[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company presents its unaudited Q1 2025 financial statements, detailing a significant net loss increase due to impairment charges **Consolidated Balance Sheet Highlights (USD in Thousands):** | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Total Assets | $142,993 | $207,360 | | Total Liabilities | $10,549 | $11,696 | | Total Shareholders' Equity | $132,444 | $195,664 | **Consolidated Statements of Operations and Comprehensive Loss Highlights (USD in Thousands, except Per Share Data):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Revenue | $6,500 | $6,262 | | Gross Profit | $4,407 | $4,117 | | Loss from Operations | $(64,548) | $(10,386) | | Net Loss | $(63,809) | $(9,160) | | Loss per Share - Basic and Diluted | $(0.07) | $(0.01) | **Consolidated Statements of Cash Flows Highlights (USD in Thousands):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Used in Operating Activities | $(6,648) | $(7,590) | | Net Cash Provided by Investing Activities | $8,406 | $5,625 | | Increase (Decrease) in Cash and Cash Equivalents | $1,758 | $(1,965) | | Cash and Cash Equivalents, End of Period | $8,837 | $10,939 | - The company recognized a significant impairment expense of **$55,833 thousand** for the three months ended March 31, 2025, primarily due to goodwill (**$45,556 thousand**), intangible assets (**$8,297 thousand**), and property and equipment (**$1,981 thousand**)[7](index=7&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - This was triggered by a substantial decline in market capitalization following the delisting of common shares from NYSE American[7](index=7&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) Consolidated Balance Sheets **Consolidated Balance Sheet (USD in Thousands):** | Asset/Liability/Equity | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $8,837 | $7,021 | | Available-for-sale securities | $54,770 | $64,332 | | Total current assets | $73,224 | $81,773 | | Property and equipment, net | $22,238 | $24,589 | | Goodwill | $— | $45,556 | | Intangible assets, net | $42,769 | $52,538 | | Total assets | $142,993 | $207,360 | | Total current liabilities | $7,405 | $9,331 | | Total liabilities | $10,549 | $11,696 | | Total shareholders' equity | $132,444 | $195,664 | - Total assets decreased by **$64,367 thousand (31%)** from December 31, 2024, to March 31, 2025, primarily due to the full impairment of goodwill and a reduction in available-for-sale securities[6](index=6&type=chunk)[75](index=75&type=chunk) Consolidated Statements of Operations and Comprehensive Loss **Consolidated Statements of Operations (USD in Thousands, except Per Share Data):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net revenue | $6,500 | $6,262 | +$238 (4%) | | Cost of revenue | $2,093 | $2,145 | -$52 (-2%) | | Gross profit | $4,407 | $4,117 | +$290 (7%) | | General and administrative | $6,262 | $8,625 | -$2,363 (-27%) | | Research and development | $1,853 | $1,771 | +$82 (5%) | | Selling and marketing | $5,007 | $4,107 | +$900 (22%) | | Impairment expense | $55,833 | $— | +$55,833 | | Loss from operations | $(64,548) | $(10,386) | -520% | | Net loss | $(63,809) | $(9,160) | -597% | | Loss per share - basic and diluted | $(0.07) | $(0.01) | -600% | - Net loss significantly increased by **597% year-over-year**, primarily driven by a **$55.8 million impairment expense** recognized in Q1 2025[7](index=7&type=chunk)[159](index=159&type=chunk) Consolidated Statements of Shareholders' Equity **Consolidated Statements of Shareholders' Equity (USD in Thousands):** | Metric | Balance at Dec 31, 2024 | Stock-based Compensation | Net Loss | Other Comprehensive Income | Balance at Mar 31, 2025 | | :-------------------------- | :---------------------- | :----------------------- | :------- | :------------------------- | :---------------------- | | Common Stock Amount | $380,973 | — | — | — | $380,973 | | Additional Paid-In Capital | $32,518 | $545 | — | — | $33,063 | | Accumulated Deficit | $(217,915) | — | $(63,809) | — | $(281,724) | | Accumulated Comprehensive Income (Loss) | $88 | — | — | $44 | $132 | | Total Shareholders' Equity | $195,664 | $545 | $(63,809) | $44 | $132,444 | - Total shareholders' equity decreased by **$63,220 thousand** from December 31, 2024, to March 31, 2025, primarily due to the net loss incurred during the period[9](index=9&type=chunk) Consolidated Statements of Cash Flows **Consolidated Statements of Cash Flows (USD in Thousands):** | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(6,648) | $(7,590) | | Net cash provided by investing activities | $8,406 | $5,625 | | Net cash provided by financing activities | $— | $— | | Increase (decrease) in cash and cash equivalents | $1,758 | $(1,965) | | Cash and cash equivalents, end of period | $8,837 | $10,939 | - Net cash used in operating activities decreased by **$942 thousand (12%)** year-over-year, while net cash provided by investing activities increased by **$2,781 thousand (49%)**, primarily due to decreased capital expenditures[11](index=11&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) Notes to the Condensed Consolidated Financial Statements Note 1. Nature of Operations - Zomedica Corp is a veterinary health company focused on creating products for companion animals, addressing unmet needs of clinical veterinarians[12](index=12&type=chunk) Note 2. Basis of Preparation - The condensed consolidated financial statements are prepared in conformity with U.S. GAAP and SEC rules for interim reports, including all normal recurring adjustments[14](index=14&type=chunk) Note 3. Significant Accounting Policies - The company's functional currency for Canada, U.S., and Switzerland subsidiaries is U.S. dollars, while its Japanese subsidiary uses Japanese Yen, with translation gains/losses recorded in other comprehensive income/loss[17](index=17&type=chunk) - Zomedica adopted ASU No. 2023-07 (Segment Reporting) in Q4 2024, which did not materially impact consolidated financial statements[18](index=18&type=chunk)[19](index=19&type=chunk) - The company is evaluating ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Income Tax Disclosures) for future impact[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company's reportable segments are **Diagnostics** (TRUFORMA®, VetGuardian®, TRUVIEW®) and **Therapeutic Devices** (Assisi®, PulseVet®, VETIGEL®)[23](index=23&type=chunk)[102](index=102&type=chunk) **Disaggregated Revenue by Segment (USD in Thousands):** | Category | Diagnostics (2025) | Diagnostics (2024) | Therapeutic Devices (2025) | Therapeutic Devices (2024) | Consolidated (2025) | Consolidated (2024) | | :---------- | :----------------- | :----------------- | :------------------------- | :------------------------- | :------------------ | :------------------ | | Capital | $1,800 | $156 | $450 | $1,774 | $1,956 | $2,224 | | Consumables | $4,094 | $403 | $294 | $3,716 | $4,497 | $4,010 | | Other | $47 | $— | $— | $28 | $47 | $28 | | Total revenue | $5,941 | $559 | $744 | $5,518 | $6,500 | $6,262 | Note 4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty - Critical accounting judgments include impairment testing for goodwill and long-lived assets, valuation and payback of TRUFORMA® property and equipment, and revenue recognition for variable consideration in the Therapeutic Device segment[54](index=54&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk)[127](index=127&type=chunk) - Goodwill impairment testing involves qualitative and quantitative analyses, using discounted cash flow and market-based methods with significant assumptions on financial projections, growth rates, and discount rates[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - For TRUFORMA® capital, the company estimates anticipated future revenue over a ten-year life to determine if the payback period is less than the asset's life, relying on third-party data for expected consumable volume, growth rates, and placements[58](index=58&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Note 5. Investment Securities **Investment Securities Fair Value (USD in Thousands):** | Type | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Commercial paper | $4,442 | $10,387 | | Corporate notes / bonds | $42,642 | $45,826 | | U.S. treasuries | $6,705 | $6,649 | | U.S. govt. agencies | $1,947 | $1,470 | | Money market funds | $4,466 | $2,766 | | Total investment securities | $60,202 | $67,098 | **Contractual Maturities of Investment Securities (USD in Thousands) as of March 31, 2025:** | Maturity | Acquisition Cost | Estimated Fair Value | | :------------------------ | :--------------- | :------------------- | | 90 days or less | $4,466 | $4,466 | | 91-365 days | $54,329 | $54,770 | | 366+ days | $965 | $966 | | Total | $59,760 | $60,202 | Note 6. Fair Value Measurements - The company measures cash and cash equivalents and investments at fair value on a recurring basis, classifying inputs into a three-tier hierarchy (Level 1, 2, 3)[63](index=63&type=chunk)[65](index=65&type=chunk)[69](index=69&type=chunk) **Fair Value Hierarchy of Investments (USD in Thousands) as of March 31, 2025:** | Type | 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 | $13,118 | $47,084 | $— | $60,202 | Note 7. Inventory **Inventory, Net (USD in Thousands):** | Category | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Raw materials | $4,629 | $4,301 | | Finished goods | $398 | $539 | | Purchased inventory | $352 | $244 | | Total inventory | $5,379 | $5,084 | | Less: reserves | $(21) | $(26) | | Inventory, net | $5,358 | $5,058 | Note 8. Prepaid Expenses and Deposits **Prepaid Expenses and Deposits (USD in Thousands):** | Category | March 31, 2025 | December 31, 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 | Note 9. Accrued Expenses and Other Current Liabilities **Accrued Expenses and Other Current Liabilities (USD in Thousands):** | Category | March 31, 2025 | December 31, 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 | Note 10. Property and Equipment **Property and Equipment, Net (USD in Thousands):** | Category | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Machinery and equipment | $15,392 | $15,947 | | 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 | - The company recognized a **$2 million impairment charge** on property and equipment within the Diagnostics segment for the three months ended March 31, 2025, due to certain assets not being fully recoverable[74](index=74&type=chunk) Note 11. Goodwill and Intangible Assets **Goodwill Carrying Amount by Segment (USD in Thousands):** | Segment | December 31, 2024 | Impairment | March 31, 2025 | | :---------- | :---------------- | :--------- | :------------- | | Diagnostics | $— | $— | $— | | Therapeutic Devices | $45,556 | $(45,556) | $— | | Total | $45,556 | $(45,556) | $— | - A **$45.6 million noncash goodwill impairment charge** was recognized for the three months ended March 31, 2025, fully impairing goodwill in the PulseVet and Assisi reporting units[75](index=75&type=chunk) - This was triggered by a significant reduction in the company's market capitalization following delisting from NYSE American[75](index=75&type=chunk) - An **$8.3 million non-cash impairment charge** was also recognized for amortizable intangible assets within the Diagnostics segment, primarily related to technology assets (**$7.1 million**) and customer relationships (**$0.8 million**), due to the same triggering event[76](index=76&type=chunk) **Intangible Assets, Net (USD in Thousands):** | Category | March 31, 2025 | December 31, 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 | **Estimated Future Amortization of Intangible Assets (USD in Thousands):** | Year | Amount | | :--- | :----- | | 2025 | $4,192 | | 2026 | $5,177 | | 2027 | $4,997 | | 2028 | $4,753 | | 2029 | $4,639 | | Thereafter | $18,385 | | Total | $42,143 | Note 12. Stock-Based Compensation - The company issued **6,975,000 stock options** in Q1 2025 (vs 795,000 in Q1 2024), vesting over four years with a 10-year expiration period[81](index=81&type=chunk) **Stock Options Continuity:** | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Balance at period start | 89,051,943 | 93,349,943 | | Stock options granted | 6,975,000 | 795,000 | | Stock options forfeited | 351,250 | 1,092,500 | | Vested stock options expired | 3,845,557 | 435,000 | | Balance at period end | 91,830,136 | 92,617,443 | | Vested at period end | 55,036,523 | 44,713,274 | - Stock-based compensation expense decreased to **$545 thousand** in Q1 2025 from $1,101 thousand in Q1 2024[83](index=83&type=chunk) - Unrecognized compensation cost for nonvested awards was **$2,184 thousand** as of March 31, 2025, to be recognized over 2.5 years[83](index=83&type=chunk) - The company adopted the 2024 Stock Appreciation Rights (SAR) Plan, with awards settled solely in cash[84](index=84&type=chunk) - As of March 31, 2025, the SAR liability was **$192 thousand**, with **$73 thousand** compensation expense recognized in Q1 2025[88](index=88&type=chunk) Note 13. Income Taxes - The company has an overall domestic net deferred tax liability position and maintains a valuation allowance of **$24,587 thousand** against US federal and state net operating loss carryforwards due to uncertainty of realization[89](index=89&type=chunk) Note 14. Commitments and Contingencies - As of March 31, 2025, the company is not aware of any pending or threatened material litigation claims[90](index=90&type=chunk) - The company has a Development and License Agreement with Brisby Inc, requiring milestone payments totaling **$1,937 thousand** upon future development milestones and first commercial sales of Smart Pet Pad and Intelligent Pet Bed[92](index=92&type=chunk)[93](index=93&type=chunk] - Zomedica holds a **19.50% equity stake** in Brisby Inc[94](index=94&type=chunk) - A License and Supply Agreement with Cresilon, Inc grants Zomedica exclusive rights to market and sell VETIGEL® Hemostatic Gel in the U.S. and Japan, with various milestone payments and royalties based on net sales[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[102](index=102&type=chunk) Note 15. Segment Information - The Chief Operating Decision Maker (CODM) evaluates financial performance and makes strategic decisions for two reportable segments: **Diagnostics** (TRUFORMA®, VetGuardian®, TRUVIEW®) and **Therapeutic Devices** (Assisi®, PulseVet®, VETIGEL®)[99](index=99&type=chunk)[102](index=102&type=chunk) **Segment Performance (USD in Thousands):** | Metric | Diagnostics (2025) | Diagnostics (2024) | Therapeutic Devices (2025) | Therapeutic Devices (2024) | Consolidated (2025) | Consolidated (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 Q1 2025, U.S. revenue was **$5,053 thousand** and foreign revenue was **$1,447 thousand**[101](index=101&type=chunk) - In Q1 2024, U.S. revenue was **$5,162 thousand** and foreign revenue was **$1,100 thousand**[101](index=101&type=chunk) Note 16. Loss Per Share **Loss Per Share (USD in Thousands, except Per Share Data):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss for the period | $(63,809) | $(9,160) | | Weighted-average shares - basic | 979,949,668 | 979,949,668 | | Loss per share - basic and diluted | $(0.07) | $(0.01) | - Stock options and warrants were excluded from diluted loss per share computation as their effect would be anti-dilutive[103](index=103&type=chunk) Note 17. Subsequent Events - No events or transactions requiring disclosure or adjustment to the condensed consolidated financial statements were identified subsequent to March 31, 2025[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, analyzing the drivers of a significant net loss and outlining the company's future outlook - The company's revenue sources include consumables and capital sales for Assisi®, PulseVet®, TRUFORMA®, TRUVIEW®, and VetGuardian® products in the U.S. and internationally[109](index=109&type=chunk) - Operating expenses consist of general and administrative (salaries, public company costs), research and development (new assay development, product enhancements), and selling and marketing (personnel, promotional activities)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Critical accounting policies include impairment testing for goodwill, intangible assets, and property and equipment, as well as revenue recognition for variable consideration in the Therapeutic Device segment[127](index=127&type=chunk)[128](index=128&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS - This section contains forward-looking statements subject to risks and uncertainties, including macroeconomic conditions, geopolitical tensions, product development, acquisition integration, supply chain disruptions, and intellectual property protection[106](index=106&type=chunk)[107](index=107&type=chunk) Components of Revenue and Costs and Expenses - Revenue sources include consumables and capital sales from Assisi®, PulseVet®, TRUFORMA®, TRUVIEW®, and VetGuardian® products, both domestically and internationally[109](index=109&type=chunk) - Cost of revenue primarily consists of raw materials, overhead, labor, and shipping for product assembly, including provisions for inventory obsolescence[110](index=110&type=chunk) - Operating expenses are categorized into general and administrative (salaries, public company costs), research and development (new assay development, product enhancements), and selling and marketing (personnel, promotional activities)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Stock-based compensation includes equity-classified stock options (fair value using Black-Scholes, graded vesting) and liability-classified Stock Appreciation Rights (SARs) (cash-settled, remeasured at each reporting date)[118](index=118&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk) Critical Accounting Policies and Significant Judgments and Estimates - Goodwill impairment testing involves qualitative and quantitative analyses, using discounted cash flow and market-based methods with assumptions on financial projections, growth rates, and discount rates[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - For Q1 2025, a quantitative impairment analysis resulted in a **$45,555 thousand goodwill impairment charge** for PulseVet and Assisi reporting units, an **$8,297 thousand impairment** for amortizable intangible assets, and **$1,981 thousand** for property and equipment, due to a significant decline in market capitalization[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - Revenue recognition for the Therapeutic Device segment involves estimating variable consideration for discounts and applicator ('trode') returns using the expected value method, based on historical experience and known trends[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) Results of Consolidated Operations **Consolidated Operations Summary (USD in Thousands):** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenue | $6,500 | $6,262 | +$238 (4%) | | Cost of Revenue | $2,093 | $2,145 | -$52 (-2%) | | Gross Profit | $4,407 | $4,117 | +$290 (7%) | | Gross Profit Margin | 68% | 66% | +2 ppts | | General and Administrative | $6,262 | $8,625 | -$2,363 (-27%) | | Research and Development | $1,853 | $1,771 | +$82 (5%) | | Selling and Marketing | $5,007 | $4,107 | +$900 (22%) | | Impairment Expense | $55,833 | $0 | +$55,833 | | Net Loss | $(63,809) | $(9,160) | -597% | - Revenue increased by **4%** due to growth in PulseVet® products, TRUFORMA® products (including new assays), and sales from VETIGEL®[147](index=147&type=chunk) - Gross profit margin improved to **68%** from 66%, driven by manufacturing cost efficiencies from the Minnesota facility integration and fixed cost absorption from increased unit sales[150](index=150&type=chunk) - General and administrative expenses decreased by **27%** due to non-recurring professional fees and lower stock-based compensation, while selling and marketing expenses increased by **22%** due to higher salaries and commissions from increased headcount[152](index=152&type=chunk)[156](index=156&type=chunk) Cash Flows **Cash Flow Summary (USD in Thousands):** | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | 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%) | | Cash and cash equivalents, end of period | $8,837 | $10,939 | $(2,102) (-19%) | - The decrease in cash used in operating activities was primarily due to lower operating expenses, excluding non-cash charges[160](index=160&type=chunk) - The increase in cash provided by investing activities resulted from decreased capital expenditures, as prior period included warehouse expansion spend[161](index=161&type=chunk) Liquidity, Capital Resources, and Financial Condition - As of March 31, 2025, Zomedica had an accumulated deficit of **$281,724 thousand** and working capital of **$65,819 thousand**[162](index=162&type=chunk)[163](index=163&type=chunk) - The company believes existing cash is sufficient to fund short-term and long-term operational requirements, but future capital needs depend on development, manufacturing, marketing, M&A activities, and intellectual property costs[164](index=164&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)[172](index=172&type=chunk) U.S. Taxes - As of March 31, 2025, the company had deferred tax assets of **$17,464 thousand** for U.S. federal net operating loss carryforwards and **$6,419 thousand** for Canadian non-capital loss carryforwards, which begin to expire in fiscal year 2035[168](index=168&type=chunk) Climate Change - Increased public awareness of climate change may lead to new regulations, higher energy costs, and potential impacts on operations, supply chain, and insurance, though the specific future impact remains uncertain[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures with no material changes in internal controls for Q1 2025 - The principal executive officer and principal financial and accounting officer concluded that disclosure controls and procedures were effective as of March 31, 2025[174](index=174&type=chunk) - There were no material changes to internal control over financial reporting during the three months ended March 31, 2025[175](index=175&type=chunk) [PART II — OTHER INFORMATION](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings as of the end of the first quarter - There are no pending or threatened material litigation claims against the company as of March 31, 2025[90](index=90&type=chunk)[176](index=176&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Annual Report on Form 10-K are reported - No material changes in risk factors from those disclosed in the 2024 Form 10-K[176](index=176&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL data - Exhibits include a Separation Agreement, CEO and VP of Finance certifications (Sarbanes-Oxley Act), and Inline XBRL documents[180](index=180&type=chunk)

Revenue Growth - Zomedica reported record revenue of $7.9 million for Q4 2024, an 8% organic growth compared to Q4 2023, with a 109% increase in the Diagnostics segment driven by the TRUFORMA® product line[4][10] - For the full year 2024, revenue grew over 8% to $27.3 million, up from $25.2 million in 2023, supported by 4% growth in Therapeutics and 77% growth in Diagnostics[7][10] Financial Performance - Gross margin for Q4 2024 was 70.3%, and for the full year 2024, it was 70.0%, aligning with the company's expectations[5][11] - The net loss for Q4 2024 was $7.2 million, significantly reduced from a net loss of $22.4 million in Q4 2023[5] - Net loss for the year ended December 31, 2024, was $46,942,000, compared to a net loss of $33,638,000 in 2023, representing a 39.5% increase in losses year-over-year[35] - Adjusted non-GAAP EBITDA loss for 2024 was $20.2 million, compared to a loss of $27.7 million in 2023, indicating improved operational efficiency[16][17] - Non-GAAP EBITDA loss for 2024 was $40,701,000, up from $27,691,000 in 2023, indicating a 46.9% increase in EBITDA losses[35] - Adjusted Non-GAAP EBITA loss for 2024 was $20,216,000, compared to $12,767,000 in 2023, reflecting a 58.5% increase in adjusted losses[35] Expenses - Operating expenses for 2024 were $70.1 million, an increase of 16% from $60.6 million in 2023, primarily due to the full-year impact of Qorvo Biotechnologies[12] - Research and development expenses for 2024 were $7.3 million, up from $5.8 million in 2023, reflecting ongoing advancements in product development[13] - Amortization expense increased to $6,441,000 in 2024 from $5,468,000 in 2023, a rise of 17.7%[35] - Impairment expense for 2024 was $16,024,000, significantly higher than $11,683,000 in 2023, marking a 37.5% increase[35] - Stock-compensation expense decreased to $2,778,000 in 2024 from $6,263,000 in 2023, a reduction of 55.7%[35] - Interest income for 2024 was $3,966,000, down from $5,458,000 in 2023, a decline of 27.3%[35] - Proforma adjustments for 2024 totaled $4,461,000, compared to $3,241,000 in 2023, an increase of 38.0%[35] - Depreciation expense rose to $1,545,000 in 2024 from $830,000 in 2023, an increase of 86.5%[35] - Income tax benefit improved to $557,000 in 2024 from $1,331,000 in 2023, a decrease of 58.2%[35] Cash Position - Total cash used during Q4 2024 was approximately $6.5 million, with an adjusted non-GAAP operating cash burn of about $4.2 million[6] - As of December 31, 2024, Zomedica had cash, cash equivalents, and available-for-sale securities totaling $71.4 million[9][18] Future Plans - The company plans to focus on the equine market with new product launches and a distribution agreement for Vetigel® hemostatic gel to drive revenue growth in 2025[3]

Financial Data and Key Metrics Changes - The company reported a record revenue of $7,900,000 for the fourth quarter, reflecting an 8% growth year over year [12][29] - Full year revenue for 2024 reached $27,300,000, marking another record year for the company [12][33] - Gross margin for the fourth quarter was 70.3%, exceeding the target range of 65% to 70% for the third consecutive quarter [30] - The net loss for the fourth quarter was $7,200,000, or $0.01 per share, compared to a net loss of $22,400,000, or $0.02 per share in the prior year [32] Business Line Data and Key Metrics Changes - The Therapeutic Devices segment generated revenues of $7,100,000, while the Diagnostics segment saw revenues of approximately $800,000, reflecting a 109% year-over-year increase [30] - The Diagnostics segment's growth was driven by the adoption of new products, particularly the Truforma assays, which contributed significantly to revenue [30][34] Market Data and Key Metrics Changes - Approximately 80% of revenue came from the U.S. market, with 20% from international markets [62] - The company experienced aggressive growth outside North America, particularly in new international markets [60] Company Strategy and Development Direction - The company is focused on international expansion, regulatory approvals, and growing its distribution network outside the U.S. [14][15] - A significant distribution agreement was signed with Crestlon for the Betagel hemostatic gel product line, expanding the company's portfolio into new care areas [22][24] - The company aims to leverage its established position in the equine market to drive adoption of new products and solutions [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational performance despite share price pressures and recent delisting from the NYSE American Exchange [6][10] - The company is committed to achieving cash flow breakeven and GAAP profitability while maintaining a strong liquidity position with over $71,000,000 in cash [43] Other Important Information - The company has made significant investments in infrastructure to improve efficiency and reduce costs, including the expansion of manufacturing facilities and the installation of automated production lines [25][26] - The management team has undergone changes, with Scott Jordan joining as the new CFO, bringing extensive experience in financial leadership [27][35] Q&A Session Summary Question: What are the product introduction goals for 2025? - The company expects to launch another five to six assays in 2025, including a mix of canine, feline, and equine assays [45] Question: Can you comment on the sales force restructuring? - The overall headcount is flat year over year, but the commercial organization has seen an increase in sales personnel to support new product launches [48][49] Question: Do you have financial guidance for 2025? - The company is developing sales growth projections for 2025 and will provide guidance later in the year [55] Question: What is the revenue growth breakdown between domestic and international markets? - The company experienced similar growth rates domestically and internationally, with about 80% of revenue from the U.S. [60][62] Question: What is the growth rate for PulseVet products? - The PulseVet products grew year over year by 4%, with capital sales affected by macroeconomic conditions [73]

Financial Performance - For the fiscal year ended December 31, 2024, the Company reported revenue of $27,285 million, an increase of $2,099 million or 8% compared to $25,186 million in 2023 [251]. - The gross profit margin for the year ended December 31, 2024 was 70%, up from 69% in 2023, primarily due to cost reductions from restructuring actions and increased unit sales [256]. - Net loss for the year ended December 31, 2024 was $46,982 million, an increase of $12,453 million or 36% compared to a net loss of $34,529 million in 2023 [265]. - Cash used in operating activities for the year ended December 31, 2024 was $23,630 million, an increase of $7,655 million or 48% from $15,975 million in 2023 [268]. - Cash provided by investing activities increased significantly to $17,854 million for the year ended December 31, 2024, compared to $1,577 million in 2023, a change of $16,277 million or 1032% [269]. - The Company had an accumulated deficit of $217,915 million as of December 31, 2024, and working capital of $72,442 million [271]. Impairment and Tax - The company reported total impairment charges of $16,024, primarily related to goodwill associated with certain reporting units due to changes in future sales growth projections and operating expenses allocation [236]. - The Company recorded a goodwill impairment charge of $16,024 million for the six months ended June 30, 2024, driven by changes in future sales growth projections [237]. - The company has recorded a full valuation allowance against its Canadian deferred tax assets due to uncertainty in realizing tax benefits [217]. - As of December 31, 2024, the company had net operating loss carryforwards of $16,044 for U.S. federal and state income tax purposes, and non-capital loss carryforwards of $6,419 for Canada, which will begin to expire in fiscal year 2039 [215]. Product Portfolio and Development - The product portfolio includes six platforms: TRUFORMA, TRUVIEW, VETGuardian, PulseVet, Assisi Loop, and VETIGEL, focusing on diagnostics and therapeutic medical devices [202][205]. - The TRUFORMA platform provides point-of-care diagnostic products for dogs, cats, and horses, enabling quicker disease diagnosis and treatment [206]. - The VETGuardian platform offers continuous wireless monitoring of pets' vital signs, assisting veterinarians in rapid diagnosis [206]. - The PulseVet platform delivers non-invasive electro-hydraulic shock wave treatment for various conditions, promoting healing and reducing the need for surgery [206]. - The company is focused on leveraging its acquisition of Qorvo for new assay development within the TRUFORMA platform and exploring new market opportunities [213]. - Research and development expenses increased by $1,524 million or 27% to $7,268 million for the year ended December 31, 2024, driven by the development of next-generation diagnostic products [260]. Operating Expenses - Selling and marketing expenses rose by $3,055 million or 22% to $17,192 million for the year ended December 31, 2024, primarily due to increased hiring campaigns [262]. Climate Change Impact - The company anticipates that climate change may increase operating costs due to potential physical risks and supply chain impacts [283]. - The company is unable to predict the future impact of climate change due to significant economic variability associated with changing conditions [283]. Public Company Costs - The company faces costs associated with being a public company and expenses related to business development or mergers and acquisitions [279]. Stock Information - As of March 13, 2025, there are 979,949,668 common shares issued and outstanding [279]. - There are stock options outstanding under the Stock Option Plan to acquire an aggregate of 89,051,943 common shares [279]. - Common share purchase warrants issued in February 2020 allow holders to acquire 197,917 common shares at an exercise price of $0.1500 per share [279]. - Common share purchase warrants issued in July 2022 allow holders to acquire 363,501 common shares at an exercise price of $0.1500 per share [279]. - Additional common share purchase warrants issued in July 2022 allow holders to acquire 10,000,000 common shares at an exercise price of $0.2201 per share [279]. - Further common share purchase warrants issued in July 2022 allow holders to acquire 22,000,000 common shares at an exercise price of $0.2520 per share [279]. Recent Accounting Pronouncements - Recent accounting pronouncements are not expected to have a material impact on the company's consolidated financial statements upon adoption [278].

Revenue Performance - Revenue for Q3 2024 increased by slightly more than 10% to $7.0 million compared to Q3 2023, with Diagnostics segment revenue growing by 38%[4] - Capital revenues reached $2.2 million, up 21% from Q3 2023, indicating strong performance in the therapeutic device segment[5] - The company anticipates significant incremental revenue growth in 2025 and beyond due to its international expansion efforts[3] Financial Metrics - Gross margin for Q3 2024 was 72.3%, exceeding the company's expectations of 65% to 70%[8] - Total cash used during Q3 2024 was approximately $5.2 million, with non-GAAP operating cash burn adjusted to approximately $4.0 million[6] - As of September 30, 2024, Zomedica had cash and cash equivalents of $77.8 million, down from $83.0 million as of June 30, 2024[11] - Net loss for Q3 2024 was $6.7 million, compared to a net loss of $0.5 million in Q3 2023, which included a one-time gain of $2.2 million[10] Research and Development - Research and development expenses increased to $1.8 million in Q3 2024, driven by advancements in new assay development[9] Market Expansion - The company signed several international distribution agreements and received CE Mark approval for the TRUVIEW® system, enhancing its global market presence[3] - Zomedica's total addressable market in the U.S. exceeds $2 billion, indicating substantial growth potential[14]

Revenue and Profitability - Revenue for the quarter ended September 30, 2024, included consumables and capital sales associated with Assisi®, PulseVet®, TRUFORMA®, TRUVIEW™, and VetGuardian® products[132] - Revenue for the three months ended September 30, 2024, was $6,997 million, an increase of $650 million or 10% compared to the same period in 2023[169] - Revenue for the nine months ended September 30, 2024, was $19,390 million, an increase of $1,541 million or 9% compared to the same period in 2023[169] - Gross profit margin for the three months ended September 30, 2024, was 72%, compared to 69% for the same period in 2023[173] Expenses - Research and development expense for the three months ended September 30, 2024, was $1,845 million, an increase of $978 million or 113% compared to the same period in 2023[178] - Selling and marketing expense for the three months ended September 30, 2024, was $3,890 million, an increase of $562 million or 17% compared to the same period in 2023[179] - General and administrative expenses included significant public company costs such as stock exchange fees and compliance costs[134] Net Loss and Cash Flow - Net loss for the three months ended September 30, 2024, was $6,697 million, an increase of $6,206 million or 1264% compared to the same period in 2023[182] - Cash used in operating activities for the nine months ended September 30, 2024, was $19,105 million, an increase of $8,145 million or 74% compared to the same period in 2023[184] - Cash provided by investing activities for the nine months ended September 30, 2024, was $15,938 million, an increase of $10,532 million or 195% compared to the same period in 2023[185] Goodwill and Valuation - A goodwill impairment charge of $16,024 was recorded for the three and nine months ended September 30, 2024, due to fair values of certain reporting units being below their carrying amounts[157] - The fair value of the PulseVet reporting unit exceeded its carrying amount, including goodwill, by 56%, while Revo Squared, SMP, and Assisi reporting units were below their carrying amounts by 64%, 80%, and 3%, respectively[156] - The control premium implied from the market capitalization reconciliation analysis was 59.3%, consistent with historical premiums in the Medical, Dental, and Hospital Equipment and Supplies industry[160] Tax and Regulatory Considerations - The company is evaluating the potential impacts of the Inflation Reduction Act, which includes a new 15% Corporate Alternative Minimum Tax for corporations with average book income over $1 billion[140] - The company recorded a full valuation allowance against Canadian deferred tax assets due to uncertainty in realizing tax benefits[142] - The company continues to monitor regulatory developments related to the Inflation Reduction Act to assess their potential impact on tax rates and financial results[141] - Deferred tax assets for U.S. federal income tax purposes amount to $15,214, with non-capital loss carryforwards for Canada at $9,581, expiring in fiscal year 2035[192] Cash Position and Future Needs - As of September 30, 2024, the company had an accumulated deficit of $210,721 and working capital of $79,206[187] - The company believes existing cash is sufficient to cover short-term cash requirements, including fixed obligations and ongoing clinical studies[188] - Long-term cash requirements have not changed materially since the 2023 Form 10-K, with ongoing evaluations potentially affecting cash needs[191] Stock-Based Compensation - Stock-based compensation is calculated using the Black-Scholes Option Pricing Model and is expensed over the vesting period of the options[145] - The company adopted a Stock Appreciation Rights Plan allowing for the grant of SARs up to 10% of issued common stock[196] Research and Development - Research and development expenses focused on leveraging the acquisition of Qorvo for new assay development and exploring new market opportunities[135] Currency and Subsidiaries - The functional currency for the company's subsidiaries in the U.S., Switzerland, and Canada is the U.S. dollar, while the Japanese subsidiary uses the Japanese Yen[143]

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $6.1 million, reflecting a 2% increase year-over-year, primarily driven by a 68% growth in the Diagnostics segment [4][21] - Capital revenues decreased by 12% to $1.7 million, down from $2 million in Q2 2023, attributed to fewer new system sales [21] - Consumable revenue increased by approximately 8% to $4.4 million, now representing 72% of total revenue [21][22] - Gross profit for Q2 2024 was $4.4 million, with a gross profit margin of 71%, slightly above the target range of 65% to 70% [22][23] - Net loss for Q2 2024 was $23.9 million, compared to a net loss of $5.2 million in Q2 2023 [25][26] Business Line Data and Key Metrics Changes - The Therapeutic Devices segment, including PulseVet and Assisi, generated revenues of $5.7 million, roughly flat compared to the prior year [22] - The Diagnostics segment saw revenues of approximately $420,000, marking a 68% increase year-over-year, driven by growth from VetGuardian and TRUFORMA [22] Market Data and Key Metrics Changes - International initiatives are expected to significantly contribute to revenue in the second half of the year, with a strategic alliance with Leader Healthcare Group for distribution in the Middle East, Egypt, and India [7][8] - The company anticipates sales from new distributors in Costa Rica and the Middle East to begin in the current quarter [48] Company Strategy and Development Direction - The company is focused on achieving cash flow and GAAP profitability, with plans to expand its product portfolio and international reach [20][31] - Zomedica aims to leverage alternative pricing and placement models to enhance access for veterinarians, particularly in light of current economic conditions [5][34] - The company is committed to reducing operating expenses while increasing revenue through innovative product offerings [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing significant progress in commercial and operational milestones despite short-term headwinds [20][31] - The management noted that macroeconomic factors, such as interest rates, may be causing customers to delay purchases [5][34] - The company expects a rebound in sales as the sales force returns to full strength and as macroeconomic conditions stabilize [5][33] Other Important Information - The CFO announced his resignation, and the company is in the process of identifying a replacement [27][28] - The company suspended its previously issued revenue guidance for 2024, with expectations for total revenue to grow compared to the prior year [28] Q&A Session Summary Question: Can you talk about the sales force headwinds in the quarter in a little bit more detail? - Management explained that the sales force faced challenges due to personnel changes and medical leaves, which affected sales productivity [32][33] Question: What are the plans to mitigate future sales force disruptions? - The company has taken steps to ensure additional sales personnel can fill in during medical leaves and has a plan to maintain sales productivity [44] Question: Can you provide insight into the $16 million charge-off? - The CFO clarified that the charge-off primarily relates to goodwill associated with previous acquisitions, with minimal amounts remaining on the balance sheet [40] Question: What is the expected cash burn moving forward? - The CFO indicated that cash burn is expected to be at the high end of the previously stated range of $12 million to $18 million, influenced by revenue performance [41][42] Question: How much of the original revenue guidance was related to international sales? - Management noted that approximately 15% of the revenue was expected to come from international sales, with potential for growth in that area [43] Question: What is the timeline for meaningful sales from recent CE approvals? - Management expects to see initial sales from Costa Rica and the Middle East in the current quarter, with a more significant uptick anticipated in September [47][48]

Revenue Growth - Zomedica reported record revenue of $7.3 million for Q4 2023, a 19% increase compared to Q4 2022, and full-year revenue of $25.2 million, reflecting a 33% annual growth[1][3][4]. - The Diagnostics segment experienced a remarkable 144% growth year-over-year in Q4 2023, while the Therapeutic Devices segment grew by 16%[3][4]. - Consumable revenue for Q4 2023 reached $4.0 million, up 26% from Q4 2022, and capital revenue was $3.3 million, a 12% increase over the same period[3]. - Zomedica expects full-year 2024 revenue to be in the range of $31 to $35 million, representing approximately 40% growth at the high end compared to 2023[8]. Financial Performance - The net loss for 2023 was $34.5 million, or $0.035 per share, compared to a net loss of $17.0 million, or $0.017 per share, in 2022[12]. - Non-GAAP Adjusted EBITDA for the period was $(22.326) million, compared to $(3.200) million in the previous year, indicating a significant increase in losses[24]. - The net loss for the company was $(23.931) million, compared to $(5.249) million in the same period last year, reflecting a worsening financial performance[24]. - The company reported a loss from operations of $(25.067) million, compared to $(5.742) million in the prior year, indicating challenges in operational efficiency[24]. - The company experienced a foreign exchange loss of $(46) thousand, which may affect overall financial performance[24]. Expenses - Research and development expenses increased by 123% to $5.7 million in 2023, driven by the expansion of internal capabilities for new diagnostic products[10]. - Selling and marketing expenses rose by 43% to $14.1 million in 2023, reflecting increased hiring and marketing efforts[11]. - General and administrative expenses were reported at $6.893 million, slightly up from $6.850 million, indicating stable operational costs[24]. - Research and development expenses increased to $1.506 million from $0.859 million year-over-year, showing a focus on innovation and product development[24]. - Selling and marketing expenses rose to $3.923 million from $3.081 million, reflecting increased investment in market expansion[24]. Gross Margin and Profitability - Gross margin for both Q4 2023 and the full year 2023 was 69%[3][5]. - The gross profit for the period was $4.367 million, compared to $1.078 million in the previous year, demonstrating improved revenue generation[24]. Acquisitions and Cash Position - The company made multiple acquisitions in 2023, including Structured Monitoring Products, Inc. and Qorvo Biotechnologies, LLC, enhancing its product portfolio and manufacturing capabilities[2][6][7]. - Zomedica's cash, cash equivalents, and available-for-sale securities totaled $100.5 million as of December 31, 2023[5]. Non-GAAP Measures - Management emphasizes the importance of non-GAAP measures for evaluating ongoing operations and financial trends[22]. - Non-GAAP EBITDA, which excludes certain expenses, was $(22.326) million, highlighting the impact of non-recurring costs on financial results[23].

Financial Performance - Revenue for the three months ended June 30, 2024, was $6,131, an increase of $111, or 2%, compared to $6,020 for the same period in 2023; revenue for the six months ended June 30, 2024, was $12,393, an increase of $891, or 8%[141]. - Gross profit margin for the three months ended June 30, 2024, was 71%, up from 67% in the same period of 2023; however, the gross profit margin for the six months ended June 30, 2024, decreased to 68% from 69%[144]. - Net loss for the three months ended June 30, 2024, was $23,931, an increase of $18,682, or 356%, compared to a net loss of $5,249 for the same period in 2023; for the six months, the net loss was $33,091, an increase of $21,457, or 184%[150]. - Cash used in operating activities for the six months ended June 30, 2024, was $14,309, an increase of $6,376, or 80%, compared to $7,933 for the same period in 2023[152]. Goodwill and Impairment - The company reported a goodwill impairment charge of $16,024 for the three and six months ended June 30, 2024, due to slowed future sales growth projections and increased operating expenses[132]. - The carrying values of goodwill for the PulseVet and Assisi reporting units at June 30, 2024, were $43.4 million and $2.2 million, respectively[134]. - The company evaluates goodwill for impairment annually or when triggering events occur, using qualitative and quantitative analyses to assess fair value[128]. - As of June 30, 2024, the implied control premium for the company's reporting units was 52.0%, consistent with historical premiums in the Medical, Dental, and Hospital Equipment and Supplies industry[135]. Operating Expenses - The company’s operating expenses consist of general and administrative, research and development, and selling and marketing expenses, with significant costs related to public company compliance[113]. - Research and development expenses for the three months ended June 30, 2024, increased by $647, or 75%, totaling $1,506, while for the six months, it increased by $1,500, or 84%, totaling $3,277[147]. - Selling and marketing expenses for the three months ended June 30, 2024, were $3,923, an increase of $842, or 27%, compared to $3,081 for the same period in 2023; for the six months, expenses increased by $1,533, or 24%, totaling $8,030[148]. Tax and Deferred Tax Assets - The company has recorded a full valuation allowance against its Canadian deferred tax assets due to uncertainty in realizing tax benefits as of June 30, 2024[119]. - As of June 30, 2024, the company had deferred tax assets for net operating loss carryforwards of $14,069 million for U.S. federal income tax purposes and $9,581 million for Canada, with expirations beginning in fiscal year 2035[157]. - The company has evaluated the realizability of its deferred tax assets, resulting in a derecognition of $3,814 million, reducing the carryforward to $10,225 million[157]. Internal Controls and Compliance - The company has remediated a material weakness in internal control over financial reporting as of June 30, 2024, which was related to the timeliness and precision of management's review controls around financial projections[165][168]. - The company’s internal control over financial reporting was assessed as effective as of June 30, 2024, following remediation efforts[166]. - The company’s management is responsible for establishing effective internal control over financial reporting to ensure reliability in financial statements[165]. - The company’s disclosure controls and procedures were initially deemed ineffective but have been improved following remediation of identified weaknesses[165]. Strategic Focus and Market Conditions - The company is focused on leveraging its recent acquisition of Qorvo into new assay development for the TRUFORMA® platform, expanding capabilities within existing products, and exploring new market opportunities[114]. - The company continues to monitor the potential impacts of the Inflation Reduction Act, which includes a new 1% excise tax on stock repurchases and a 15% Corporate Alternative Minimum Tax for corporations with average book income over $1 billion[117][118]. - The company acknowledges the uncertain impact of climate change on operations and customer needs, which may lead to increased operating costs and risks[158][159]. - There were no material changes in risk factors from those previously disclosed in the annual report for the year ended December 31, 2023[171]. Customer Contracts and Liabilities - As of June 30, 2024, the estimated value of the Therapeutic Device customer contract liability was $553; a 2% increase in the expected return rate would have reduced sales and customer liability by approximately $61[140]. - The carrying value of the company's Diagnostic instruments was $10,330 as of June 30, 2024; a 25% reduction in estimated revenues would increase the payback period from 2.93 years to 3.81 years[137]. Stock-Based Compensation - Stock-based compensation expense is calculated using the fair value method and is recognized based on the expected vesting of stock-based payment awards[122]. - The company adopted the 2024 Stock Appreciation Rights Plan, allowing for the grant of stock appreciation rights up to 10% of the issued and outstanding shares of common stock[160]. Fair Value Assessment - As of June 30, 2024, the fair value of the PulseVet reporting unit exceeded its carrying amount, including goodwill, by 56%, while the Revo Squared, SMP, and Assisi reporting units had fair values below their carrying amounts by 64%, 80%, and 3%, respectively[132].

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $6.3 million, reflecting over 14% growth compared to Q1 2023, marking the strongest first quarter in company history [7][45] - Gross profit for Q1 2024 was $4.1 million, with a gross profit margin of 66%, aligning with previous guidance of 65% to 70% [51] - Net loss for Q1 2024 was $9.2 million, compared to a net loss of $6.4 million in Q1 2023 [57] Business Line Data and Key Metrics Changes - Capital revenues for Q1 2024 were $2.2 million, up 30% from $1.7 million in Q1 2023, driven by increased device placements in small animal and mixed vet practices [46] - Consumables revenue grew to $4 million, a 7% increase from $3.8 million in Q1 2023, representing 64% of total revenue [48] - Diagnostic segment revenues were approximately $744,000, an 87% increase year-over-year, driven by growth from VetGuardian and TRUFORMA [50] Market Data and Key Metrics Changes - Approximately 14% of revenue is generated from international markets, with plans to expand international commercialization efforts for VetGuardian and TRUFORMA [12] - The company has over 2,000 PulseVet systems in active use across all 50 states in the U.S. and 30 countries globally [14] Company Strategy and Development Direction - The company aims to build an annual run rate of $50 million in revenue by the end of 2025, increasing to over $100 million two years later [38] - Zomedica is focused on expanding its product portfolio through business development and M&A activities, leveraging its strong balance sheet [39] - The company is investing in R&D, with a doubled expenditure of $1.8 million in Q1 2024 compared to $900,000 in Q1 2023 [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capitalizing on significant market opportunities throughout 2024 and beyond, following a record-setting 2023 [45] - The company expects to achieve cash flow breakeven or profitability when reaching an annual revenue run rate of approximately $50 million, anticipated in late 2025 [60] Other Important Information - The company ended Q1 2024 with $90.9 million in cash and cash equivalents, with a cash burn expected to be between $12 million to $18 million for the year [58][61] - Zomedica has a robust intellectual property portfolio with 201 issued patents and 61 pending patents, which protects its innovative solutions [42][43] Q&A Session Summary Question: How many of your products are approved for overseas sales? - Currently, three products are approved for overseas sales, with potential for more by the end of the quarter [69] Question: Do you expect to show profitability in the near future, especially with your EU approval? - Profitability is expected on a cash flow basis when annual revenue reaches about $50 million, anticipated in late 2025 [70] Question: Will there be a stock buyback? - The company does not plan to initiate a stock buyback, prioritizing cash preservation for operational needs and potential acquisitions [71] Question: Where are most of your customers located? - The company sells products in all 50 states, with a concentration in areas with significant equine activity [73] Question: What is the current cash position and expected low point? - The company ended the quarter with $90.9 million in cash, with a projected low watermark of $65 million to $75 million [76][77]