and future periods.

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

Impairment Testing

We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change indicating the carrying value may not be recoverable. When testing goodwill for impairment, we may first assess qualitative factors to determine if it is more likely than not the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, we consider the impact of changes, if any, to the following factors: macroeconomic, industry and market factors; cost factors; changes in overall financial performance; and any other relevant events and uncertainties impacting a reporting unit. If our qualitative assessment indicates a goodwill impairment is more likely than not, we perform additional quantitative analyses. We may also elect to skip the qualitative testing and proceed directly to the quantitative testing. For reporting units where a quantitative analysis is performed, we perform a test measuring the fair values of the reporting units and comparing them to their aggregate carrying values, including goodwill. If the fair value is less than the carrying value of the reporting unit, an impairment is recognized for the difference, up to the carrying amount of goodwill.

We estimate the fair values of our reporting units using a discounted cash flow method or a weighted combination of discounted cash flows and a market-based method. The discounted cash flow method includes assumptions about a wide variety of internal and external factors. Significant assumptions used in the discounted cash flow method include financial projections of free cash flow, including revenue trends, medical costs trends, operating productivity, income taxes and capital levels; long-term growth rates for determining terminal value beyond the discretely forecasted periods; and discount rates. Financial projections and long-term growth rates used for our reporting units will be consistent with, and use inputs from, our internal long-term business plan and strategies.

Discount rates will be determined for each reporting unit and include consideration of the implied risk inherent in their forecasts. Our most significant estimate in the discount rate determinations involves our adjustments to the peer company weighted average costs of capital reflecting reporting unit-specific factors. We do not make any adjustments to decrease a discount rate below the calculated peer company weighted average cost of capital for any reporting unit. Company-specific adjustments to discount rates are subjective and thus are difficult to measure with certainty.

The passage of time and the availability of additional information regarding areas of uncertainty with respect to the reporting units’ operations could cause these assumptions to change in the future. Additionally, as part of our quantitative impairment testing, we perform various sensitivity analyses on certain key assumptions, such as discount rates, cash flow projections, and peer company multiples to analyze the potential for a material impact. The market-based method requires determination of an appropriate peer group whose securities are traded on an active market. The peer group is used to derive market multiples to estimate fair value.

Valuation and Payback of Property and Equipment

Diagnostic based TRUFORMA^® capital is placed in fixed assets once purchased or manufactured, where they remain, undepreciated, until they are placed with our customers under the agreement that they will repeatedly purchase consumables or services which are utilized within. Each instance of this placed capital represents an asset that we own. An estimate is made of the anticipated future revenue over its respective life which is ten years. If the payback period of the initial investment in the asset is less than the ten-year life of the asset, we conclude that the assets have been properly recorded, and no write-down is necessary. We rely on third-party data that considers various data points and assumptions, including, but not limited to, the expected volume of consumables which will be sold, anticipated growth rates, and anticipated placements. Realization of the anticipated revenue is dependent on the current assumptions and forecasted models.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

Revenue Recognition

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

5. Investment Securities

The following represents the Company’s investment securities as of March 31, 2025 and December 31, 2024:


Balance at March 31, 2025		Acquisition Cost		Accretion / (Amortization)		Unrealized Gain / (Loss)		Estimated Fair Value
Commercial paper	$	4,383	$	59	$	—	$	4,442
Corporate notes / bonds		42,372		275		(5)		42,642
U.S. treasuries		6,609		97		(1)		6,705
U.S. govt. agencies		1,930		21		(4)		1,947
Money market funds		4,466		—		—		4,466
Total investment securities	$	59,760	$	452	$	(10)	$	60,202


Balance at December 31, 2024		Acquisition Cost		Accretion / (Amortization)		Unrealized Gain / (Loss)		Estimated Fair Value
Commercial paper	$	10,130	$	254	$	3	$	10,387
Corporate notes / bonds		45,336		483		7		45,826
U.S. treasuries		6,609		41		(1)		6,649
U.S. govt. agencies		1,441		31		(2)		1,470
Money market funds		2,766		—		—		2,766
Total investment securities	$	66,282	$	809	$	7	$	67,098

Accretion / (amortization) refers to the discounts and premiums incurred on bonds and notes purchased and are included within Interest income on the consolidated statements of operations and comprehensive loss.

Accrued interest receivable related to the above investment securities amounted to $412 and $504 as of March 31, 2025 and December 31, 2024, respectively, and is included in Other receivables on the consolidated balance sheets. The contractual maturities of investment securities as of March 31, 2025, are as follows:


		Acquisition Cost		Estimated Fair Value
Original maturities of 90 days or less	$	4,466	$	4,466
Original maturities of 91-365 days		54,329		54,770
Original maturities of 366+ days		965		966
Total investment securities	$	59,760	$	60,202

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

6. Fair Value Measurements

In accordance with FASB ASC 820, Fair Value Measurement (“ASC 820”), the Company measures its cash and cash equivalents and investments at fair value on a recurring basis. The Company also measures certain assets and liabilities at fair value on a non-recurring basis when applying acquisition accounting.

ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1:

Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Observable inputs other than quoted prices included in Level 1 for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3:

Unobservable data points for the assets or liability, and include situations where there is little, if any, market activity for the asset or liability. Valuations based on inputs that are unobservable and involve management judgement and the reporting entity’s own assumptions about market participants and pricing.

Cash and cash equivalents, accounts receivable, and accounts payable: The carrying amount of these assets approximate fair value due to the short maturity of these instruments. Cash and cash equivalents include marketable securities with an original maturity within 90 days.

Available-for-sale securities: The Company classifies marketable securities and other highly liquid investments, with a maturity of greater than three months and that can be readily purchased or sold using established markets, as available-for-sale. These investments are reported at fair value on the Company’s consolidated balance sheets and unrealized gains and losses are reported as a component of shareholders’ equity.

Stock Appreciation Rights liability: The Company measures its cash-settled SARs at fair value on a recurring basis using a Black-Scholes option-pricing model. The liability, classified as Level 2 within the fair-value hierarchy, is reported at fair value on the Company’s consolidated balance sheets, and changes in fair value are recognized as compensation expense in the consolidated statements of operations and comprehensive loss in the period of remeasurement.

In accordance with the fair value hierarchy described above, the following table shows the fair value of our investments as of March 31, 2025 and December 31, 2024:


Balance at March 31, 2025		Level 1		Level 2		Level 3		Estimated Fair Value
Commercial paper	$	—	$	4,442	$	—	$	4,442
Corporate notes / bonds		—		42,642		—		42,642
U.S. treasuries		6,705		—		—		6,705
U.S. govt. agencies		1,947		—		—		1,947
Money market funds		4,466		—		—		4,466
Total investment securities	$	13,118	$	47,084	$	—	$	60,202

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)


Balance at December 31, 2024		Level 1		Level 2		Level 3		Estimated Fair Value
Commercial paper	$	—	$	10,387	$	—	$	10,387
Corporate notes / bonds		—		45,826		—		45,826
U.S. treasuries		6,649		—		—		6,649
U.S. govt. agencies		1,470		—		—		1,470
Money market funds		2,766		—		—		2,766
Total investment securities	$	10,885	$	56,213	$	—	$	67,098

The following tables shows our investments as of March 31, 2025 and December 31, 2024 and their respective balance sheet classifications:


Balance at March 31, 2025		Cash & Cash Equivalents		Available- For-Sale (Current)		Available- For-Sale (Non-Current)		Estimated Fair Value
Commercial paper	$	—	$	4,442	$	—	$	4,442
Corporate notes / bonds		—		41,676		966		42,642
U.S. treasuries		—		6,705		—		6,705
U.S. govt. agencies		—		1,947		—		1,947
Money market funds		4,466		—		—		4,466
Total investment securities	$	4,466	$	54,770	$	966	$	60,202


Balance at December 31, 2024		Cash & Cash Equivalents		Available- For-Sale (Current)		Available- For-Sale (Non-Current)		Estimated Fair Value
Commercial paper	$	—	$	10,387	$	—	$	10,387
Corporate notes / bonds		—		45,826		—		45,826
U.S. treasuries		—		6,649		—		6,649
U.S. govt. agencies		—		1,470		—		1,470
Money market funds		2,766		—		—		2,766
Total investment securities	$	2,766	$	64,332	$	-	$	67,098

Unrealized gains on our investments have not been recorded into income as we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The decline in fair value of our debt securities is largely due to the rising interest rate environment driven by current market conditions that have resulted in higher credit spreads. The credit ratings associated with our debt securities are mostly unchanged, are highly rated, and the debtors continue to make timely principal and interest payments. As a result, there were no credit or non-credit impairment charges recorded through March 31, 2025.

7. Inventory


	March 31, 2025						December 31, 2024
	Diagnostics		Therapeutic Devices		Consolidated		Diagnostics		Therapeutic Devices		Consolidated
Raw materials	$	2,082	$	2,547	$	4,629	$	1,997	$	2,304	$	4,301
Finished goods		274		124		398		265		274		539
Purchased inventory		62		290		352		46		198		244
Total inventory		2,418		2,961		5,379		2,308		2,776		5,084
Less: reserves		(21)		—		(21)		(26)		—		(26)
Inventory, net	$	2,397	$	2,961	$	5,358	$	2,282	$	2,776	$	5,058

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

8. Prepaid Expenses and Deposits


	March 31,		December 31,
	2025		2024
Deposits	$	330	$	508
Prepaid marketing		340		368
Prepaid insurance		366		438
Other		1,284		1,170
Total prepaid expenses and deposits	$	2,320	$	2,484

9. Accrued Expenses and Other Current Liabilities


	March 31,		December 31,
	2025		2024
Accrued employee compensation and benefits	$	2,438	$	4,557
Accrued taxes		860		1,003
Accrued professional services		478		535
Other		202		336
Total accrued expenses and other current liabilities	$	3,978	$	6,431

10. Property and Equipment


	March 31,		December 31,
	2025		2024
Machinery and equipment	$	15,392	$	15,947
Furniture and fixtures		168		224
Laboratory equipment		857		857
Leasehold improvements		2,808		3,088
Construction in progress		6,595		7,889
Total property and equipment		25,820		28,005
Less: accumulated depreciation		(3,582)		(3,416)
Property and equipment, net	$	22,238	$	24,589

Depreciation expense related to property and equipment is as follows:

During the three months ended March 31, 2025, a triggering event occurred that required the Company to perform interim impairment testing of goodwill. In connection with this assessment, the Company conducted a review of its property and equipment for recoverability in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”). Based on this review, it was determined that certain property and equipment assets within the Diagnostics segment were not fully recoverable. As a result, the Company recognized an impairment charge totaling $2 million, consisting of $0.9 million related to machinery and equipment and $1.1 million related to construction in progress. These impairment charges were recorded in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

11. Goodwill and Intangible Assets

The following table provides a rollforward of the carrying amount of goodwill by segment:


	Diagnostics		Therapeutic Devices		Total
Balance at December 31, 2024	$	—	$	45,556	$	45,556
Impairment		—		(45,556)		(45,556)
Balance at March 31, 2025	$	—	$	—	$	—

During the three months ended March 31, 2025, the Company determined that a triggering event occurred that required an interim goodwill impairment analysis in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”). The triggering event was related to the Company’s market capitalized value, which is a function of its stock price, which has reduced significantly subsequent to the delisting of the Company’s common shares from NYSE American during the three months ended March 31, 2025. The Company concluded it was more likely than not that the fair values of certain of its reporting units had declined below their carrying values. The difference between the reporting units’ carrying values and fair values was recognized as impairment charges. The Company recognized $45.6 million in noncash impairment charges related to goodwill during the three months ended March 31, 2025, which represented full impairments of goodwill in the PulseVet and Assisi reporting units. No goodwill impairment charges were recognized during the three months ended March 31, 2024.

As part of the interim impairment analysis during the three months ended March 31, 2025, the Company also evaluated its amortizable intangible assets for recoverability under ASC 360. It was determined that the carrying values of certain intangible assets exceeded their fair values. The decline in fair value was related to the same facts and circumstances as those noted above as part of our interim goodwill impairment analysis. The Company recognized $8.3 million in non-cash impairment charges related to intangible assets within the Diagnostics segment, consisting primarily of $7.1 million related to technology assets and $0.8 million related to customer relationships. No impairment charges related to intangible assets were recognized during the three months ended March 31, 2024.

Both the goodwill and amortizable intangible assets impairment charges are presented within Impairment expense on the consolidated statements of operations and comprehensive loss.

The following table summarizes our intangible assets, net of accumulated amortization:


	March 31,		December 31,
	2025		2024
Computer software	$	3,132	$	3,454
Customer relationships		26,087		26,850
Licenses		9,542		9,542
Technology		17,990		25,050
Tradenames		2,787		2,850
Trademarks		16		16
Website		1,433		1,364
Intangibles under construction		63
Total intangibles		61,050		69,126
Less: accumulated amortization		(18,281)		(16,588)
Intangibles, net	$	42,769	$	52,538

Included within intangibles are $563 in licenses associated with future exclusivity to sell products should we determine that they have both market viability and are a complementary fit within our suite of offerings. As these relationships are still in the exploratory phase with no revenue stream to match expenses against nor a guarantee that this exclusivity will ever be used, we are considering these to be indefinite lived as of March 31, 2025. This accounts for the difference between the net intangibles as found within our consolidated balance sheets and the amortization table below. We will continue to assess the commercialization status and relationship with these companies on a quarterly basis and will adjust our amortization schedules accordingly.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

The estimated future amortization of intangible assets is as follows:


2025	$	4,192
2026		5,177
2027		4,997
2028		4,753
2029		4,639
Thereafter		18,385
Total	$	42,143

Amortization expense associated with intangible assets is as follows:

12. Stock-Based Compensation

Stock Options

The Zomedica Amended and Restated Stock Option Plan (the “Plan”) was amended and restated on June 15, 2022, and provides incentives through the grant of stock options which may be granted to the directors, officers, and employees of the Company. The Plan is administered by the Board of Directors of the Company, and the aggregate number of shares reserved for issuance under the Plan shall not, at the time of the stock option grant, exceed ten percent of the total number of issued and outstanding shares (calculated on a non-diluted basis). If any stock options granted under this Plan shall expire or terminate for any reason without having been exercised in full, they shall be available for the purposes of granting new stock options under this Plan.

During the three months ended March 31, 2025 and 2024, the Company issued 6,975,000 and 795,000 stock options to purchase an aggregate of 6,975,000 and 795,000 common shares, respectively. These options vest over a period of four years and have an expiration period of 10 years.

The continuity of stock options for the three months ended March 31, 2025 and 2024 are as follows:


	Number of Options	Weighted-Average Exercise Price
Balance at December 31, 2024	89,051,943	$	0.3232
Stock options granted	6,975,000		0.1183
Stock options forfeited	351,250		0.1769
Vested stock options expired	3,845,557		0.3354
Balance at March 31, 2025	91,830,136	$	0.3077
Vested at March 31, 2025	55,036,523	$	0.3565


	Number of Options	Weighted-Average Exercise Price
Balance at December 31, 2023	93,349,943	$	0.3338
Stock options granted	795,000		0.1535
Stock options forfeited	1,092,500		0.2557
Vested stock options expired	435,000		0.9408
Balance at March 31, 2024	92,617,443	$	0.3303
Vested at March 31, 2024	44,713,274	$	0.3474

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

The Company recorded the following stock-based compensation expense:

As of March 31, 2025, the total unrecognized compensation cost related to nonvested awards was $2,184, which is expected to be recognized over a weighted-average period of 2.5 years.

Cash-Settled Stock Appreciation Rights (“SARs”)

On August 12, 2024, the Board of Directors of the Company adopted the Zomedica Corp. 2024 Stock Appreciation Rights Plan (the “SAR Plan”). The SAR Plan is administered by the Board of Directors, which may delegate administration to a committee of the Board. Up to 10% of the issued and outstanding shares of common stock of the Company (calculated on a non-diluted basis) is available for the grant of SARs. Awards are settled solely in cash and do not result in the issuance of shares.

The Board determines the exercise price of each SAR, which must not be less than the fair market value of one share of common stock on the grant date, as well as the term and vesting provisions of each award. The term of a SAR may not exceed ten years. Upon exercise, participants receive a cash payment equal to the excess of the fair market value of a share of common stock on the exercise date over the exercise price.

SARs granted to employees vest 25% on the first anniversary of the grant date, with the remainder vesting 1/48th per month over the next 36 months. SARs granted to non-employee directors vest 100% on the first anniversary of the grant date, subject to continuous service through the vesting date.

Following termination of service, vested SARs may generally be exercised within 90 days, or up to 12 months in the event of death or disability, but not beyond the expiration date of the SAR. The SAR Plan is subject to the terms outlined in individual grant agreements.

The continuity of SARs for the month ended March 31, 2025 is as follows:


	Number of SARs	Weighted-Average Exercise Price
Balance at December 31, 2024	13,521,379	$	0.13
Balance at March 31, 2025	13,521,379	$	0.13
Exercisable at March 31, 2025	—
Vested at March 31, 2025	—

As of March 31, 2025, unrecognized stock-based compensation expense related to non-employee director SARs was $319 and is expected to be recognized over a weighted-average period of approximately 0.6 year. During the three months ended March 31, 2025, the Company recognized $73 of compensation expense related to SARs. The carrying amount of the SAR liability, measured at fair value, was $192 as of March 31, 2025, and $119 as of December 31, 2024, and is presented within Accrued expenses and other current liabilities on the consolidated balance sheets.

13. Income Taxes

The Company is in an overall domestic net deferred tax liability position for the three months ended March 31, 2025. Management has assessed that the future taxable income resulting from the deferred tax liability position will result in partial utilization of the Company's US federal and state net operating loss carryforwards and has therefore concluded a valuation allowance of $24,587 is currently necessary. Due to the uncertainty of realizing any tax benefits as of March 31, 2025 due to historical losses, a full valuation allowance remains necessary to fully offset our Canadian deferred tax assets.

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

14. Commitments and Contingencies

From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As of March 31, 2025, and continuing as of May 15, 2025, the Company is not aware of any pending or threatened material litigation claims against the Company.

Agreements with Qorvo Biotechnologies, LLC

On January 17, 2023, the Company entered into a series of agreements with Qorvo Biotechnologies, LLC. Other than the obligation to purchase a minimum quantity of BAW sensors during the term of the BAW Sensor Supply Agreement from Qorvo US, Inc., the obligations under these agreements were terminated upon the acquisition of Qorvo Biotechnologies, LLC on October 4, 2023.

Development and License Agreement with Brisby, Inc.

On April 4, 2023, the Company entered into a Development and License Agreement with Brisby Inc. Under the terms of this agreement, Brisby grants the Company a license to use, develop, manufacture, have manufactured, offer for sale, sell, and import certain Brisby products, such as the Smart Pet Pad and the Intelligent Pet Bed, along with any future developments of these products.

As part of this agreement, the Company is required to make the following milestone payments:

●

$3,500 in cash payments, split between license fees and equity interest, upon the achievement of future development milestones, inclusive of development milestones and commercial sales;

●

$750 in cash payment upon the first commercial sale of the Smart Pet Pad;

●

$750 in cash payment upon the first commercial sale of the Intelligent Pet Bed;

●

$5,000 in cash payment upon reaching $15,000 in annual net sales of the licensed products.

As of March 31, 2025, the Company has made $1,563 in cash payments for milestones achieved under this agreement and holds a 19.50% equity stake in Brisby Inc. The remaining cash payments, totaling $1,937, are due upon the achievement of future development milestones and the first commercial sales of the Smart Pet Pad and the Intelligent Pet Bed.

The Company’s investment in Brisby Inc. is accounted for under the equity method in accordance with ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”), and is included in Other assets on the consolidated balance sheets.

License and Supply Agreement with Cresilon, Inc.

On December 30, 2024 (the “Effective Date”), the Company entered into a License and Supply Agreement with Cresilon, Inc. Under the terms of this agreement, Cresilon will manufacture and supply VETIGEL^® Hemostatic Gel and related products (the “Products”) to the Company, ensuring the Products materially conform to agreed specifications.

The agreement grants the Company a perpetual, royalty-bearing exclusive license to promote, market, and sell VETIGEL Products in the United States and, upon regulatory approval, Japan, as well as a non-exclusive license for global markets outside these territories. Both licenses include sublicensing rights but exclude any rights to manufacture the Products. Additionally, the Company received a non-exclusive, transferable trademark license to use Cresilon trademarks solely for the sale and importation of VETIGEL Products.

As part of this agreement, the Company is required to make the following considerations:

●

$1,500 in an up-front license fee, due upon execution of the Agreement, which was paid during the year-ended December 31, 2024;

●

$1,000 in a sales milestone payment, payable no later than January 31 of the first calendar year following the first calendar year in which Gross Sales exceed $3,000 (provided this occurs within five years of the Effective Date);

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Zomedica Corp.
Notes to the Condensed Consolidated Financial Statements
(United States Dollars in Thousands)

●

$1,000 in a sales milestone payment, payable no later than January 31 of the first calendar year following the first calendar year in which Gross Sales exceed $5,000 (provided this occurs within five years of the Effective Date);

●

$2,000 in a sales milestone payment, payable no later than January 31 of the first calendar year following the first calendar year in which Gross Sales exceed $10,000 (provided this occurs within five years of the Effective Date);

●

Royalties on Net Sales less amounts paid to Cresilon for Products (“Cresilon Net Sales”), ranging from 5% to 15%, depending on territory and patent status;

●

A Minimum Royalty obligation (beginning in the second calendar year following the Effective Date), consisting of: (a) a royalty based on at least $1,000 in Cresilon Net Sales; and (b) a shortfall payment based on the number of Products manufactured by Cresilon to meet that threshold but not purchased by the Company during the applicable calendar year.

15. Segment Information

The Company’s operations are comprised of two reportable segments:

●

Diagnostics, which consists of TRUFORMA^®, VetGuardian^®, and TRUVIEW^® products; and

●

Therapeutic Devices, which consists of Assisi^®, PulseVet^®, and VETIGEL^® products.

The Company’s Chief Operating Decision Maker (CODM) is its Chief Executive Officer who has ultimate responsibility for enterprise decisions. Segment information is used by the CODM to evaluate financial performance and to make strategic decisions related to resource allocation and operational focus across the segments. The CODM does not assess individual expense line items beyond cost of goods sold, nor does the CODM evaluate additional financial measures or allocate assets at the segment level.

Although our reportable segments provide similar products, each one is managed separately to better align with the Company’s customers and distribution / development partners. The CODM determines resource allocation for, and monitors performance of, the consolidated enterprise, which includes both the Diagnostics and the Therapeutic Devices segments. The CODM relies on internal segment reporting that analyzes results on certain key performance indicators, namely, revenues, cost of goods sold, and gross profit. Cost of goods sold is the only significant expense evaluated at the segment level, as it is critical for assessing gross profit and segment performance. Costs below gross profit, such as operating expenses, are not allocated to the segments, nor are asset groupings, except for the purpose of periodic impairment analysis.

The following is a reconciliation of consolidated revenue, cost of revenue, and gross profit amongst our reportable segments for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	Diagnostics				Therapeutic Devices				Consolidated
	2025		2024		2025		2024		2025		2024
Net revenue	$	559	$	744	$	5,941	$	5,518	$	6,500	$	6,262
Cost of revenue		557		583		1,536		1,562		2,093		2,145
Gross profit	$	2	$	161	$	4,405	$	3,956	$	4,407	$	4,117

For the three months ended March 31, 2025, revenue from external customers in the U.S. was $5,053, and revenue from customers in foreign countries was $1,447. For the three months ended March 31, 2024, revenue from external customers in the U.S. was $5,162, and revenue from customers in foreign countries was $1,100.

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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

(All amounts are expressed in thousands unless otherwise indicated)

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of the Company. The Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto for the quarter ended March 31, 2025. This report contains forward-looking statements or forward-looking information (collectively, “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, as well as the safe harbor provisions of applicable Canadian securities legislation, that are based on management’s beliefs and assumptions and involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

Forward-looking statements can also be identified by words such as “future”, “anticipates”, “believes”, “projects”, “estimates”, “expects”, “intends”, “plans”, “predicts”, “will”, “should”, “would”, “could”, “can”, “may”, or similar terms. Forward-looking statements are not guarantees of future performance and Zomedica’s actual results may differ significantly from the results discussed in the forward-looking statements. Zomedica cautions that these statements are subject to numerous important risks, uncertainties, assumptions, and other factors, some of which are beyond Zomedica’s control. These risks could cause Zomedica’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to adverse macroeconomic conditions; geopolitical tensions; laws and policies resulting from change in federal government administration; impact of trade tarrifs; changes in consumer confidence and spending in response to economic volatility; our ability to develop and commercialize our products; our ability to integrate our acquisitions successfully into our business; supply chain disruptions that increase our costs and impair our ability to manufacture our products; our ability to attract and keep senior management and key scientific personnel; our ability to obtain and maintain intellectual property protection; the accuracy of our estimates regarding expenses, future revenues, and capital requirements; and the “Risk Factors” described in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”). 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 anticipated in our forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We undertake no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations, except as required by applicable law.

Components of Revenue and Costs and Expenses

Revenue

Our revenue consisted of consumables sold in the U.S. and internationally associated with our Assisi^® products; capital and consumables sold in the U.S and internationally associated with our PulseVet^® platform; consumables sold in the U.S associated with our TRUFORMA^® platform; subscriptions and services sold in the U.S. associated with our TRUVIEW^® products; and capital and service agreements sold in the U.S. and internationally associated with our VetGuardian^® products.

Cost of Revenue

Cost of revenue consisted primarily of the cost of raw materials used in the assembly of: PulseVet^® capital and consumables; TRUFORMA^® capital and consumables; Assisi consumables; TRUVIEW^® capital and consumables; and VetGuardian^® capital and services. We expense all inventory obsolescence provisions related to normal manufacturing changes as cost of revenue.

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Liability-Classified Awards (SARs)

The Company accounts for SARs as liability-classified awards because they are settled solely in cash and do not result in the issuance of equity. The fair value of SARs is initially measured at the grant date and subsequently remeasured at each reporting date until settlement. The fair value of SARs is calculated using the Black-Scholes Option Pricing Model and recognized as compensation expense over the vesting period of the award using the straight-line method. Changes in fair value are recognized as compensation expense in the consolidated statement of operations during the period of remeasurement based on the proportion of the vesting period that has elapsed. The expected term of SARs, which represents the period the SARs are expected to remain outstanding, is estimated based on the average term of the SARs. The risk-free interest rate is based on the U.S. treasury yield curve at the time of valuation for the expected term. We assume a zero-dividend yield, as we do not anticipate paying dividends in the foreseeable future. The expected volatility used in valuing SARs is calculated based on the historical price of the Company’s stock. Changes in volatility would result in a corresponding increase or decrease in the fair value of the SARs.

Upon exercise, SAR participants receive a cash payment equal to the excess of the fair market value of a share of common stock on the exercise date over the exercise price of the SAR. Since SARs are remeasured at each reporting date, volatility in the Company’s stock price may lead to fluctuations in the recognized compensation expense and recorded liability.

Loss Per Share

Basic loss per share, or EPS (earnings per share), 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.

Comprehensive Loss

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, revenue, costs and expenses, and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 3 of the notes to our consolidated financial statements included within our 2024 Form 10-K, management has identified the following as “Critical Accounting Policies and Estimates”: Intangible Assets and Business Combinations; Impairment Testing; Valuation and Payback of Property and Equipment; and Revenue Recognition and Liabilities Due to Customers. We believe that the estimates and assumptions involved in these accounting policies may have the greatest potential impact on our financial statements.

Impairment Testing

We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change indicating the carrying value may not be recoverable. When testing goodwill for impairment, we may first assess qualitative factors to determine if it is more likely than not the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, we consider the impact of changes, if any, to the following factors: macroeconomic industry and market factors; cost factors; changes in overall financial performance; and any other relevant events and uncertainties impacting a reporting unit. If our qualitative assessment indicates a goodwill impairment is more likely than not, we perform additional quantitative analyses. We may also elect to skip the qualitative testing and proceed directly to the quantitative testing. For reporting units where a quantitative analysis is performed, we perform a test measuring the fair values of the reporting units and comparing them to their aggregate carrying values, including goodwill. If the fair value is less than the carrying value of the reporting unit, an impairment is recognized for the difference, up to the carrying amount of goodwill.

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During the three months ended March 31, 2025, the Company determined that a triggering event occurred, which required interim testing for impairment in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”). The triggering event was related to the Company’s market capitalized value, which is a function of its stock price, which has reduced significantly subsequent to the delisting of the Company’s common shares from NYSE American during the three months ended March 31, 2025. We elected to perform a quantitative analysis as part of our interim goodwill impairment test. Our analysis of the PulseVet reporting unit indicated that its carrying amount, including goodwill, exceeded its fair value by approximately 163%. Our analysis of the Assisi reporting unit indicated that its carrying amount, including goodwill, exceeded its fair value by approximately 128%. As part of the Company’s quantitative analysis, we updated our implied fair value calculations to more closely align with our reduced market capitalization as March 31, 2025. As a result, a goodwill impairment charge of $45,555 was recorded for the three months ended March 31, 2025, as part of the Company’s interim goodwill impairment test.

In connection with our interim impairment analysis during the three months ended March 31, 2025, the Company also completed an evaluation of it amortizable intangible assets for recoverability in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”). It was determined that the carrying values of certain intangible assets exceeded their fair values. The decline in fair value was related to the same facts and circumstances as those noted above in our ASC 350 interim analysis. As a result, the Company recognized $8,297 in noncash impairment charges related to these assets.

Additionally, as part of the interim impairment analysis the Company evaluated its property and equipment for recoverability in accordance with ASC 360. Based on this assessment, it was determined that certain property and equipment assets were not fully recoverable. The impairment was attributable to the same triggering event as described above. As a result, the Company recognized a noncash impairment charge of $1,981 million related to property and equipment during the three months ended March 31, 2025.

The implied fair value for each reporting unit was calculated on a standalone basis using a weighted combination of the income approach and market approach. The implied fair values of each reporting unit were added together along with our unallocated assets to get an indicated value of total equity. This indicated value was compared to the total market capitalization as of March 31, 2025. This comparison yielded an implied control premium of approximately 34.3%. As a result, the market capitalization reconciliation analysis provided support for the reasonableness of the fair values estimated for each individual reporting unit.

While the Company continues to believe its estimates of fair value for its amortizable intangible assets and property and equipment are reasonable, changes in assumptions concerning future financial performance, increases in discount rates, or other market and operational factors could negatively impact the recoverability of these assets. As a result, the Company may be required to recognize additional impairment charges related to its amortizable intangible assets or property and equipment in future periods.

Valuation and Payback of Property and Equipment

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2024. The increase was due to impairment charges recognized during the quarter as a result of a significant decline in the Company’s market capitalization following the delisting of its common shares from NYSE American.

Net Loss

Net loss for the three months ended March 31, 2025 was $63,809 compared to a net loss of $9,160 for the three months ended March 31, 2024, a decrease of $54,649, or 597%.

The net loss for the three months ended March 31, 2025, was attributed to the expenses described above, particularly the significant impairment expense. We expect to continue recording net losses in future periods until we have sufficient revenue from product sales to offset our operating expenses.

Cash Flows

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


	Three Months Ended March 31,
	2025		2024		Change
Cash used in operating activities	$	(6,648)	$	(7,590)	$	942	(12)%
Cash provided by investing activities		8,406		5,625		2,781	49%
Increase (decrease) in cash and cash equivalents		1,758		(1,965)		3,723	189%
Effect of exchange rate changes on cash		58		(48)		106	221%
Cash and cash equivalents, beginning of period		7,021		12,952		(5,931)	(46)%
Cash and cash equivalents, end of period	$	8,837	$	10,939	$	(2,102)	(19)%

Net cash used in operating activities for the three months ended March 31, 2025 was $6,648, compared to $7,590 for the three months ended March 31, 2024, a decrease in cash used of $942, or 12%. The decrease in cash used in operating activities primarily resulted from the decrease in operating expenses noted above, excluding the impact of non-cash charges, including stock-based compensation and impairment expense.

Net cash provided by investing activities for the three months ended March 31, 2025 was $8,406, compared to $5,625 for the three months ended March 31, 2024, an increase in cash provided of $2,781, or 49%. The increase in cash provided by investing activities primarily resulted from decreased capital expenditures as compared to the prior comparative period. The prior period amount was driven largely by warehouse expansion spend, which did not recur in the current period.

Liquidity, Capital Resources, and Financial Condition

We have incurred losses and negative cash flows from operations since our inception in May 2015. As of March 31, 2025, we had an accumulated deficit of $281,724. We continue to fund our working capital requirements primarily through revenue generating activity and proceeds generated from our past sales of our equity and equity-related securities and the exercise of stock options and warrants.

As of March 31, 2025, the Company had working capital (defined as current assets minus current liabilities) of $65,819.

Short-Term Cash Requirements

We believe that our existing cash is sufficient to fund our expected short-term needs. We currently have fixed obligations in association with our building leases and quarterly inventory orders. We also have payment obligations associated with our on-going clinical studies, and we believe that we have sufficient cash to cover these requirements. We do not expect that our operations will require significant increases in our short-term cash needs, and our short-term cash requirements have not changed materially since the 2024 Form 10-K.

Long-Term Cash Requirements

We believe that our existing cash resources will be sufficient to fund our expected operational requirements for the long-term future. We regularly evaluate our business plans and strategy. These evaluations often result in changes to our business plans and strategy, some of which may be material and significantly change our cash requirements. Ongoing business development activity may also require us to use some of our liquidity and use of additional capital to fund newly acquired operations. 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.

Exhibit No.		Description

10.1+		Separation Agreement, dated April 28, 2025, between Zomedica Inc. and Scott Jordan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Commission on April 30, 2025).
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Vice President of Finance and Corporate Controller, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer and Vice President of Finance and Corporate Controller, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
101.INS		Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL (1).
101.SCH		Inline XBRL Taxonomy Extension Schema Document (1).
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (1).
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (1).
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (1).
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (1).
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)


	Zomedica Corp.

	By:	/s/ Larry Heaton
	Name:	Larry Heaton
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Michael Zuehlke
	Name:	Michael Zuehlke
	Title:	Vice President of Finance and Corporate Controller
		(Principal Financial and Accounting Officer)


		Page
PART I
FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024
	Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2025 and 2024
	Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2025 and 2024
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024
	Notes to the Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 4.	Controls and Procedures	31

PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 6.	Exhibits	32