10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019.

OR

[  ] 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 Pharmaceuticals Corp.

(Exact name of registrant as specified in its charter)

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

100 Phoenix Drive, Suite 190 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 [X] 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 [X] 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	[X]	Smaller reporting company	[X]
		Emerging growth company	[X]

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. [X]

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

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

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

As of November 12, 2019, 108,038,398 shares of the registrant’s common shares, without par value, were issued and outstanding.

Zomedica Pharmaceuticals Corporation

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

SEPTEMBER 30, 2019

TABLE OF CONTENTS

	Page
PART I
FINANCIAL INFORMATION
1. Condensed Financial Statements	1
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
3. Quantitative and Qualitative Disclosures about Market Risk	33
4. Controls and Procedures	33
PART II
OTHER INFORMATION
1. Legal Proceedings
1A. Risk Factors	34
6. Exhibits	39

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Zomedica Pharmaceuticals Corp.

Condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Expressed in United States Dollars, except as otherwise noted)

Zomedica Pharmaceuticals Corp.

Condensed unaudited interim consolidated balance sheets

As at September 30, 2019 and December 31, 2018

(Stated in United States dollars)

		September 30,			December 31,
	Note	2019			2018
Assets
Current assets:
Cash and cash equivalents		$	2,487,651		$	1,940,265
Prepaid expenses and deposits	5		1,497,425			1,867,034
Trade and other receivable			75,992			53,659
			4,061,068			3,860,958
Prepaid expenses and deposits	5		-			1,442,415
Property and equipment	6		805,218			717,088
Right-of-use asset	8		1,231,003			-
Intangible assets	7		513,735			13,058
		$	6,611,024		$	6,033,519
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities		$	1,577,525		$	2,376,519
			1,577,525			2,376,519
Shareholders' equity:
Capital stock
Series 1 preferred shares, without par value; 20 shares authorized (2018 - nil) Issued and outstanding 12 series 1 preferred shares (2018 - nil)	10		11,961,397			-
Unlimited common shares without par value; Issued and outstanding 108,038,398 common shares (2018 - 97,598,898)	11		38,647,822			30,410,648
Common stock subscribed			-			4,280,000
Additional paid-in capital	12		3,625,083			1,240,139
Accumulated deficit			(49,200,803	)		(32,273,787	)
			5,033,499			3,657,000
		$	6,611,024		$	6,033,519

Nature of operations and going concern (Note 1)

Commitments and contingencies (Note 13)

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

2

Zomedica Pharmaceuticals Corp.

Condensed unaudited interim consolidated statements of operations and comprehensive loss

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

		Three months ended September 30,						Nine months ended September 30,
	Note	2019			2018			2019			2018
Expenses:
Research and development	16	$	962,463		$	630,371		$	9,555,345		$	3,765,332
General and administrative	16		1,404,952			834,570			5,557,661			3,243,232
Professional fees	16		279,237			293,484			1,230,151			1,001,886
Amortization - right-of-use asset	8		127,345			-			382,035			-
Amortization - intangible asset	7		273			431			810			1,810
Depreciation	6		70,096			86,162			201,075			150,320
Loss from operations			2,844,366			1,845,018			16,927,077			8,162,580
Loss on fixed assets			-			69,382			1,308			69,382
Interest expense			-			-			18,338			-
Gain on settlement of liabilities	11		-			-			(19,737	)		-
Foreign exchange gain			1,313			(4,122	)		30			(5,957	)
Loss before income taxes			2,845,679			1,910,278			16,927,016			8,226,005
Income tax expense			-			-			-			-
Net loss and comprehensive loss		$	2,845,679		$	1,910,278		$	16,927,016		$	8,226,005
Weighted average number of common shares - basic and diluted			108,038,398			94,514,905			105,711,459			92,534,667
Loss per share - basic and diluted		$	(0.03	)	$	(0.02	)	$	(0.16	)	$	(0.09	)

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

3

Zomedica Pharmaceuticals Corp.

Condensed unaudited interim consolidated statements of shareholders’ equity

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

		Series 1 preferred stock				Common stock
	Note	Shares		Amount		Shares		Amount		Common stock subscribed			Additional paid-in capital			Accumulated deficit			Total
Balance at December 31, 2017			-	$	-		90,225,869	$	18,244,659	$	-		$	1,768,526		$	(15,626,100	)	$	4,387,085
Stock issuance for services			-		-		641,717		1,238,513		-			-			-			1,238,513
Stock issuance for financing, net of cost			-		-		1,861,627		3,966,362		-			-			-			3,966,362
Stock-based compensation	12		-		-		-		-		-			7,288			-			7,288
Stock issuance due to exercise of options	11,12		-		-		1,866,996		1,923,922		-			(386,898	)		-			1,537,024
Net loss			-		-		-		-		-			-			(8,226,005	)		(8,226,005	)
Balance at September 30, 2018			-	$	-		94,596,209	$	25,373,456	$	-		$	1,388,916		$	(23,852,105	)	$	2,910,267
Balance at December 31, 2018			-	$	-		97,598,898	$	30,410,648	$	4,280,000		$	1,240,139		$	(32,273,787	)	$	3,657,000
Stock issuance for services	11		-		-		707,236		792,104		-			-			-			792,104
Stock issuance for financing, net of cost	10,11		12		11,961,397		9,337,529		6,690,922		(4,280,000	)		-			-			14,372,319
Stock-based compensation	12		-		-		-		-		-			2,539,092			-			2,539,092
Stock issuance due to exercise of options	11,12		-		-		394,735		754,148		-			(154,148	)		-			600,000
Net loss			-		-		-		-		-			-			(16,927,016	)		(16,927,016	)
Balance at September 30, 2019			12	$	11,961,397		108,038,398	$	38,647,822	$	-		$	3,625,083		$	(49,200,803	)	$	5,033,499

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

4

Zomedica Pharmaceuticals Corp.

Condensed unaudited interim consolidated statements of cash flows

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

		Three months ended September 30,						Nine months ended September 30,
	Note	2019			2018			2019			2018
Cash flows used in operating activities:
Net loss for the period		$	(2,845,679	)	$	(1,910,278	)	$	(16,927,016	)	$	(8,226,005	)
Adjustments for
Depreciation	6		70,096			86,162			201,075			150,320
Amortization - intangible assets	7		273			431			810			1,810
Amortization - right-of-use-asset	8		127,345			-			382,035			-
Loss on fixed assets	6		-			69,382			1,308			69,382
Stock issued for services	11		-			-			792,104			1,238,513
Stock-based compensation	12		197,988			-			2,539,092			7,288
Change in non-cash operating working capital
Trade and other receivable			19,558			11,885			(22,333	)		(9,470	)
Prepaid expenses			(122,315	)		56,399			140,695			(191,365	)
Deposits			21,366			(1,281,617	)		(76,709	)		(1,311,463	)
Accounts payable and accrued liabilities			(1,378,710	)		(403,423	)		(798,994	)		451,643
			(3,910,078	)		(3,371,059	)		(13,767,933	)		(7,819,347	)
Cash flows (used) from financing activities:
Cash proceeds from financing of preferred shares	10		-			-			12,000,000			-
Cash proceeds from financing of common shares	11		-			-			3,000,000			4,002,496
Cash received from stock option exercises	12		-			98,716			600,000			1,537,024
Cash paid on stock issuance costs	10,11		(1,414	)		(12,328	)		(627,681	)		(36,135	)
			(1,414	)		86,388			14,972,319			5,503,385
Cash flows used in investing activities:
Investment in intangibles	6		(501, 487	)		-			(501, 487	)		-
Investment in property and equipment	6		(80,950	)		(467,675	)		(155,513	)		(605,368	)
			(582,437	)		(467,675	)		(657,000	)		(605,368	)
Increase (decrease) in cash and cash equivalents			(4,493,929	)		(3,752,346	)		547,386			(2,921,330	)
Cash and cash equivalents, beginning of period			6,981,580			4,279,163			1,940,265			3,448,147
Cash and cash equivalents, end of period		$	2,487,651		$	526,817		$	2,487,651		$	526,817
Supplemental cash flow information:
Interest paid		$	12,164		$	-		$	18,338		$	-

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

5

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

1. Nature of operations and going concern

Zomedica Pharmaceuticals Corp. ("Zomedica" or the “Company”) was incorporated on January 7, 2013 under the Business Corporations Act (Alberta) as Wise Oakwood Ventures Inc. (“WOW”) and was classified as a capital pool company, as defined in Policy 2.4 of the TSX Venture Exchange. ZoMedica Pharmaceuticals Inc. was incorporated on May 14, 2015 under the Canada Business Corporations Act.

On April 21, 2016, the Company closed its qualifying transaction (“Transaction”), consisting of the acquisition of ZoMedica Pharmaceuticals Inc. (“ZoMedica”) pursuant to a three-cornered amalgamation, whereby ZoMedica was amalgamated with 9674128 Canada Inc. (which was wholly-owned by WOW) and common shares and options of the Company were issued to former holders of ZoMedica securities as consideration. The amalgamated company changed its name to Zomedica Pharmaceuticals Ltd. and WOW subsequently changed its name to Zomedica Pharmaceuticals Corp. Prior to completion of the Transaction, WOW consolidated its common shares on the basis of the one post-consolidation common share for every 2.5 pre-consolidation common shares. The Transaction constituted WOW’s qualifying transaction under TSX Venture Exchange Policy 2.4 – Capital Pool Companies. The shares of Zomedica Pharmaceuticals Corp. began trading on the TSX Venture Exchange under the new symbol “ZOM” on Monday, May 2, 2016. On June 21, 2016, the Company filed Articles of Amalgamation and vertically amalgamated with its wholly-owned subsidiary, Zomedica Pharmaceuticals Ltd.

Zomedica has one corporate subsidiary, Zomedica Pharmaceuticals, Inc., a Delaware company whose results and operations are included in these consolidated financial statements. The Company is a biopharmaceutical company targeting health and wellness solutions for the companion pet through a ground-breaking approach that focuses on the needs of the veterinarians themselves. Zomedica's head office is located at 100 Phoenix Drive, Suite 190, Ann Arbor, MI 48108 and its registered office is located at Suite 1250, 639 – 5th Avenue S.W., Calgary, Alberta T2P 0M9.

On November 20, 2017, Zomedica announced that its registration statement on Form S-1 was declared effective by the U.S. Securities and Exchange Commission and on November 21, 2017, the Company’s common shares began trading on the NYSE American under the symbol “ZOM”.

Going concern

The consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. The Company has incurred losses from operations since inception and has an accumulated deficit of $49,200,803 as at September 30, 2019 (December 31, 2018 - $32,273,787). The Company has funded its research and development (“R&D”) activities principally through the issuance of securities and loans from related parties. There is no certainty that such funding will be available going forward. These conditions raise substantial doubt about its ability to continue as a going concern and realize its assets and pay its liabilities as they become due.

In order for the Company to continue as a going concern and fund any significant expansion of its operations or R&D activities, the Company will require significant additional capital. The Company’s ultimate success will depend on whether its future product candidates receive the necessary regulatory approval and it is able to successfully market approved products. The Company cannot be certain that it will be able to receive regulatory approval for any of its future product candidates, or that it will reach the level of sales and revenues necessary to achieve and sustain profitability.

The availability of equity or debt financing will be affected by, among other things, the results of the Company’s research and development, its ability to obtain regulatory approvals, the market acceptance of its products, the state of the capital markets generally, strategic alliance agreements, and other relevant commercial considerations. In addition, if the Company raises additional funds by issuing equity securities,

6

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

1. Nature of operations and going concern (continued)

Going concern (continued)

its then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict its operations. Any failure on its part to raise additional funds on terms favorable to the Company or at all, may require the Company to significantly change or curtail its current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in the Company not taking advantage of business opportunities.

2. Basis of preparation

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

Basis of consolidation

These condensed unaudited interim consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiary, Zomedica Pharmaceuticals, Inc.

All inter-company accounts and transactions have been eliminated on consolidation.

3. Significant accounting policies

Use of estimates

The preparation of the condensed unaudited interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed unaudited interim consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

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

Basis of measurement

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

Functional and reporting currencies

The Company’s and subsidiary’s functional currency, as determined by management, is US dollars, which is also the Company’s reporting currency.

The accounting policies set out below have been applied consistently to all periods and companies presented in the condensed unaudited interim consolidated financial statements.

7

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

3. Significant accounting policies (continued)

Research and development

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC topic 730.

Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

Translation of foreign currencies

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

Stock-based compensation

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

The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Loss per share

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

The dilutive effect of stock options is determined using the treasury stock method. Stock options to purchase common shares of the Company during the period were not included in the computation of diluted EPS because the Company has incurred a loss for the three and nine months ended September 30, 2019 as the effect would be anti-dilutive.

8

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

3. Significant accounting policies (continued)

Comprehensive loss

The Company follows ASC topic 220. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. The Company has no other comprehensive loss items.

Recently adopted accounting pronouncements

In February 2016, the FASB issued new guidance, ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Additional qualitative and quantitative disclosures are also required by the new guidance. Topic 842 is effective for annual reporting periods (including interim reporting periods) beginning after December 15, 2018. Early adoption is permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company adopted the new standard with an initial application date of January 1, 2019 and used the effective date as its date of initial application. Consequently, financial information was not updated, and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company has not elected the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company.

On August 29, 2018, the FASB issued ASU 2018-15, which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019. Early adoption is permitted.

The Company has chosen to adopt this guidance during the three months ended September 30, 2019.

9

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

4. Critical accounting judgments and key sources of estimation uncertainty

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

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

Going concern

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

Stock-based payments

The Company estimates the fair value of convertible securities such as options using the Black-Scholes option-pricing model which requires significant estimation around assumptions and inputs such as expected term to maturity, expected volatility and expected dividends.

Useful lives of property and equipment

The Company reviews the estimated useful lives of property and equipment with definite useful lives at the end of each year and assesses whether the useful lives of certain items should be shortened or extended, due to various factors including technology, competition and revised service offerings. During the three and nine months ended September 30, 2019, the Company was not required to adjust the useful lives of any assets based on the factors described above. Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable.

Deferred income taxes

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

10

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

5. Prepaid expenses and deposits

	September 30,		December 31,
	2019		2018
Prepaid rent (i)	$	-	$	1,613,038
Deposits (ii)		1,202,814		1,596,104
Prepaid FDA fees		31,497		-
Prepaid marketing (iii)		36,596		37,465
Prepaid insurance (iii)		156,044		33,372
Other (iv)		70,474		29,470
Total	$	1,497,425	$	3,309,449

(i) On July 31, 2018, the Company entered into an amended lease agreement with Wickfield Phoenix LLC for an additional 18,640 square feet of office space. The Company prepaid the full outstanding balance of $1,269,073. As of January 1, 2019, the balance of the prepaid rent, inclusive of the original and amended lease amounts was $1,613,038. In accordance with ASC 842, this amount was reclassified as a right-of-use asset in the consolidated balance sheet. As of December 31, 2018, the Company classified $509,380 as a current asset in the consolidated balance sheet;

(ii) Deposits include payments made to vendors in advance and are primarily associated with research activity, deposits for leasehold improvements, and equipment purchases. As of September 30, 2019, and December 31, 2018, the Company classified $1,202,814 and $922,347 as a current asset in the consolidated balance sheet, respectively;

(iii) As of September 30, 2019, and December 31, 2018, all amounts were classified as a current asset in the consolidated balance sheet;

(iv) Other prepaid expenses and deposits are comprised of subscription payments and software licensing. As of September 30, 2019, and December 31, 2018, the Company classified all amounts as a current asset in the consolidated balance sheet.

11

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

6. Property and equipment

	Computer equipment			Furniture and equipment		Laboratory equipment			Leasehold improvements			Total
Cost
Balance at December 31, 2017	$	151,155		$	76,058	$	245,729		$	36,957		$	509,899
Additions		18,847			105,821		246,375			256,954			627,997
Disposals		-			-		(139,467	)		(10,936	)		(150,403	)
Balance at December 31, 2018		170,002			181,879		352,637			282,975			987,493
Additions		218,076			3,414		3,350			65,673			290,513
Disposals		(2,210	)		-		-			-			(2,210	)
Balance at September 30, 2019		385,868			185,293		355,987			348,648			1,275,796
Accumulated depreciation
Balance at December 31, 2017		42,802			11,845		74,875			9,220			138,742
Depreciation		62,116			17,740		86,368			37,460			203,684
Disposals		-			-		(61,547	)		(10,474	)		(72,021	)
Balance at December 31, 2018		104,918			29,585		99,696			36,206			270,405
Depreciation		60,561			19,885		51,151			69,478			201,075
Disposals		(902	)		-		-			-			(902	)
Balance at September 30, 2019		164,577			49,470		150,847			105,684			470,578
Net book value as at:
December 31, 2018	$	65,084		$	152,294	$	252,941		$	246,769		$	717,088
September 30, 2019	$	221,291		$	135,823	$	205,140		$	242,964		$	805,218

In February 2019, the Company reclassified $135,000 out of prepaid assets into property and equipment.

7. Intangible assets

	Computer software		Trademarks		Total intangible assets
Cost
Balance at December 31, 2017	$	5,143	$	16,236	$	21,379
Additions		-		-		-
Balance at December 31, 2018		5,143		16,236		21,379
Additions		501,487		-		501,487
Balance at September 30, 2019		506,630		16,236		522,866
Accumulated amortization
Balance at December 31, 2017		4,143		2,095		6,238
Amortization		1,000		1,083		2,083
Balance at December 31, 2018		5,143		3,178		8,321
Amortization		-		810		810
Balance at September 30, 2019		5,143		3,988		9,131
Net book value as at:
December 31, 2018	$	-	$	13,058	$	13,058
September 30, 2019	$	501,487	$	12,248	$	513,735

12

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

8. Leases

As discussed in Note 3, the Company adopted ASC 842 with an initial application date of January 1, 2019. The Company is party to two lease agreements under which it rents office and laboratory space. The rent for both of these leases was prepaid upon inception and therefore at adoption the Company reclassified its prepaid lease balances of $1,613,038 to a right-of-use asset.

The Company amortizes the asset on a straight-line basis and records the expense in the consolidated statement of operations and comprehensive loss. During the three and nine months ended September 30, 2019, the Company recognized $127,345 and $382,035 (2018 – nil) in amortization expense in the consolidated statements of operations and comprehensive loss.

9. Loan arrangements

On October 17, 2017, the Company entered into a loan arrangement with a shareholder of the Company, pursuant to which such shareholder has agreed to provide a loan facility to the Company, whereby the Company may borrow up to $5,000,000, with the proceeds to be used for working capital and general corporate purposes. The term of the loan facility is five (5) years, with principal and interest payments being due only at the time of maturity. Under the loan agreement, the Company may borrow in one or more advances, provided however that a minimum amount of $250,000 must be borrowed at any one time and not more than two advances may occur per month. Interest shall accrue at a rate of fourteen percent (14%) per annum, payable upon maturity. As of September 30, 2019, no amounts have been borrowed.

10. Preferred stock

The Company is authorized to issue up to 20 shares of our Series 1 Preferred Shares, all without par value, and each having a stated value of $1,000,000. The Series 1 Preferred Shares do not have voting rights except to the extent required by applicable law and are not convertible into the Company’s common shares. Holders of the Series 1 Preferred Shares will not be entitled to dividends but, in lieu thereof, will receive Net Sales Payments (“Net Sales Payments” is defined as annual payments equal to 9 percent of sales) until such time as the holders have received total Net Sales Payments equal to 9 times the aggregate stated value of the outstanding Series 1 Preferred Shares. The Company will have the right to redeem the outstanding Series 1 Preferred Shares at any time at a redemption price equal to 9 times the aggregate stated value of the Series 1 Preferred Shares outstanding less the aggregate amount of the Net Sales Payments paid (the “Redemption Amount”).

Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series 1 Preferred Shares will be entitled to a liquidation preference equal to the stated value of the Series 1 Preferred Shares less the Net Sales Payments paid on the Series 1 Preferred Shares.

In the event of a fundamental transaction (defined to include an amalgamation, merger or other business combination transaction involving our company in which our shareholders do not have the right to cast more than 50% of the votes that may be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of our company as an entirety or substantially as an entirety to a third party), the holders of the Series 1 Preferred Shares will be entitled to receive consideration for their Series 1 Preferred Shares equal to a multiple of the stated value of the Series 1 Preferred Shares ranging from 5.0 to 9.0 depending on the timing of the fundamental transaction, subject to a cap equal to the redemption amount. The Company has assessed the likelihood of any Net Sales Payments to the Series 1 Preferred shareholders to be remote.

13

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

10. Preferred stock (continued)

Issued and outstanding preferred stock:

	Number of
	preferred		Preferred
	stock		stock amount
Balance at December 31, 2018		-	$	-
Stock issued from financing (i)		12		11,961,397
Balance at September 30, 2019		12	$	11,961,397

(i) On May 9, 2019, the Company entered into subscription agreements to sell $12,000,000 of its Series 1 Preferred Shares to an accredited investor in a private placement at a purchase price of $1,000,000 per Series 1 Preferred Share; $5,000,000 of the purchase price was paid on May 9, 2019 and the remaining $7,000,000 was paid on June 7, 2019. The Company recorded $1,414 and $38,603 of share issuance costs as an offset to preferred stock in the three and nine months ended September 30, 2019

11. Common stock

The Company is authorized to issue an unlimited number of common shares, all without par value.

Issued and outstanding common stock:

	Number of
	common		Common
	stock		stock amount
Balance at December 31, 2017		90,225,869	$	18,244,659
Stock issuance for services		641,717		1,238,513
Stock issuance for financing, net of costs		1,861,627		3,966,362
Stock issuance due to exercise of options		1,866,996		1,923,922
Balance at September 30, 2018		94,596,209	$	25,373,456
Balance at December 31, 2018		97,598,898	$	30,410,648
Stock issuance for services (i and ii)		707,236		792,104
Stock issuance from financing (iii and iv)		9,337,529		6,690,922
Stock issuance due to exercise of options		394,735		754,148
Balance at September 30, 2019		108,038,398	$	38,647,822

(i) On January 14, 2019, the Company settled $75,000 of amounts due to a vendor by issuing 49,342 common shares valued at $55,263 at the date of issuance. The Company recorded a $19,737 gain on the settlement of liabilities during the three months ended March 31, 2019;

(ii) On January 14, 2019, the Company issued 657,894 common shares in satisfaction of $1,000,000 of all remaining milestones under a License and Supply Agreement with a third party. The Company recognized $736,841 as research and development expense, based on the value of the common stock on the date of issuance;

(iii) On January 14, 2019, the Company completed a non-brokered private placement, and issued 2,815,789 common shares. Gross proceeds of $4,280,000 were received prior to December 31, 2018.The Company recorded $465 of share issuance costs as an offset to common stock;

(iv) On March 28, 2019, the Company completed an underwritten public offering of its common stock pursuant to which the Company sold an aggregate 6,521,740 common shares for gross proceeds of $3,000,000. The Company recorded nil and $588,613 of share issuance costs as an offset to common stock in the three and nine months ended September 30, 2019.

14

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

12. Stock-based compensation

During the three months ended September 30, 2019, nil options were exercised. During the three months ended September 30, 2018, 85,000 options were exercised. During the nine months ended September 30, 2019, 394,735 options were exercised. During the nine months ended September 30, 2018, 1,866,996 options were exercised. During the three months ended September 30, 2019, the Company issued 1,500,000 stock options. During the nine months ended September 30, 2019, the Company issued 7,495,000 stock options, each option entitling the holder to purchase one common share of the Company. During the three and nine months ended September 30, 2018, the Company issued nil options.

The continuity of stock options are as follows:

	Number of options			Weighted avg exercise price (US$)(i)
Balance at December 31, 2018		422,004		$	1.95
Stock options granted January 10, 2019		5,995,000			1.52
Stock options expired February 24, 2019		(35,000	)		1.12
Stock options exercised March 8, 2019		(164,473	)		1.52
Stock options exercised March 15, 2019		(164,473	)		1.52
Stock options exercised March 29, 2019		(65,789	)		1.52
Stock options expired May 23, 2019		(10,000	)		1.52
Stock options expired June 16, 2019		(40,000	)		1.52
Stock options cancelled August 13, 2019		(5,000	)		1.52
Stock options expired August 14, 2019		(392,004	)		2.07
Stock options granted August 19, 2019		500,000			0.26
Stock options granted August 19, 2019		100,000			0.35
Stock options granted August 19, 2019		100,000			0.45
Stock options granted August 19, 2019		100,000			0.55
Stock options granted August 19, 2019		100,000			0.65
Stock options granted August 19, 2019		100,000			0.75
Stock options granted September 16, 2019		500,000			0.43
Balance at September 30, 2019		7,040,265		$	1.28

(i) As of the year ended December 31, 2018, the weighted average exercised price in CDN$ was $2.65.

As at September 30, 2019, details of the issued and outstanding stock options were as follows:

Grant date		Exercise price (USD$)	Number of options	Number of vested options	Weighted Avg Remaining Life (years)
January 10, 2019	$	1.52	5,540,265	5,540,265	1.28
August 19, 2019		0.26	500,000	500,000	1.88
August 19, 2019		0.35	100,000	100,000	1.88
August 19, 2019		0.45	100,000	100,000	1.88
August 19, 2019		0.55	100,000	100,000	1.88
August 19, 2019		0.65	100,000	100,000	1.88
August 19, 2019		0.75	100,000	100,000	1.88
September 16, 2019		0.43	500,000	500,000	1.96
Balance at September 30, 2019			7,040,265	7,040,265

15

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

12. Stock-based compensation (continued)

The fair value of options granted during the three and nine months ended September 30, 2019 was estimated using the Black-Scholes option pricing model to determine the fair value of options granted using the following assumptions:

	January 10, 2019		August 19, 2019		September 16, 2019
Volatility		68%		87%		89%
Risk-free interest rate		2.56%		1.48%		1.74%
Expected life (years)		2		2		2
Dividend yield		0		0		0
Common share price		$1.23		$0.26		$0.42
Strike price		$1.52		$ 0.26 - $ 0.75		$0.43
Forfeiture rate		nil		nil		nil

The Company recorded $197,988 of stock-based compensation for the three months ended September 30, 2019 (three months ended September 30, 2018 – nil). The Company recorded $2,539,092 of stock-based compensation for the nine months ended September 30, 2019 (nine months ended September 30, 2018 - $7,288). The Company recorded nil in cash receipts due to the exercise of options during the three months ended September 30, 2019. The Company recorded the cash receipt of $600,000 and reclassified $154,148 of stock-based compensation to common stock due to the exercise of options during the nine months ended September 30, 2019. The Company recorded the cash receipt of $98,716 and reclassified $34,608 of stock-based compensation to common stock due to the exercise of options during the three months ended September 30, 2018. The Company recorded the cash receipt of $1,537,024 and reclassified $386,898 of stock-based compensation to common stock due to the exercise of options during the nine months ended September 30, 2018.

The Company has estimated its stock option forfeitures to be nil for the three and nine months ended September 30, 2019 (three and nine months ended September 2018 - nil).

13. Commitments and contingencies

On October 1, 2018, the Company entered into a one-year rental agreement. On September 1, 2019, the Company elected to renew this rental agreement for an additional one-year period, as well as enter into an additional one-year rental agreement. The Company elected not to account for these leases in accordance with ASC 842 as they are for a one-year term. Total future annual lease payments for the premises are as follows:

2019	$	12,480
2020		33,280
Total	$	45,760

16

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

13. Commitments and contingencies (continued)

On November 26, 2018, the Company entered into a Development and Supply Agreement and as part of this agreement, the Company has contingent future outflows as follows:

•	1st payment: At the later of the achievement of a future milestone event or September 12, 2019, can decide to receive payment as follows:
	°	$3,000,000 in cash or
	°	$1,500,000 in cash and $1.95 million in equity
•	2nd payment: At the later of the achievement of a future milestone or February 19, 2020 - $2,000,000 in cash.

As at September 30, 2019, neither of the future development milestones related to the above agreement have been met.

On May 10, 2018, the Company entered into a Development, Commercialization and Exclusive Distribution Agreement. As part of the agreement, the Company is required to make the following future milestone payments:

• 1^st payment: $3,500,000 in cash payment upon the achievement of future development milestones

• 2^nd payment: $3,500,000 in equity based on the number of the Company’s common stock determined by dividing the amount due by the volume-weighted average price of the Company’s common stock on the NYSE American exchange over the 10 trading days prior to the achievement of the milestone event.

As at September 30, 2019, neither of the future development milestones related to the above agreement have been met.

From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As at September 30, 2019, and continuing as at November 12, 2019, the Company is not aware of any pending or threatened material litigation claims against the Company, other than as described below.

On November 1, 2019, Heska Corporation (“Heska”) filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and the Company (collectively with Qorvo, the “Defendants”). The Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the Company’s TRUFORMA^TM diagnostic instrument.

Under the terms of the Development and Supply Agreement, dated November 26, 2018, by and between Qorvo Biotech and the Company (the “Qorvo Agreement”), Qorvo Biotech agreed to indemnify the Company and certain related parties against claims alleging infringement or misappropriation of third-party intellectual property rights, subject to certain limitations and exceptions. Qorvo Biotech has notified the Company that Qorvo Biotech has assumed the defense of the Complaint and will indemnify the Company for losses arising from the Complaint in accordance with the terms of the Qorvo Agreement. Qorvo Biotech has further advised the Company that it intends to mount a vigorous defense to the claims in the Complaint, and that it believes the allegations contained in the Complaint are without merit.

14. Financial instruments

(a) Fair values

The Company follows ASC topic 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC topic 820 apply to other accounting pronouncements that require or permit fair value measurements. ASC topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and establishes a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

17

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

14. Financial instruments (continued)

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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

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

The carrying values of cash, trade and other receivable, accounts payable and accrued liabilities and shareholder loans payable approximates their fair values because of the short-term nature of these instruments.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and cash equivalents, due to related parties due to the short-term nature of these balances.

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank and a U.S. Bank. The Company’s cash is not subject to any external restrictions.

(c) Foreign exchange risk

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange (“FX”) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

18

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

14. Financial instruments (continued)

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at June 30, 2019 and December 31, 2018:

									September 30, 2019
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		1,577,525		-		-		-		-		1,577,525
		1,577,525		-		-		-		-		1,577,525

									December 31, 2018
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		2,376,519		-		-		-		-		2,376,519
		2,376,519		-		-		-		-		2,376,519

15. Segmented information

The Company's operations comprise a single reportable segment engaged in the research, development targeting health and wellness solutions for the companion animal. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for loss for the period, depreciation and total assets also represent segmented amounts. In addition, all of the Company's long-lived assets are in the United States of America (“US”).

	September 30,		December 31,
	2019		2018
	$		$
Total assets
Canada		431,063		383,567
US		6,179,961		5,649,952
Total US property and equipment		805,218		717,088
Total US right-of-use asset		1,231,003		-
		2,036,221		717,088

19

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

16. Schedule of expenses

	For the three months ended September 30,						For the three months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	129,319	$	-	$	849,458	$	164,267	$	-	$	454,786
Contracted expenditures		661,917		-		-		259,947		-		-
Marketing and investor relations		-		-		165,837		-		-		53,996
Travel and accommodation		8,327		-		198,993		8,023		-		36,491
Insurance		19,497		-		66,029		20,855		-		76,903
License fees		-		-		-		-		-		-
Office		11,565		-		80,032		6,665		-		82,416
Consultants		29,343		279,237		-		80,425		293,484		-
Regulatory		31,773		-		26,163		19,247		-		32,904
Rent		-		-		7,603		15,396		-		90,463
Supplies		70,722		-		10,837		55,546		-		6,611
Total	$	962,463	$	279,237	$	1,404,952	$	630,371	$	293,484	$	834,570

	For the nine months ended September 30,						For the nine months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	579,110	$	-	$	4,422,480	$	490,706	$	-	$	1,957,341
Contracted expenditures		2,474,483		-		-		968,159		-		-
Marketing and investor relations		-		-		297,252		-		-		177,151
Travel and accommodation		21,103		-		318,730		13,360		-		228,359
Insurance		76,402		-		179,367		65,099		-		234,646
License fees		5,936,841		-		-		1,738,513		-		-
Office		31,162		-		216,521		41,312		-		220,823
Consultants		178,223		1,230,151		-		169,613		1,001,886		-
Regulatory		95,418		-		76,333		57,422		-		226,604
Rent		-		-		19,483		31,047		-		176,501
Supplies		162,603		-		27,495		190,101		-		21,807
Total	$	9,555,345	$	1,230,151	$	5,557,661	$	3,765,332	$	1,001,886	$	3,243,232

17. Capital risk management

The capital of the Company includes equity, which is comprised of issued common capital stock, additional paid-in capital, and accumulated deficit. The Company's objective when managing its capital is to safeguard the ability to continue as a going concern in order to provide returns for its shareholders, and other stakeholders and to maintain a strong capital base to support the Company's core activities.

20

Zomedica Pharmaceuticals Corp.

Notes to the condensed unaudited interim consolidated financial statements

For the three and nine months ended September 30, 2019 and 2018

(Stated in United States dollars)

18. Loss per share

	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Numerator
Net loss for the period	$	2,845,679		$	1,910,278		$	16,927,016		$	8,226,005
Denominator
Weighted average shares - basic		108,038,398			94,514,905			105,711,459			92,534,667
Stock options		-			-			-			-
Denominator for diluted loss per share		108,038,398			94,514,905			105,711,459			92,534,667
Loss per share - basic and diluted	$	(0.03	)	$	(0.02	)	$	(0.16	)	$	(0.09	)

For the above-mentioned periods, the Company had securities outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive.

19. Related party transactions and key management compensation

Key management personnel are comprised of the Company’s directors and executive officers. In addition to their salaries, key management personnel also receive share-based compensation. Key management personnel compensation is as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
Salaries and benefits, including bonuses	$	251,737	$	324,784	$	887,635	$	1,046,449
Stock-based compensation		100,002		-		1,744,327		-
Total	$	351,739	$	324,784	$	2,631,962	$	1,046,449

21

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

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report, and those set forth in our most recent Annual Report on Form 10-K particularly those under “Risk Factors” discussed below and in our most recent Annual Report on Form 10-K.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management’s beliefs and assumptions and on information currently available to management. Some of the statements under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this Form 10-Q contain forward-looking statements. In some cases, you can identify forward-looking statements through our use of words such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

· the success, cost and timing of our research and development activities, validation studies and pivotal trials, including with respect to our lead product candidates, TRUFORMA™, ZM-017, ZM-022, ZM-020, ZM-007, ZM-012 ZM-006, and ZM-011;

· our ability to obtain regulatory approval from the Food and Drug Administration’s Center for Veterinary Medicine (FDA-CVM) and/or the USDA Center for Veterinary Biologics (USDA-CVB) for our pharmaceutical and diagnostic product candidates, as applicable;

· our ability to obtain funding for our operations;

· our obligation to pay a portion of our “net sales” to holders of our Series 1 Preferred Shares;

· our ability to raise additional capital, considering the significant obligations under our Series 1 Preferred Shares;

· the ability of our contract research organizations to appropriately conduct our safety studies and certain development activities;

· the ability of our contract manufacturing organizations to manufacture and supply our product candidates in accordance with current Good Manufacturing Practices and our clinical needs;

· the ability of our contract manufacturing organizations to manufacture and supply our product candidates in accordance with current Good Manufacturing Practices and our clinical needs;

· our plans to develop and commercialize our product candidates;

· our ability to develop and commercialize product candidates that can compete effectively against the product candidates developed and commercialized by our competitors or that can meet the current standards of care (including human generic drugs);

22

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

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

· regulatory developments in the United States;

· the loss of key scientific or management personnel;

· our expectations regarding the period during which we will be an “emerging growth company” under the JOBS Act;

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

· our status as a “passive foreign investment company” for U.S. federal income tax purposes.

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements. Please see “Risk Factors” below and in our most recent Annual Report on Form 10-K for additional risks which could adversely impact our business and financial performance.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

Overview

We are a development stage veterinary diagnostic and pharmaceutical company creating products for companion animals (canine, feline, and equine) by focusing on the unmet needs of clinical veterinarians. We believe that we have identified and are developing diagnostics and therapeutics that have the potential to significantly improve the diagnosis and treatment of various diseases affecting companion animals. We believe that there are significant unmet medical needs for pets, and that the pet diagnostic and therapeutic segments of the animal health industry are likely to grow substantially as new diagnostic tools and treatments are identified, developed, and marketed specifically for companion animals.

Together with our strategic partners, we are developing three diagnostic platforms, a Bulk Acoustic Wave sensor-based veterinary point-of-care diagnostic platform for performing immunodiagnostic testing, a Raman spectroscopy-based point-of-care diagnostic platform for the detection of pathogens, and liquid biopsy assays for the detection of cancer, along with related consumables. We believe that the regulatory pathway to approval of companion animal diagnostics is significantly shorter than for similar diagnostic products intended for human use. In certain cases, pre-market clearance may be unnecessary, depending on the intended use of the diagnostic.

We also have identified several drugs that have proven safe and effective in humans that we are developing for use in canines and felines. We believe this development approach enables us to reduce the risks associated with obtaining regulatory approval for unproven product candidates and shortens the development timeline necessary to bring our product candidates to market. We have four drug product candidates in early development and have identified several other potential product candidates for further investigation.

23

In addition, we are investigating the development of alternative drug delivery technologies for our drug product candidates. Many of the human-approved therapeutics used in companion animals are only available in pill or injectable form. However, it can be difficult to give a companion animal an injection or to assure that the animal has swallowed a pill. As a result, we believe that compliance with treatment regimens is a significant problem for veterinarians and pet owners. The challenges associated with medicating pets are unique, and we believe that developing product candidates that can be easily taken by the pet or easily administered by pet owners will help increase compliance.

We are a development-stage company with no products approved for marketing and sale, and we have not generated any revenue. We have incurred significant net losses since our inception. We incurred net losses of $2,845,679 and $1,910,278 for the three months ended September 30, 2019 and September 30, 2018, respectively, and $16,927,016 and $8,226,005 for the nine months ended September 30, 2019 and September 30, 2018, respectively. These losses have resulted principally from costs incurred in connection with investigating and developing our product candidates, research and development activities and general and administrative costs associated with our operations. As of September 30, 2019, we had an accumulated deficit of $49,200,803 and cash and cash equivalents of $2,487,651.

For the foreseeable future, we expect to continue to incur losses, which will increase significantly from historical levels as we expand our product development activities, commercialize them if they do not require U.S. Food and Drug Administration’s Center for Veterinary Medicine, or FDA-CVM, pre-market approval, seek regulatory approvals for our product candidates where required from the FDA-CVM or the United States Department of Agriculture Center for Veterinary Biologics, or the USDA-CVB.

For further information on the regulatory, business and product pipeline, please see the “Business” section of this Annual Report on Form 10-K. For further information on the risk factors, please see the “Risk Factors” section of the Annual Report on Form 10-K.

Revenue

We do not have any products approved for sale, have not generated any revenue from product sales since our inception and do not expect to generate any revenue from the sale of products in the near future. If our development efforts result in clinical success and regulatory approval or collaboration agreements with third parties for any of our product candidates, we may generate revenue from those product candidates.

Operating Expenses

Most of our operating expenses to date have been for the general and administrative activities related to general business activities, capital market activities and stock-based compensation, and research and development activities related to our lead product candidates.

Research and Development Expense

All costs of research and development are expensed in the period in which they are incurred. Research and development costs primarily consist of salaries and related expenses for personnel, fees paid to consultants, outside service providers, professional services, travel costs and materials used in clinical trials and research and development.

We have a point-of-care biosensor platform, TRUFORMA™ that we are developing for diagnosis and treatment management of disorders such as thyroid and adrenal disorders, a non-invasive diagnostic assay or blood test, that we are developing as an aid for veterinarians in diagnosing cancer in canines, and a diagnostic instrument and related assays, for the detection of pathogens in urine and fecal samples at the point-of-care.

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

24

General and Administrative Expense

General and administrative expense consists primarily of personnel costs, including salaries, related benefits and stock-based compensation for employees, consultants and directors. General and administrative expenses also include rent and other facilities costs and professional and consulting fees for legal, accounting, tax services and other general business services.

Professional Fees

Professional fees include attorney’s fees, accounting fees and consulting fees incurred in connection with product investigation and analysis, regulatory analysis, government relations, audit, securities offerings, investor relations, and general corporate and intellectual property advice.

Income Taxes

As of December 31, 2018, we had net operating loss carryforwards for federal and state income tax purposes of $11,522,620 and non-capital loss carryforwards for Canada of approximately $13,353,870, which will begin to expire in fiscal year 2036. We have evaluated the factors bearing upon the realizability of our deferred tax assets, which are comprised principally of net operating loss carryforwards and non-capital loss carryforwards. We concluded that, due to the uncertainty of realizing any tax benefits as of December 31, 2018, a valuation allowance was necessary to fully offset our deferred tax assets.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and revenue, costs and expenses and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 3 of the notes to our consolidated financial statements appearing elsewhere in this document, we believe that the estimates and assumptions involved in the following accounting policies may have the greatest potential impact on our financial statements.

JOBS Act

The Jumpstart Our Business Startups Act, or the JOBS Act, contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” We have irrevocably elected not to avail ourselves of the JOBS Act provision that an emerging growth company may delay adopting new or revised accounting standards until such times as those standards apply to private companies.

In addition, we are in the process of evaluating the benefits of relying on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if as an “emerging growth company” we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply until December 31, 2022 or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier.

25

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the year. Actual results could differ from those estimates.

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

Research and Development Costs

Research and development expenses comprise costs incurred in performing research and development activities, including salaries and benefits, safety and efficacy studies and contract manufacturing costs, contract research costs, patent procurement costs, materials and supplies and occupancy costs. Research and development activities include internal and external activities associated with research and development studies of current product candidates and advancing product candidates towards a goal of obtaining regulatory approval to manufacture and market the product candidate.

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC topic 730.

Translation of Foreign Currencies

The functional currency, as determined by management, is U.S. dollars, which is also our reporting currency. Transactions denominated in currencies other than U.S. dollars and the monetary value of assets and liabilities are translated at the period end exchange rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

We measure the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted if the fair value of the goods or services received by us cannot be reliably estimated.

We calculate stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of our stock-based compensation plans do not require us to settle any options by transferring cash or other assets, and therefore we classify the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest. We estimate forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Volatility is determined based on volatilities of comparable companies when the Company does not have its own trading history. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on an average of the term of the options. The risk-free rate assumed in valuing the options is based on the Canadian treasury yield curve in effect at the time of grant for the expected term of the option. The expected dividend yield percentage at the date of grant is nil as we are not expected to pay dividends in the foreseeable future.

Loss Per Share

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

26

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase our common shares issued during the period were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

Comprehensive Loss

We follow ASC topic 220. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. We currently have no other comprehensive loss items. 

Results of Operations

Three and nine months ended September 30, 2019 compared to three and nine months ended September 30, 2018

Our results of operations for the three and nine months ended September 30, 2019 and September 30, 2018 are as follows:

	Three months ended September 30,											Nine months ended September 30,
		2019		2018		Change							2019			2018		Change
	$		$			$			%			$			$			$			%
Expenses
Research and development		962,463		630,371			332,092			53	%		9,555,345			3,765,332			5,790,013			154	%
General and administrative		1,404,952		834,570			570,382			68	%		5,557,661			3,243,232			2,314,429			71	%
Professional fees		279,237		293,484			(14,247	)		-5	%		1,230,151			1,001,886			228,265			23	%
Amortization - right-of-use asset		127,345		-			127,345			N/A			382,035			-			382,035			N/A
Amortization - intangible		273		431			(158	)		-37	%		810			1,810			(1,000	)		-55	%
Depreciation		70,096		86,162			(16,066	)		-19	%		201,075			150,320			50,755			34	%
Loss from operations		2,844,366		1,845,018			999,348			54	%		16,927,077			8,162,580			8,764,497			107	%
Loss on fixed assets		-		69,382			(69,382	)		N/A			1,308			69,382			(68,074	)		-98	%
Interest expense		-		-			-			N/A			18,338			-			18,338			N/A
Gain on settlement of liabilities		-		-			-			N/A			(19,737	)		-			(19,737	)		N/A
Foreign exchange gain		1,313		(4,122	)		5,435			-132	%		30			(5,957	)		5,987			-101	%
Loss before income taxes		2,845,679		1,910,278			935,401			49	%		16,927,016			8,226,005			8,701,011			106	%
Income tax expense		-		-			-			N/A			-			-			-			N/A
Net loss and comprehensive loss		2,845,679		1,910,278			935,401			49	%		16,927,016			8,226,005			8,701,011			106	%

Revenue

We did not generate any revenue during the three and nine months ended September 30, 2019 and September 30, 2018.

Research and Development

Research and development expense for the three months ended September 30, 2019 was $962,463 compared to $630,371 for the three months ended September 30, 2018, an increase of $332,092 or 53%. The increase was primarily due to an increase in contracted expenditures of $401,970 related to the development of the five assays for TRUFORMA^TM.

Research and development expense for the nine months ended September 30, 2019 was $9,555,345 compared to $3,765,332 for the nine months ended September 30, 2018, an increase of $5,790,013 or 154%. The increase was primarily due to increases in license fees of $4,198,328, and contracted expenditures of $1,506,324. The license fees increase related to $5,000,000 of expenses recognized upon the achievement of development milestones relating to TRUFORMA™ under our development and supply agreement with Qorvo Biotechnologies, LLC (“Qorvo”), and $736,841 of additional milestone expenses relating to our development of ZM-017 under our license and supply agreement with Celsee Diagnostics, Inc. The increase was partially offset by no recurrence from the 2018 period of an up-front licensing fee of $1,738,513 to Seraph Biosciences, Inc. (“Seraph”), upon the execution of our development, commercialization and exclusive distribution agreement, and $333,247 of additional development fees due to Seraph. The contract expenditures increase related to the development of the five assays for TRUFORMA^TM.

27

General and Administrative

General and administrative expense for the three months ended September 30, 2019 was $1,404,952, compared to $834,570 for the three months ended September 30, 2018, an increase of $570,382 or 68%. The increase was due to an increase in salaries, bonus and benefits of $394,673, which included share-based compensation expense of $197,988 as a result of the granting of options to purchase an aggregate of 1,500,000 common shares, all of which vested upon the dates of grant. Other increases in salaries, bonus and benefits are due to increases in sales, marketing and other administrative salaries and benefits. Travel and accommodation increased by $162,502 and marketing and investor relations increased by $111,841, which were partially offset by rent decrease of $82,860 which was reclassified to amortization of right-of-use asset.

General and administrative expense for the nine months ended September 30, 2019 was $5,557,661, compared to $3,243,232 for the nine months ended September 30, 2018, an increase of $2,314,429 or 71%. The increase was primarily due to a $2,465,139 increase in salaries, bonus and benefits, which included share–based compensation expense of $2,539,092. After adjusting for the share-based compensation expense, general and administrative expense decreased $224,663 or 7%, primarily as a result of the reclassification of rent to amortization of right-of-use asset of $254,690 and regulatory fees decrease of $150,271, partially offset by marketing and investor relations increase of $120,101 and travel and accommodation increase of $90,371.

Professional Fees

Professional fees for the three months ended September 30, 2019 were $279,237, compared to $293,484 for the three months ended September 30, 2018, a decrease of $14,247 or 5%. The decrease was due to a reduction in legal and consulting fees associated with SEC and related filings.

Professional fees for the nine months ended September 30, 2019 were $1,230,151, compared to $1,001,886 for the nine months ended September 30, 2018, an increase of $228,265 or 23%. The increase was primarily due to increased expenses related to the filing of our S-3 resale registration statement and our S-8 registration statement.

Net Loss

Our net loss for the three months ended September 30, 2019 was $2,845,679 or $0.03 per share, compared with a net loss of $1,910,278 or $0.02 per share, for the three months ended September 30, 2018, an increase of $935,401 or 49%. The net loss in each period was attributed to the matters described above.

Our net loss for the nine months ended September 30, 2019 was $16,927,016 or $0.16 per share, compared with a net loss of $8,226,005 or $0.09 per share, an increase of $8,701,011 or 106%. The net loss in each period was attributed to the matters described above. We expect to continue to record net losses in future periods until such time as we have sufficient revenue from our product candidates to offset our operating expenses.

Cash Flows

Three and nine months ended September 30, 2019 compared to three and nine months ended September 30, 2018

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

	Three months ended September 30,												Nine months ended September 30,
	2019			2018			Change						2019			2018			Change
	$			$			$			%			$			$			$			%
Cash flows used in operating activities		(3,910,078	)		(3,371,059	)		(539,019	)		16	%		(13,767,933	)		(7,819,347	)		(5,948,586	)		76	%
Cash flows (used) from financing activities		(1,414	)		86,388			(87,802	)		-102	%		14,972,319			5,503,385			9,468,934			172	%
Cash flows used in investing activities		(582,437	)		(467,675	)		(114,762	)		25	%		(657,000	)		(605,368	)		(51,632	)		9	%
Increase in cash		(4,493,929	)		(3,752,346	)		(741,583	)		20	%		547,386			(2,921,330	)		3,468,716			-119	%
Cash and cash equivalents, beginning of period		6,981,580			4,279,163			2,702,417			63	%		1,940,265			3,448,147			(1,507,882	)		-44	%
Cash and cash equivalents, end of period		2,487,651			526,817			1,960,834			372	%		2,487,651			526,817			1,960,834			372	%

28

Operating Activities

Net cash used in operating activities for the three months ended September 30, 2019 was $3,910,078, compared to $3,371,059 for the three months ended September 30, 2018, an increase of $539,019 or 16%. The increase in net cash used in operating activities resulted primarily from an increase in our net loss, cash used in decreasing accounts payable and accrued liabilities of $1,378,710 and cash used in increasing prepaid expenses of $122,315, partially offset by non-cash impacts of stock-based compensation of $197,988, amortization – right-of-use asset of $127,345 and depreciation of $70,096.

Net cash used in operating activities for the nine months ended September 30, 2019 was $13,767,933, compared to $7,819,347 for the nine months ended September 30, 2018, an increase of $5,948,586 or 76%. The largest use of cash in the current period was the payment of $5,000,000 upon the achievement of development milestones relating to TRUFORMA™ under our development and supply agreement with Qorvo. Other increases in cash used in operating activities resulted primarily from other increases in our net loss, cash used in decreasing accounts payable and accrued liabilities of $798,994, partially offset by non-cash impacts of stock-based compensation of $2,539,092, stock issued for services of $792,104, amortization – right-of-use asset of $382,035, depreciation of $201,075 and cash provided by decreasing prepaid expenses of $140,695.

Net cash used in operating activities for the three and nine months ended September 30, 2018 was $3,371,059, and $7,819,347, which resulted primarily from our net loss of $1,910,278 and $8,226,005, respectively. The largest use of cash stemmed from increases in deposits of $1,281,617 and $1,311,463, respectively.

Financing Activities 

Net cash used in financing activities for the three months ended September 30, 2019 was $1,414, compared to cash from financing activities of $86,388 for the three months ended September 30, 2018 a decrease of $87,802 or 102%. The decrease in cash used from financing activities resulted primarily from a reduction in financing activities as compared to the prior period.

Net cash from financing activities for the nine months ended September 30, 2019 was $14,972,319, compared to $5,503,385 for the nine months ended September 30, 2018 an increase of $9,468,934 or 172%. The increase in cash from financing activities resulted primarily from $12,000,000 in proceeds from the private sale of preferred shares, $3,000,000 in proceeds from the underwritten public offering of common stock, net of financing costs, and $600,000 in proceeds from the exercise of stock options.

Net cash from financing activities for the three and nine months ended September 30, 2018 was $86,388 and $5,503,385, which resulted from cash proceeds from financing and the exercise of stock options.

Investing Activities

Net cash used in investing activities for the three months ended September 30, 2019 was $582,437, compared to $467,675 for the three months ended September 30, 2018, an increase of $114,762 or 25%. The increase in net cash used in investing activities resulted primarily from costs associated with the digital data platform, the construction of marketing assets, and the capitalization of integration costs associated with the implementation of an ERP system, compared to the prior period build-out of office space and purchases of lab and office equipment for our Ann Arbor facility completed in the three months ended September 30, 2018.

29

Net cash used in investing activities for the nine months ended September 30, 2019 was $657,000, compared to $605,368 for the nine months ended September 30, 2018, an increase of $51,632 or 9%. The increase in net cash used in investing activities resulted primarily from costs associated with the digital data platform, the construction of marketing assets, and the capitalization of integration costs associated with the implementation of an ERP system, compared to the prior period build-out of office space and purchases of lab and office equipment for our Ann Arbor facility completed in the nine months ended September 30, 2018.

Liquidity and Capital Resources

We have incurred losses and negative cash flows from operations and have not generated any revenue since our inception in May 2015. As of September 30, 2019, we had an accumulated deficit of $49,200,803. We have funded our working capital requirements primarily through the sale of our preferred and common shares and the exercise of stock options.

As at September 30, 2019, the Company had cash of $2,487,651, prepaid expenses and deposits of $1,497,425, and accounts receivable of $75,992. Current assets amounted to $4,061,068 with current liabilities of $1,577,525, resulting in working capital (defined as current assets minus current liabilities) of $2,483,543.

In the second quarter of 2019, we sold $12,000,000 of our Series 1 Preferred Shares to an accredited investor in a private placement at a purchase price of $1,000,000 per Series 1 Preferred Share. Each Series 1 Preferred Share has a stated value of $1,000,000. The Series 1 Preferred Shares do not have voting rights except to the extent required by applicable law and are not convertible into the Company’s common shares. Holders of the Series 1 Preferred Shares will not be entitled to dividends but, in lieu thereof, will receive Net Sales Payments until such time as the holders have received total Net Sales Payments equal to 9 times the aggregate stated value of the outstanding Series 1 Preferred Shares. We will have the right to redeem the outstanding Series 1 Preferred Shares at any time at a redemption price equal to 9 times the aggregate stated value of the Series 1 Preferred Shares outstanding less the aggregate amount of the Net Sales Payments paid (the “Redemption Amount”). Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series 1 Preferred Shares will be entitled to a liquidation preference equal to the stated value of the Series 1 Preferred Shares less the Net Sales Payments paid on the Series 1 Preferred Shares. In the event of a fundamental transaction (defined in the Series 1 Preferred Shares to include an amalgamation, merger or other business combination transaction involving our company in which our shareholders do not have the right to cast more than 50% of the votes that may be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of our company as an entirety or substantially as an entirety to a third party), the holders of the Series 1 Preferred Shares will be entitled to receive consideration for their Series 1 Preferred Shares equal to a multiple of the stated value of the Series 1 Preferred Shares ranging from 5.0 to 9.0 depending on the timing of the fundamental transaction, subject to a cap equal to the Redemption Amount.

In December 2018, we entered into an at-the-market equity offering sales agreement with Cantor Fitzgerald & Co. under which we may sell pursuant to the universal shelf registration statement common shares in the United States only, from time to time, for up to $50.0 million and was amended on March 25, 2019 to $10.0 million in aggregate sales proceeds in "at the market" transactions. No sales of common shares were made under the sales agreement in the second and third quarters, and the program was inactive at September 30, 2019.

On October 17, 2017 we entered into a five-year $5,000,000 unsecured working capital facility with Equidebt LLC, one of our shareholders (the “Equidebt Facility”). Amounts borrowed under the Equidebt Facility bear interest at a rate of 14% per annum payable at maturity. All amounts borrowed under the Equidebt Facility become due and payable on October 17, 2022. We can make two borrowings per month under the Equidebt Facility, each of which must be for a minimum of $250,000. The Equidebt Facility is unsecured; however Gerald A. Solensky Jr., our Chairman of the Board, President and Chief Executive Officer, has personally guaranteed our obligations under the Equidebt Facility. As of September 30, 2019, no amounts were outstanding under the Equidebt Facility.

If we raise additional funds by issuing equity securities, our existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict operations. In the event that we are unable to obtain sufficient capital to meet our working capital requirements, we may be required to change or curtail current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated. In such an event, we may not be able to take advantage of business opportunities, and may have to terminate or delay safety and efficacy studies, curtail our product development programs, or sell or assign rights to our product candidates, products and technologies.

30

Our future capital requirements depend on many factors, including, but not limited to:

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

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

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

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

• the cost of commercialization activities if any of our current or future product candidates are approved for sale, including marketing, sales, service, customer support and distribution costs;

• the expenses needed to attract and retain skilled personnel;

• the costs associated with being a public company;

• our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; and

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

Off Balance Sheet Arrangements

Since inception, we have not engaged in the use of any off-balance sheet arrangements, such as structured finance entities, special purpose entities or variable interest entities. 

Contingencies and Legal Proceedings

On November 1, 2019, Heska Corporation (“Heska”) filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and the Company (collectively with Qorvo, the “Defendants”). The Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the Company’s TRUFORMA^TM diagnostic instrument. For the reasons set forth below, the Company believes that the allegations in the Complaint have no merit and will not have a material adverse effect on the Company’s business, results of operations or financial condition, and the Company reaffirms its intention to commence the commercialization of its TRUFORMA^TM platform in the first quarter of 2020.

Under the terms of the Development and Supply Agreement, dated November 26, 2018, by and between Qorvo Biotech and the Company (the “Qorvo Agreement”), Qorvo Biotech agreed to indemnify the Company and certain related parties against claims alleging infringement or misappropriation of third-party intellectual property rights, subject to certain limitations and exceptions. Qorvo Biotech has notified the Company that Qorvo Biotech has assumed the defense of the Complaint and will indemnify the Company for losses arising from the Complaint in accordance with the terms of the Qorvo Agreement. Qorvo Biotech has further advised the Company that it intends to mount a vigorous defense to the claims in the Complaint, and that it believes the allegations contained in the Complaint are without merit for many reasons, including without limitation, the following:

• The Complaint fails to identify any Heska proprietary trade secret technology that is contained in the TRUFORMA^TM platform, and Qorvo and Zomedica are aware of no such technology; and

• Two United States courts have previously considered many of the same allegations contained in the Complaint, and after extensive motion practice, refused to grant Heska’s requests to take discovery from Qorvo relating to Heska’s claims. During those proceedings, Heska did not demonstrate that Qorvo was using any Heska proprietary trade secret technology.

31

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued new guidance, ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Additional qualitative and quantitative disclosures are also required by the new guidance. Topic 842 is effective for annual reporting periods (including interim reporting periods) beginning after December 15, 2018. Early adoption is permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company adopted the new standard with an initial application date of January 1, 2019 and used the effective date as its date of initial application. Consequently, financial information was not updated, and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company has not elected the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company.

On August 29, 2018, the FASB issued ASU 2018-15, which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019. Early adoption is permitted.

The Company has chosen to adopt this guidance during the three months ended September 30, 2019.

32

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Evaluation of Our Disclosure Controls

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, our chief executive officer and our chief financial officer, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2019, our disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of June 30, 2019.

33

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

On November 1, 2019, Heska Corporation (“Heska”) filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and the Company (collectively with Qorvo, the “Defendants”). The Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the Company’s TRUFORMA^TM diagnostic instrument. For the reasons set forth below, the Company believes that the allegations in the Complaint have no merit and will not have a material adverse effect on the Company’s business, results of operations or financial condition, and the Company reaffirms its intention to commence the commercialization of its TRUFORMA^TM platform in the first quarter of 2020.

Under the terms of the Development and Supply Agreement, dated November 26, 2018, by and between Qorvo Biotech and the Company (the “Qorvo Agreement”), Qorvo Biotech agreed to indemnify the Company and certain related parties against claims alleging infringement or misappropriation of third-party intellectual property rights, subject to certain limitations and exceptions. Qorvo Biotech has notified the Company that Qorvo Biotech has assumed the defense of the Complaint and will indemnify the Company for losses arising from the Complaint in accordance with the terms of the Qorvo Agreement. Qorvo Biotech has further advised the Company that it intends to mount a vigorous defense to the claims in the Complaint, and that it believes the allegations contained in the Complaint are without merit for many reasons, including without limitation, the following:

• The Complaint fails to identify any Heska proprietary trade secret technology that is contained in the TRUFORMA^TM platform, and Qorvo and Zomedica are aware of no such technology; and

• Two United States courts have previously considered many of the same allegations contained in the Complaint, and after extensive motion practice, refused to grant Heska’s requests to take discovery from Qorvo relating to Heska’s claims. During those proceedings, Heska did not demonstrate that Qorvo was using any Heska proprietary trade secret technology.

34

Item 1A. Risk Factors.

RISK FACTORS

Risks Related to Our Business

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

We have not generated any revenue to date, and we expect to continue to incur significant research and development costs and other expenses. Our net loss and comprehensive loss for the three months ended September 30, 2019 and September 30, 2018 was $3,338,549 and $1,910,278, respectively, for the nine months ended September 30, 2019 and September 30, 2018 was $17,419,886 and $8,226,005, respectively, and for the years ended December 31, 2018 and December 31, 2017 was $16,647,687 and $8,065,075, respectively. Our accumulated deficit as of September 30, 2019 was $49,693,673. As of September 30, 2019, we had total shareholders’ equity of $4,540,629. We expect to continue to incur losses for the foreseeable future, which will increase significantly from historical levels as we expand our product development activities (including conducting required clinical studies and trials), seek necessary approvals for our product candidates, and begin commercialization activities. Even if we succeed in developing and broadly commercializing one or more of our product candidates, we expect to continue to incur losses for the foreseeable future, and we may never become profitable. If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations.

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

We do not have any products approved for sale. Although we believe that we do not require pre-market approval from the U.S. Food and Drug Administration’s Center for Veterinary Medicine, or the FDA-CVM, to market and sell our point-of-care biosensor platform TRUFORMA^TM, our point-of-care pathogen detection platform (ZM-020), or the circulating tumor cell, or CTC, diagnostic assay and lymphoma assay (ZM-017 and ZM-022, respectively) that we are developing, we do not expect to commence marketing of these solutions until the first half of 2020.

Until, and unless, we receive approval from the FDA-CVM for our drug product candidates, we cannot market or sell our drug products in the United States and will have no material drug product revenue. Our lead drug product candidates are in the formulation, optimization and/or pilot study stage, and we have not yet begun pivotal trials. We anticipate that each of our drug product candidates will require approximately five years of development at a cost of approximately $6 million per drug product candidate before we expect to be able to apply for marketing approval in the United States. In addition, certain assays that we may choose to pursue for use in our diagnostic platforms may require pre-market regulatory approval.

We are also seeking to identify potential complementary opportunities in the veterinary diagnostics and therapeutics sectors. We will continue to expend substantial resources for the foreseeable future to develop our existing product candidates and any other product candidates that we may develop or acquire. These expenditures will include: costs of developing and validating our diagnostic product candidates and related assays and consumables; costs associated with drug formulation; costs associated with conducting pilot and pivotal trials and clinical studies; costs associated with completing other research and development activities; costs of identifying additional potential product candidates; costs associated with payments to technology licensors and maintaining other intellectual property; costs of obtaining regulatory approvals; costs associated with securing contract manufacturers to meet our commercial manufacturing and supply capabilities; and costs associated with marketing and selling our products. In addition, under our existing development agreements, we are required make significant cash milestone payments to our development partners and to pay certain development costs. We do not control the timing of these payments. We also may incur unanticipated costs. Because the outcome of our development activities and commercialization efforts is inherently uncertain, the actual amounts necessary to successfully complete the development and commercialization of our existing or future product candidates may be greater or less than we anticipate.

35

As a result, we will need to obtain additional capital to fund the development of our business. Except for our $5,000,000 unsecured working capital loan we have no existing agreements or arrangements with respect to any financings, and any such financings may result in dilution to our shareholders, the imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business or the value of our common shares.

Our future capital requirements depend on many factors, including, but not limited to:

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

· the extent to which any of our future diagnostic assays may be subject to USDA-CVB pre-market regulation;

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

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

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

· the cost of commercialization activities if any of our existing or future diagnostics and product candidates are approved for sale, including marketing, sales and distribution costs;

· the expenses needed to attract and retain skilled personnel;

· the costs associated with being a public company;

· our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements; and

· the costs involved in preparing and filing patent applications, maintaining any successfully obtained patents and protecting and enforcing any such patents.

Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate one or more of our product development programs or any future commercialization efforts.

In March of 2019, we completed an underwritten public offering of our common shares for $3,000,000 and in June of 2019, we completed a private offering of our Series 1 Preferred Shares for $12,000,000, however, we will need to obtain additional capital to fund the development of our business.

Risks Related to Our Securities

We will be obligated to pay a significant portion of our net sales to the holders of our Series 1 Preferred Shares. This payment obligation will materially and adversely affect our liquidity and capital resources, may adversely impact our ability to raise additional capital, and could adversely affect the trading price of our common shares.

We are obligated to make annual payments to the holders of our Series 1 Preferred Shares in an amount equal to nine percent of the net sales (as defined in the Series 1 Preferred Shares), if any, of our company and our affiliates (the “Net Sales Payments”) until such time as the holders have received total Net Sales Payments equal to nine times the aggregate stated value of the outstanding Series 1 Preferred Shares. Such payments will materially and adversely affect our liquidity and capital resources which could result in a shortage of capital necessary to fund our operations or to take advantage of business opportunities as they arise. Our obligation to make these payments may make it more difficult for us to raise additional capital on terms acceptable to us, or at all. This payment obligation also may adversely affect investor perceptions of our company which could adversely affect the trading price of our common shares.

36

In the event of a sale of our company, holders of our Series 1 Preferred Shares will be entitled to a substantial premium on the purchase price they paid for their Series 1 Preferred Shares, which will reduce the sale proceeds to be received by holders of our common shares.

In the event that our company is the subject of a “fundamental transaction” (defined in the Series 1 Preferred Shares to include an amalgamation, merger or other business combination transaction involving our company in which our shareholders do not have the right to cast more than 50% of the votes that may be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of our company as an entirety or substantially as an entirety to a third party) the holders of the Series 1 Preferred Shares will have the right, in preference to the holders of our common shares, to receive a portion of the aggregate consideration paid in the fundamental transaction that will represent a substantial premium on the purchase price they paid for their Series 1 Preferred Shares. Such premium will reduce the proceeds of any such fundamental transaction that would be received by holders of our common shares.

In the event of the liquidation, dissolution or winding up of our company, holders of the Series 1 Preferred Shares will have a liquidation preference over holders of our common shares and if the net assets of our company available for distribution to holders of our equity securities is not sufficient to pay this liquidation preference in full, holders of our common shares would receive no liquidating distribution in respect of their common shares.

In the event of the liquidation, dissolution or winding up of our company, holders of the Series 1 Preferred Shares will have a liquidation preference equal to the stated value of the Series 1 Preferred Shares less the Net Sales Payments paid on the Series 1 Preferred Shares before holders of our common shares would be entitled to any proceeds of such liquidation, dissolution or winding up. If the net assets of our company available for distribution to holders of our equity securities is not sufficient to pay this liquidation preference in full, holders of our common shares would receive no liquidating distribution in respect of their common shares.

Risks Related to Intellectual Property

Our ability to obtain intellectual property protection for our product candidates is limited.

Our diagnostic technologies are dependent on intellectual property developed by our strategic partners and licensed to us. We do not own the intellectual property rights that underlie these technology licenses. Our rights to use the technology we license are subject to the negotiation of, continuation of and compliance with the terms of our licenses. However, we have filed three U.S. patent applications and two Patent Cooperation Treaty (PCT) applications for U.S. and international protection of our diagnostic tests. These applications cover tests developed for our ZM-017, ZM-022 and ZM-020 technology platforms. Even if such patents are issued, we do not expect that all of the patents will provide significant protection for our intellectual property.

If we are unable to obtain trademark registrations for our products our business could be adversely affected.

We have pending trademark applications for our company name and composite marks comprised of our company name, logo and/or slogan in the U.S., Canada, European Union, the United Kingdom, and Mexico. In addition, we have pending trademark applications for our “Voice of the Vet” mark in the U.S. and Canada. We have secured two registrations in the European Union for our company name, company name and logo, and for the mark “Voice of the Vet powered by Zomedica” (and Design). We also have secured registrations in Brazil for our company name and logo. While we cannot make assurances that any pending trademark applications will mature to registration, most of these applications are now poised to mature to registration.

We have also filed for protection of several product names in the U.S., Canada and European Union. Currently, no significant hurdles have been encountered in the registration process. Moreover, any name we propose to use with our product candidates in the United States must be approved by the FDA-CVM or the USDA-CVB regardless of whether we have registered it, or applied to register it, as a trademark. The FDA-CVM typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA-CVM or the USDA-CVB object to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA-CVM and the USDA-CVB.

37

In most jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademark applications/registrations, and our trademark applications/registrations may not survive such proceedings. Finally, we may need to enforce our trademark rights against third parties and expend significant additional resources to enforce such rights against infringements.

Our business depends on our ability to acquire rights to use intellectual property developed by third parties and to avoid infringing the proprietary rights of third parties. We may not be able to obtain such rights on terms acceptable to us, if at all. We may be subject to claims of third parties alleging infringement of their intellectual property rights. If we are sued for infringing third party intellectual property rights, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates or increase the cost of such development.

Our commercial success depends on our ability to develop, manufacture, market and sell our product candidates and use the proprietary technologies we have developed or licensed for use in our product candidates without infringing the proprietary rights of third parties. We may not be able to obtain rights to use technology developed by third parties on terms acceptable to us, if at all.

We cannot assure you that marketing and selling our product candidates and using such technologies will not infringe the intellectual property rights of third parties. We may be exposed to, or threatened with, future litigation by third parties alleging that our product candidates or proprietary technologies infringe such third parties’ intellectual property rights. This type of litigation can be costly and could adversely affect our operating results and divert the attention of managerial and technical personnel, even if it is ultimately determined that we have not infringed such third-party rights. Such litigation could prevent or delay us from developing or commercializing our product candidates or increase the cost of such development. There is a risk that a court could decide that we are infringing the third party’s intellectual property rights and could order us to stop the activities covered by such third-party rights. In addition, there is a risk that a court could order us to pay the other party significant damages for having violated the other party’s intellectual property rights. We may be forced to seek a license to use such intellectual property on terms that are not favorable to us.

Because we rely on certain third-party licensors and partners and will continue to do so in the future, if one of our licensors or partners is sued for infringing a third party’s intellectual property rights, our business, financial condition, operating results and prospects could suffer in the same manner as if we were sued directly, even if we are entitled to indemnification for such claims.

The occurrence of any of the foregoing could adversely affect our business, financial condition or operating results.

On November 1, 2019, Heska Corporation (“Heska”) filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case 1:19-cv-01108-LCB-JLW, against Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and the Company (collectively with Qorvo, the “Defendants”). The Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the Company’s TRUFORMA^TM diagnostic instrument.

38

Item 6. Exhibits.

The exhibits listed on the accompanying index to exhibits immediately preceding the exhibits are filed as part of, or hereby incorporated by reference into, this Quarterly Report.

39

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Zomedica Pharmaceuticals Corp.
By:	/s/ Gerald Solensky, Jr.
Name:	Gerald Solensky, Jr.
Title:	Chief Executive Officer
By:	/s/ Shameze Rampertab
Name:	Shameze Rampertab
Title:	Chief Financial Officer

40

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Amalgamation of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 20, 2017 (File No. 333-217409)).
3.2	Amended and Restated By-Law No. 1 of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 20, 2017 (File No. 333-217409)).
3.3	Certificate of Amendment and Registration of Restated Articles of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 20, 2017 (File No. 333-217409)).
3.4	Certificate of Amalgamation of Zomedica Pharmaceuticals Corp. (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 20, 2017 (File No. 333-217409)).
3.5	Articles of Amendment to the Articles of Incorporation of Zomedica Pharmaceuticals Corp.
10.30+	Executive Employment Agreement between Zomedica Pharmaceuticals Corp. and Stephanie Morley (incorporated by reference to Exhibit 10.30 to the Company’s Current Report on Form 8-K filed on September 17, 2019).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.

+ Indicates management contract or compensatory plan.

41

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gerald Solensky, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Zomedica Pharmaceuticals Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019

/s/ Gerald Solensky, Jr.

Gerald Solensky, Jr.

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shameze Rampertab, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Zomedica Pharmaceuticals Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2019

/s/ Shameze Rampertab

Shameze Rampertab

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Zomedica Pharmaceuticals Corp. (the “Company”) for the three month period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gerald Solensky, Jr., President and Chief Executive Officer of the Company, and Shameze Rampertab, Chief Financial Officer of the Company, hereby certify, to the knowledge of the undersigned, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2019	By:	/s/ Gerald Solensky, Jr.
		Gerald Solensky, Jr.
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 12, 2019	By:	/s/ Shameze Rampertab
		Shameze Rampertab
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 6 - Property and Equipment (Details Textual)	1 Months Ended
	Feb. 28, 2019 USD ($)
Reclassificaiton From Prepaid Assets to Property, Plant and Equipment	$ 135,000

XML

Note 9 - Loan Arrangements (Details Textual) - Loan Arrangement With Shareholder [Member] - USD ($)	Oct. 17, 2017	Sep. 30, 2019
Debt Agreement, Maximum Borrowing Capacity	$ 5,000,000
Debt Instrument, Term	5 years
Debt Agreement, Minimum Borrowing Per Advances	$ 250,000
Debt Instrument, Interest Rate, Stated Percentage	14.00%
Long-term Debt, Total		$ 0

XML

Note 16 - Schedule of Expenses - Schedule of Expenses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Research and development	$ 962,463	$ 630,371	$ 9,555,345	$ 3,765,332
Professional fees	279,237	293,484	1,230,151	1,001,886
General and administrative	1,404,952	834,570	5,557,661	3,243,232
Salaries, Bonus and Benefits [Member]
Research and development	129,319	164,267	579,110	490,706
Professional fees
General and administrative	849,458	454,786	4,422,480	1,957,341
Contracted Expenditures [Member]
Research and development	661,917	259,947	2,474,483	968,159
Professional fees
General and administrative
Marketing and Investor Relations [Member]
Research and development
Professional fees
General and administrative	165,837	53,996	297,252	177,151
Travel and Accommodation [Member]
Research and development	8,327	8,023	21,103	13,360
Professional fees
General and administrative	198,993	36,491	318,730	228,359
Insurance [Member]
Research and development	19,497	20,855	76,402	65,099
Professional fees
General and administrative	66,029	76,903	179,367	234,646
License Fees [Member]
Research and development			5,936,841	1,738,513
Professional fees
General and administrative
Office [Member]
Research and development	11,565	6,665	31,162	41,312
Professional fees
General and administrative	80,032	82,416	216,521	220,823
Consultant [Member]
Research and development	29,343	80,425	178,223	169,613
Professional fees	279,237	293,484	1,230,151	1,001,886
General and administrative
Regulatory [Member]
Research and development	31,773	19,247	95,418	57,422
Professional fees
General and administrative	26,163	32,904	76,333	226,604
Amortization, Right-of-use Asset [Member]
Research and development		15,396		31,047
Professional fees
General and administrative	7,603	90,463	19,483	176,501
Supplies [Member]
Research and development	70,722	55,546	162,603	190,101
Professional fees
General and administrative	$ 10,837	$ 6,611	$ 27,495	$ 21,807

XML

Condensed Unaudited Interim Consolidated Statements of Shareholders' Equity - USD ($)	Preferred Stock [Member]	Common Stock [Member]		Common Stock Subscribed [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2017		90,225,869
Balance at Dec. 31, 2017		$ 18,244,659			$ 1,768,526	$ (15,626,100)	$ 4,387,085
Stock issuance for services (in shares)		641,717
Stock issuance for services		$ 1,238,513					1,238,513
Stock issued from financing, number (in shares)		1,861,627
Stock issuance for financing, net of costs		$ 3,966,362					3,966,362
Stock-based compensation					7,288		$ 7,288
Stock issuance due to exercise of options (in shares)		1,866,996					1,866,996
Stock issuance due to exercise of options		$ 1,923,922			(386,898)		$ 1,537,024
Net loss						(8,226,005)	(8,226,005)
Balance (in shares) at Sep. 30, 2018		94,596,209
Balance at Sep. 30, 2018		$ 25,373,456			1,388,916	(23,852,105)	2,910,267
Balance (in shares) at Dec. 31, 2018		97,598,898
Balance at Dec. 31, 2018		$ 30,410,648		4,280,000	1,240,139	(32,273,787)	3,657,000
Stock issuance for services (in shares)		707,236	[1],[2]
Stock issuance for services		$ 792,104	[1],[2]				792,104
Stock issued from financing, number (in shares)	12	9,337,529
Stock issuance for financing, net of costs	$ 11,961,397	$ 6,690,922	[3],[4]	(4,280,000)			14,372,319
Stock-based compensation					2,539,092		$ 2,539,092
Stock issuance due to exercise of options (in shares)		394,735					394,735
Stock issuance due to exercise of options		$ 754,148			(154,148)		$ 600,000
Net loss						(16,927,016)	(16,927,016)
Balance (in shares) at Sep. 30, 2019	12	108,038,398
Balance at Sep. 30, 2019	$ 11,961,397	$ 38,647,822			$ 3,625,083	$ (49,200,803)	$ 5,033,499

[1] On January 14, 2019, the Company issued 657,894 common shares in satisfaction of $1,000,000 of all remaining milestones under a License and Supply Agreement with a third party. The Company recognized $736,841 as research and development expense, based on the value of the common stock on the date of issuance;

[2] On January 14, 2019, the Company settled $75,000 of amounts due to a vendor by issuing 49,342 common shares valued at $55,263 at the date of issuance. The Company recorded a $19,737 gain on the settlement of liabilities during the three months ended March 31, 2019;

[3] On January 14, 2019, the Company completed a non-brokered private placement, and issued 2,815,789 common shares. Gross proceeds of $4,280,000 were received prior to December 31, 2018. The Company recorded $465 of share issuance costs as an offset to common stock;

[4] On March 28, 2019, the Company completed an underwritten public offering of its common stock pursuant to which the Company sold an aggregate 6,521,740 common shares for gross proceeds of $3,000,000. The Company recorded nil and $588,613 of share issuance costs as an offset to common stock in the three and nine months ended September 30, 2019.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 12, 2019
Document Information [Line Items]
Entity Registrant Name	Zomedica Pharmaceuticals Corp.
Entity Central Index Key	0001684144
Trading Symbol	zom
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		108,038,398
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of the condensed unaudited interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed unaudited interim consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

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

Basis of Measurement [Policy Text Block]

Basis of measurement

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

Functional and Reporting Currencies [Policy Text Block]

Functional and reporting currencies

The Company’s and subsidiary’s functional currency, as determined by management, is US dollars, which is also the Company’s reporting currency.

The accounting policies set out below have been applied consistently to all periods and companies presented in the condensed unaudited interim consolidated financial statements.

Research and Development Expense, Policy [Policy Text Block]

Research and development

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC topic

730.

Share Issue Costs [Policy Text Block]

Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Translation of foreign currencies

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

Share-based Payment Arrangement [Policy Text Block]

Stock-based compensation

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

The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do

not

require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Earnings Per Share, Policy [Policy Text Block]

Loss per share

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

The dilutive effect of stock options is determined using the treasury stock method. Stock options to purchase common shares of the Company during the period were

not

included in the computation of diluted EPS because the Company has incurred a loss for the

three

and

nine

months ended

September 30, 2019

as the effect would be anti-dilutive.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive loss

The Company follows ASC topic

220.

This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. The Company has

no

other comprehensive loss items.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently adopted accounting pronouncements

In

February 2016,

the FASB issued new guidance, ASU

No.

2016

-

02,

Leases (Topic

842

). The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than

12

months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Additional qualitative and quantitative disclosures are also required by the new guidance. Topic

842

is effective for annual reporting periods (including interim reporting periods) beginning after

December 15, 2018.

Early adoption is permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company adopted the new standard with an initial application date of

January 1, 2019

and used the effective date as its date of initial application. Consequently, financial information was

not

updated, and the disclosures required under the new standard were

not

provided for dates and periods before

January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’, which permits the Company

not

to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company has

not

elected the use-of-hindsight or the practical expedient pertaining to land easements; the latter

not

being applicable to the Company.

On

August 29, 2018,

the FASB issued ASU

2018

-

15,

which amends ASC

350

-

40

to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. ASU

2018

-

15

aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC

350

to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC

350

-

40

to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The amendments in this update are effective for public business entities for fiscal years beginning after

December 15, 2019.

Early adoption is permitted.

The Company has chosen to adopt this guidance during the

three

months ended

September 30, 2019.

XML

Note 3 - Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

3. Significant accounting policies

Use of estimates

The preparation of the condensed unaudited interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed unaudited interim consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

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

Basis of measurement

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

Functional and reporting currencies

The Company’s and subsidiary’s functional currency, as determined by management, is US dollars, which is also the Company’s reporting currency.

The accounting policies set out below have been applied consistently to all periods and companies presented in the condensed unaudited interim consolidated financial statements.

Research and development

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC topic

730.

Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

Translation of foreign currencies

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

Stock-based compensation

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

The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do

not

require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Loss per share

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

The dilutive effect of stock options is determined using the treasury stock method. Stock options to purchase common shares of the Company during the period were

not

included in the computation of diluted EPS because the Company has incurred a loss for the

three

and

nine

months ended

September 30, 2019

as the effect would be anti-dilutive.

Comprehensive loss

The Company follows ASC topic

220.

This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity. The Company has

no

other comprehensive loss items.

Recently adopted accounting pronouncements

In

February 2016,

the FASB issued new guidance, ASU

No.

2016

-

02,

Leases (Topic

842

). The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than

12

months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Additional qualitative and quantitative disclosures are also required by the new guidance. Topic

842

is effective for annual reporting periods (including interim reporting periods) beginning after

December 15, 2018.

Early adoption is permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company adopted the new standard with an initial application date of

January 1, 2019

and used the effective date as its date of initial application. Consequently, financial information was

not

updated, and the disclosures required under the new standard were

not

provided for dates and periods before

January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’, which permits the Company

not

to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company has

not

elected the use-of-hindsight or the practical expedient pertaining to land easements; the latter

not

being applicable to the Company.

On

August 29, 2018,

the FASB issued ASU

2018

-

15,

which amends ASC

350

-

40

to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. ASU

2018

-

15

aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC

350

to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC

350

-

40

to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The amendments in this update are effective for public business entities for fiscal years beginning after

December 15, 2019.

Early adoption is permitted.

The Company has chosen to adopt this guidance during the

three

months ended

September 30, 2019.

XML

Note 16 - Schedule of Expenses

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Operating Expenses [Text Block]

16. Schedule of expenses

	For the three months ended September 30,						For the three months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	129,319	$	-	$	849,458	$	164,267	$	-	$	454,786
Contracted expenditures		661,917		-		-		259,947		-		-
Marketing and investor relations		-		-		165,837		-		-		53,996
Travel and accommodation		8,327		-		198,993		8,023		-		36,491
Insurance		19,497		-		66,029		20,855		-		76,903
License fees		-		-		-		-		-		-
Office		11,565		-		80,032		6,665		-		82,416
Consultants		29,343		279,237		-		80,425		293,484		-
Regulatory		31,773		-		26,163		19,247		-		32,904
Rent		-		-		7,603		15,396		-		90,463
Supplies		70,722		-		10,837		55,546		-		6,611
Total	$	962,463	$	279,237	$	1,404,952	$	630,371	$	293,484	$	834,570

	For the nine months ended September 30,						For the nine months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	579,110	$	-	$	4,422,480	$	490,706	$	-	$	1,957,341
Contracted expenditures		2,474,483		-		-		968,159		-		-
Marketing and investor relations		-		-		297,252		-		-		177,151
Travel and accommodation		21,103		-		318,730		13,360		-		228,359
Insurance		76,402		-		179,367		65,099		-		234,646
License fees		5,936,841		-		-		1,738,513		-		-
Office		31,162		-		216,521		41,312		-		220,823
Consultants		178,223		1,230,151		-		169,613		1,001,886		-
Regulatory		95,418		-		76,333		57,422		-		226,604
Rent		-		-		19,483		31,047		-		176,501
Supplies		162,603		-		27,495		190,101		-		21,807
Total	$	9,555,345	$	1,230,151	$	5,557,661	$	3,765,332	$	1,001,886	$	3,243,232

XML

Note 8 - Leases

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

8. Leases

As discussed in Note

3,

the Company adopted ASC

842

with an initial application date of

January 1, 2019.

The Company is party to

two

lease agreements under which it rents office and laboratory space. The rent for both of these leases was prepaid upon inception and therefore at adoption the Company reclassified its prepaid lease balances of

$1,613,038

to a right-of-use asset.

The Company amortizes the asset on a straight-line basis and records the expense in the consolidated statement of operations and comprehensive loss. During the

three

and

nine

months ended

September 30, 2019,

the Company recognized

$127,345

and

$382,035

(

2018

–

nil

) in amortization expense in the consolidated statements of operations and comprehensive loss.

XML

Note 4 - Critical Accounting Judgments and Key Sources of Estimation Uncertainty

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Critical Accounting Judgments and Key Sources of Estimation Uncertainly [Text Block]

4. Critical accounting judgments and key sources of estimation uncertainty

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

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

Going concern

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

Stock-based payments

The Company estimates the fair value of convertible securities such as options using the Black-Scholes option-pricing model which requires significant estimation around assumptions and inputs such as expected term to maturity, expected volatility and expected dividends.

Useful lives of property and equipment

The Company reviews the estimated useful lives of property and equipment with definite useful lives at the end of each year and assesses whether the useful lives of certain items should be shortened or extended, due to various factors including technology, competition and revised service offerings. During the

three

and

nine

months ended

September 30, 2019,

the Company was

not

required to adjust the useful lives of any assets based on the factors described above. Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset

may

not

be recoverable.

Deferred income taxes

The calculation of deferred income taxes is based on assumptions which are subject to uncertainty as to timing and which tax rates are expected to apply when temporary differences reverse. Deferred tax recorded is also subject to uncertainty regarding the magnitude of non-capital losses available for carry forward and of the balances in various tax pools. By their nature, these estimates are subject to measurement uncertainty, and the effect on the financial statements from changes in such estimates in future period could be material. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets are reviewed at each balance sheet date and adjusted to the extent that it is

no

longer probable that the related tax benefit will be realized.

XML

Note 12 - Stock-based Compensation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

12. Stock-based compensation

During the

three

months ended

September 30, 2019,

nil

options were exercised. During the

three

months ended

September 30, 2018,

85,000

options were exercised. During the

nine

months ended

September 30, 2019,

394,735

options were exercised. During the

nine

months ended

September 30, 2018,

1,866,996

options were exercised. During the

three

months ended

September 30, 2019,

the Company issued

1,500,000

stock options. During the

nine

months ended

September 30, 2019,

the Company issued

7,495,000

stock options, each option entitling the holder to purchase

one

common share of the Company. During the

three

and

nine

months ended

September 30, 2018,

the Company issued

nil

options.

The continuity of stock options are as follows:

	Number of options			Weighted avg exercise price (US$)(i)
Balance at December 31, 2018		422,004		$	1.95
Stock options granted January 10, 2019		5,995,000			1.52
Stock options expired February 24, 2019		(35,000	)		1.12
Stock options exercised March 8, 2019		(164,473	)		1.52
Stock options exercised March 15, 2019		(164,473	)		1.52
Stock options exercised March 29, 2019		(65,789	)		1.52
Stock options expired May 23, 2019		(10,000	)		1.52
Stock options expired June 16, 2019		(40,000	)		1.52
Stock options cancelled August 13, 2019		(5,000	)		1.52
Stock options expired August 14, 2019		(392,004	)		2.07
Stock options granted August 19, 2019		500,000			0.26
Stock options granted August 19, 2019		100,000			0.35
Stock options granted August 19, 2019		100,000			0.45
Stock options granted August 19, 2019		100,000			0.55
Stock options granted August 19, 2019		100,000			0.65
Stock options granted August 19, 2019		100,000			0.75
Stock options granted September 16, 2019		500,000			0.43
Balance at September 30, 2019		7,040,265		$	1.28

(i) As of the year ended

December 31, 2018,

the weighted average exercised price in CDN$ was

$2.65.

As at

September 30, 2019,

details of the issued and outstanding stock options were as follows:

Grant date		Exercise price (USD$)	Number of options	Number of vested options	Weighted Avg Remaining Life (years)
January 10, 2019	$	1.52	5,540,265	5,540,265	1.28
August 19, 2019		0.26	500,000	500,000	1.88
August 19, 2019		0.35	100,000	100,000	1.88
August 19, 2019		0.45	100,000	100,000	1.88
August 19, 2019		0.55	100,000	100,000	1.88
August 19, 2019		0.65	100,000	100,000	1.88
August 19, 2019		0.75	100,000	100,000	1.88
September 16, 2019		0.43	500,000	500,000	1.96
Balance at September 30, 2019			7,040,265	7,040,265

The fair value of options granted during the

three

and

nine

months ended

September 30, 2019

was estimated using the Black-Scholes option pricing model to determine the fair value of options granted using the following assumptions:

	January 10, 2019		August 19, 2019		September 16, 2019
Volatility		68%		87%		89%
Risk-free interest rate		2.56%		1.48%		1.74%
Expected life (years)		2		2		2
Dividend yield		0		0		0
Common share price		$1.23		$0.26		$0.42
Strike price		$1.52		$ 0.26 - $ 0.75		$0.43
Forfeiture rate		nil		nil		nil

The Company recorded

$197,988

of stock-based compensation for the

three

months ended

September 30, 2019 (

three

months ended

September 30, 2018 –

nil

). The Company recorded

$2,539,092

of stock-based compensation for the

nine

months ended

September 30, 2019 (

nine

months ended

September 30, 2018 -

$7,288

). The Company recorded

nil

in cash receipts due to the exercise of options during the

three

months ended

September 30, 2019.

The Company recorded the cash receipt of

$600,000

and reclassified

$154,148

of stock-based compensation to common stock due to the exercise of options during the

nine

months ended

September 30, 2019.

The Company recorded the cash receipt of

$98,716

and reclassified

$34,608

of stock-based compensation to common stock due to the exercise of options during the

three

months ended

September 30, 2018.

The Company recorded the cash receipt of

$1,537,024

and reclassified

$386,898

of stock-based compensation to common stock due to the exercise of options during the

nine

months ended

September 30, 2018.

The Company has estimated its stock option forfeitures to be

nil

for the

three

and

nine

months ended

September 30, 2019 (

three

and

nine

months ended

September 2018 -

nil

).

XML

Note 13 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

2019	$	12,480
2020		33,280
Total	$	45,760

XML

Note 18 - Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Numerator
Net loss for the period	$	2,845,679		$	1,910,278		$	16,927,016		$	8,226,005
Denominator
Weighted average shares - basic		108,038,398			94,514,905			105,711,459			92,534,667
Stock options		-			-			-			-
Denominator for diluted loss per share		108,038,398			94,514,905			105,711,459			92,534,667
Loss per share - basic and diluted	$	(0.03	)	$	(0.02	)	$	(0.16	)	$	(0.09	)

XML

Note 13 - Commitments and Contingencies (Details Textual) - USD ($)	Nov. 26, 2018	May 10, 2018
Qorvo Biotechnologies, LLC [Member]
Development and Supply Agreement, Contingent on Achievement of Future Milestone, Second Payment, Cash Only	$ 3,000,000
Development and Supply Agreement, Contingent on Achievement of Future Milestone, Second Payment, Cash Portion	1,500,000
Development and Supply Agreement, Contingent on Achievement of Future Milestone, Second Payment, Equity Portion	1,950,000
Development and Supply Agreement, Contingent on Achievement of Future Milestone, Fourth Payment, Cash Only	$ 2,000,000
Seraph Biosciences, Inc. [Member]
Development, Commercialization and Exclusive Distribution Agreement, Contingent on Achievement of Development Milestone, Cash		$ 3,500,000
Development, Commercialization and Exclusive Distribution Agreement, Contingent on Achievement of Development Milestone, Equity		$ 3,500,000

XML

Note 12 - Stock-based Compensation (Details Textual) $ / shares in Units, xbrli-pure in Thousands					3 Months Ended			9 Months Ended
	Mar. 29, 2019 shares	Mar. 15, 2019 shares	Mar. 08, 2019 shares	Jan. 10, 2019 shares	Sep. 30, 2019 USD ($) $ / shares shares		Sep. 30, 2018 USD ($) shares	Sep. 30, 2019 USD ($) $ / shares shares		Sep. 30, 2018 USD ($) shares	Dec. 31, 2018 $ / shares	Dec. 31, 2018 $ / shares	[1]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | shares	65,789	164,473	164,473		0		85,000	394,735		1,866,996
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares				5,995,000	1,500,000		0	7,495,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | (per share)					$ 1.28	[1]		$ 1.28	[1]		$ 2.65	$ 1.95
Share-based Payment Arrangement, Expense					$ 197,988		$ 0	$ 2,539,092		$ 7,288
Proceeds from Stock Options Exercised					$ 0		98,716	600,000		1,537,024
Stock Issued During Period, Value, Stock Options Exercised							$ 34,608	$ 600,000		$ 1,537,024
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Estimated Forfeiture Rate					0.00%		0.00%	0.00%		0.00%
Additional Paid-in Capital [Member]
Stock Issued During Period, Value, Stock Options Exercised								$ (154,148)		$ (386,898)

[1] As of the year ended December 31, 2018, the weighted average exercised price in CDN$ was $2.65.

XML

Note 13 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

13. Commitments and contingencies

On

October 1, 2018,

the Company entered into a

one

-year rental agreement. On

September 1, 2019,

the Company elected to renew this rental agreement for an additional

one

-year period, as well as enter into an additional

one

-year rental agreement. The Company elected

not

to account for these leases in accordance with ASC

842

as they are for a

one

-year term. Total future annual lease payments for the premises are as follows:

2019	$	12,480
2020		33,280
Total	$	45,760

On

November 26, 2018,

the Company entered into a Development and Supply Agreement and as part of this agreement, the Company has contingent future outflows as follows:

•	1 st payment: At the later of the achievement of a future milestone event or September 12, 2019, can decide to receive payment as follows:
	°	$3,000,000 in cash or
	°	$1,500,000 in cash and $1.95 million in equity
•	2 nd payment: At the later of the achievement of a future milestone or February 19, 2020 - $2,000,000 in cash.

As at

September 30, 2019,

neither of the future development milestones related to the above agreement have been met.

On

May 10, 2018,

the Company entered into a Development, Commercialization and Exclusive Distribution Agreement. As part of the agreement, the Company is required to make the following future milestone payments:

• 1 st payment: $3,500,000 in cash payment upon the achievement of future development milestones

• 2 nd payment: $3,500,000 in equity based on the number of the Company’s common stock determined by dividing the amount due by the volume-weighted average price of the Company’s common stock on the NYSE American exchange over the 10 trading days prior to the achievement of the milestone event.

As at

September 30, 2019,

neither of the future development milestones related to the above agreement have been met.

From time to time, the Company

may

be exposed to claims and legal actions in the normal course of business. As at

September 30, 2019,

and continuing as at

November 12, 2019,

the Company is

not

aware of any pending or threatened material litigation claims against the Company, other than as described below.

On

November 1, 2019,

Heska Corporation (“Heska”) filed a complaint for damages and injunctive relief (the “Complaint”) in the United States District Court for the Middle District of North Carolina, Case

1:19

-cv-

01108

-LCB-JLW, against Qorvo US, Inc. (“Qorvo US”), Qorvo Biotechnologies, LLC (“Qorvo Biotech” and, together with Qorvo US, “Qorvo”) and the Company (collectively with Qorvo, the “Defendants”). The Complaint alleges, among other things, that the Defendants improperly obtained Heska’s trade secrets and confidential information and/or conspired to use improper means to misappropriate Heska’s trade secrets related to an instrument and related consumable products for performing immunoassay analysis of biomarkers and other substances. The Complaint seeks compensatory and exemplary damages, as well as preliminary and permanent injunctive relief to prevent the Defendants from commercializing the Company’s TRUFORMA

TM

diagnostic instrument.

Under the terms of the Development and Supply Agreement, dated

November 26, 2018,

by and between Qorvo Biotech and the Company (the “Qorvo Agreement”), Qorvo Biotech agreed to indemnify the Company and certain related parties against claims alleging infringement or misappropriation of

third

-party intellectual property rights, subject to certain limitations and exceptions. Qorvo Biotech has notified the Company that Qorvo Biotech has assumed the defense of the Complaint and will indemnify the Company for losses arising from the Complaint in accordance with the terms of the Qorvo Agreement. Qorvo Biotech has further advised the Company that it intends to mount a vigorous defense to the claims in the Complaint, and that it believes the allegations contained in the Complaint are without merit.

XML

Note 9 - Loan Arrangements

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

9. Loan arrangements

On

October 17, 2017,

the Company entered into a loan arrangement with a shareholder of the Company, pursuant to which such shareholder has agreed to provide a loan facility to the Company, whereby the Company

may

borrow up to

$5,000,000,

with the proceeds to be used for working capital and general corporate purposes. The term of the loan facility is

five

(

5

) years, with principal and interest payments being due only at the time of maturity. Under the loan agreement, the Company

may

borrow in

one

or more advances, provided however that a minimum amount of

$250,000

must be borrowed at any

one

time and

not

more than

two

advances

may

occur per month. Interest shall accrue at a rate of

fourteen

percent (

14%

) per annum, payable upon maturity. As of

September 30, 2019,

no

amounts have been borrowed.

XML

Note 5 - Prepaid Expenses and Deposits

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Prepaid Rent [Text Block]

5. Prepaid expenses and deposits

	September 30,		December 31,
	2019		2018
Prepaid rent (i)	$	-	$	1,613,038
Deposits (ii)		1,202,814		1,596,104
Prepaid FDA fees		31,497		-
Prepaid marketing (iii)		36,596		37,465
Prepaid insurance (iii)		156,044		33,372
Other (iv)		70,474		29,470
Total	$	1,497,425	$	3,309,449

(i) On July 31, 2018, the Company entered into an amended lease agreement with Wickfield Phoenix LLC for an additional 18,640 square feet of office space. The Company prepaid the full outstanding balance of $1,269,073. As of January 1, 2019, the balance of the prepaid rent, inclusive of the original and amended lease amounts was $1,613,038. In accordance with ASC 842, this amount was reclassified as a right-of-use asset in the consolidated balance sheet. As of December 31, 2018, the Company classified $509,380 as a current asset in the consolidated balance sheet;

(ii) Deposits include payments made to vendors in advance and are primarily associated with research activity, deposits for leasehold improvements, and equipment purchases. As of September 30, 2019, and December 31, 2018, the Company classified $1,202,814 and $922,347 as a current asset in the consolidated balance sheet, respectively;

(iii) As of September 30, 2019, and December 31, 2018, all amounts were classified as a current asset in the consolidated balance sheet;

(iv) Other prepaid expenses and deposits are comprised of subscription payments and software licensing. As of September 30, 2019, and December 31, 2018, the Company classified all amounts as a current asset in the consolidated balance sheet.

XML

Note 12 - Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Number of options			Weighted avg exercise price (US$)(i)
Balance at December 31, 2018		422,004		$	1.95
Stock options granted January 10, 2019		5,995,000			1.52
Stock options expired February 24, 2019		(35,000	)		1.12
Stock options exercised March 8, 2019		(164,473	)		1.52
Stock options exercised March 15, 2019		(164,473	)		1.52
Stock options exercised March 29, 2019		(65,789	)		1.52
Stock options expired May 23, 2019		(10,000	)		1.52
Stock options expired June 16, 2019		(40,000	)		1.52
Stock options cancelled August 13, 2019		(5,000	)		1.52
Stock options expired August 14, 2019		(392,004	)		2.07
Stock options granted August 19, 2019		500,000			0.26
Stock options granted August 19, 2019		100,000			0.35
Stock options granted August 19, 2019		100,000			0.45
Stock options granted August 19, 2019		100,000			0.55
Stock options granted August 19, 2019		100,000			0.65
Stock options granted August 19, 2019		100,000			0.75
Stock options granted September 16, 2019		500,000			0.43
Balance at September 30, 2019		7,040,265		$	1.28

Share-based Compensation Arrangements by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding [Table Text Block]

Grant date		Exercise price (USD$)	Number of options	Number of vested options	Weighted Avg Remaining Life (years)
January 10, 2019	$	1.52	5,540,265	5,540,265	1.28
August 19, 2019		0.26	500,000	500,000	1.88
August 19, 2019		0.35	100,000	100,000	1.88
August 19, 2019		0.45	100,000	100,000	1.88
August 19, 2019		0.55	100,000	100,000	1.88
August 19, 2019		0.65	100,000	100,000	1.88
August 19, 2019		0.75	100,000	100,000	1.88
September 16, 2019		0.43	500,000	500,000	1.96
Balance at September 30, 2019			7,040,265	7,040,265

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	January 10, 2019		August 19, 2019		September 16, 2019
Volatility		68%		87%		89%
Risk-free interest rate		2.56%		1.48%		1.74%
Expected life (years)		2		2		2
Dividend yield		0		0		0
Common share price		$1.23		$0.26		$0.42
Strike price		$1.52		$ 0.26 - $ 0.75		$0.43
Forfeiture rate		nil		nil		nil

XML

Note 16 - Schedule of Expenses (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Operating Expenses [Table Text Block]

	For the three months ended September 30,						For the three months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	129,319	$	-	$	849,458	$	164,267	$	-	$	454,786
Contracted expenditures		661,917		-		-		259,947		-		-
Marketing and investor relations		-		-		165,837		-		-		53,996
Travel and accommodation		8,327		-		198,993		8,023		-		36,491
Insurance		19,497		-		66,029		20,855		-		76,903
License fees		-		-		-		-		-		-
Office		11,565		-		80,032		6,665		-		82,416
Consultants		29,343		279,237		-		80,425		293,484		-
Regulatory		31,773		-		26,163		19,247		-		32,904
Rent		-		-		7,603		15,396		-		90,463
Supplies		70,722		-		10,837		55,546		-		6,611
Total	$	962,463	$	279,237	$	1,404,952	$	630,371	$	293,484	$	834,570

	For the nine months ended September 30,						For the nine months ended September 30,
	2019						2018
	Research and		Professional		General and		Research and		Professional		General and
	Development		Fees		Administrative		Development		Fees		Administrative
Salaries, bonus and benefits	$	579,110	$	-	$	4,422,480	$	490,706	$	-	$	1,957,341
Contracted expenditures		2,474,483		-		-		968,159		-		-
Marketing and investor relations		-		-		297,252		-		-		177,151
Travel and accommodation		21,103		-		318,730		13,360		-		228,359
Insurance		76,402		-		179,367		65,099		-		234,646
License fees		5,936,841		-		-		1,738,513		-		-
Office		31,162		-		216,521		41,312		-		220,823
Consultants		178,223		1,230,151		-		169,613		1,001,886		-
Regulatory		95,418		-		76,333		57,422		-		226,604
Rent		-		-		19,483		31,047		-		176,501
Supplies		162,603		-		27,495		190,101		-		21,807
Total	$	9,555,345	$	1,230,151	$	5,557,661	$	3,765,332	$	1,001,886	$	3,243,232

XML

Note 13 - Commitments and Contingencies - Future Annual Lease Payments (Details)	Sep. 30, 2019 USD ($)
2019	$ 12,480
2020	33,280
Total	$ 45,760

XML

Note 12 - Stock-based Compensation - Issuance of Stock Options (Details)													3 Months Ended			9 Months Ended
		Sep. 16, 2019 $ / shares shares	Aug. 19, 2019 $ / shares shares	Aug. 14, 2019 $ / shares shares	Aug. 13, 2019 $ / shares shares	Jun. 16, 2019 $ / shares shares	May 23, 2019 $ / shares shares	Mar. 29, 2019 $ / shares shares	Mar. 15, 2019 $ / shares shares	Mar. 08, 2019 $ / shares shares	Feb. 24, 2019 $ / shares shares	Jan. 10, 2019 $ / shares shares	Sep. 30, 2019 $ / shares shares		Sep. 30, 2018 shares	Sep. 30, 2019 $ / shares shares		Sep. 30, 2018 shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2018 $ / shares shares
Number of Options, Options Outstanding (in shares)													7,040,265			7,040,265			422,004	422,004
Weighted Avg Exercise Price, Options Outstanding (in dollars per share) | (per share)													$ 1.28	[1]		$ 1.28	[1]		$ 2.65	$ 1.95	[1]
Number of Options, Options Granted (in shares)												5,995,000	1,500,000		0	7,495,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]											$ 1.52
Number of Options, Options Expired (in shares)				(392,004)		(40,000)	(10,000)				(35,000)
Weighted Avg Exercise Price, Options Expired (in dollars per share) | $ / shares	[1]			$ 2.07		$ 1.52	$ 1.52				$ 1.12
Number of Options, Options Exercised (in shares)								(65,789)	(164,473)	(164,473)			0		(85,000)	(394,735)		(1,866,996)
Weighted Avg Exercise Price, Options Exercised (in dollars per share) | $ / shares	[1]							$ 1.52	$ 1.52	$ 1.52
Number of Options, Options Cancelled (in shares)					(5,000)
Weighted Avg Exercise Price, Options Cancelled (in dollars per share) | $ / shares	[1]				$ 1.52
Options 1 [Member]
Number of Options, Options Granted (in shares)			500,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.26
Options 2 [Member]
Number of Options, Options Granted (in shares)			100,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.35
Options 3 [Member]
Number of Options, Options Granted (in shares)			100,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.45
Options 4 [Member]
Number of Options, Options Granted (in shares)			100,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.55
Option 5 [Member]
Number of Options, Options Granted (in shares)			100,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.65
Option 6 [Member]
Number of Options, Options Granted (in shares)			100,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]		$ 0.75
Option 7 [member]
Number of Options, Options Granted (in shares)		500,000
Weighted Avg Exercise Price, Options Granted (in dollars per share) | $ / shares	[1]	$ 0.43

[1] As of the year ended December 31, 2018, the weighted average exercised price in CDN$ was $2.65.

XML

Note 5 - Prepaid Expenses and Deposits - Summary of Prepaid Expenses and Deposits (Details) - USD ($)		Sep. 30, 2019	Dec. 31, 2018
Prepaid rent	[1]		$ 1,613,038
Deposits	[2]	1,202,814	1,596,104
Prepaid FDA fees		31,497
Prepaid marketing	[3]	36,596	37,465
Prepaid insurance	[3]	156,044	33,372
Other	[4]	70,474	29,470
Total		$ 1,497,425	$ 3,309,449

[1] On July 31, 2018, the Company entered into an amended lease agreement with Wickfield Phoenix LLC for an additional 18,640 square feet of office space. The Company prepaid the full outstanding balance of $1,269,073. As of January 1, 2019, the balance of the prepaid rent, inclusive of the original and amended lease amounts was $1,613,038. In accordance with ASC 842, this amount was reclassified as a right-of-use asset in the consolidated balance sheet. As of December 31, 2018, the Company classified $509,380 as a current asset in the consolidated balance sheet;

[2] Deposits include payments made to vendors in advance and are primarily associated with research activity, deposits for leasehold improvements, and equipment purchases. As of September 30, 2019, and December 31, 2018, the Company classified $1,202,814 and $922,347 as a current asset in the consolidated balance sheet, respectively;

[3] As of September 30, 2019, and December 31, 2018, all amounts were classified as a current asset in the consolidated balance sheet;

[4] Other is comprised of subscription payments and software licensing. As of September 30, 2019, and December 31, 2018, the Company classified all amounts as a current asset in the consolidated balance sheet.

XML

Note 8 - Leases (Details Textual)		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 01, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Number of Lease Agreements		2		2
Operating Lease, Right-of-Use Asset, Amortization		$ 127,345		$ 382,035		$ 0
Accounting Standards Update 2016-02 [Member]
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 1,613,038

XML

Note 18 - Loss Per Share - Loss Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net loss for the period	$ 2,845,679	$ 1,910,278	$ 16,927,016	$ 8,226,005
Weighted average shares - basic (in shares)	108,038,398	94,514,905	105,711,459	92,534,667
Stock options (in shares)
Denominator for diluted loss per share (in shares)	108,038,398	94,514,905	105,711,459	92,534,667
Loss per share - basic and diluted (in dollars per share)	$ (0.03)	$ (0.02)	$ (0.16)	$ (0.09)

XML

Note 5 - Prepaid Expenses and Deposits (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Prepaid Expenses and Deposits [Table Text Block]

	September 30,		December 31,
	2019		2018
Prepaid rent (i)	$	-	$	1,613,038
Deposits (ii)		1,202,814		1,596,104
Prepaid FDA fees		31,497		-
Prepaid marketing (iii)		36,596		37,465
Prepaid insurance (iii)		156,044		33,372
Other (iv)		70,474		29,470
Total	$	1,497,425	$	3,309,449

XML

Note 2 - Basis of Preparation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Basis of Accounting [Text Block]

2. Basis of preparation

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

Basis of consolidation

These condensed unaudited interim consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiary, Zomedica Pharmaceuticals, Inc.

All inter-company accounts and transactions have been eliminated on consolidation.

XML

Note 17 - Capital Risk Management

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Capital Risk Management [Text Block]

17. Capital risk management

The capital of the Company includes equity, which is comprised of issued common capital stock, additional paid-in capital, and accumulated deficit. The Company's objective when managing its capital is to safeguard the ability to continue as a going concern in order to provide returns for its shareholders, and other stakeholders and to maintain a strong capital base to support the Company's core activities.

XML

Condensed Unaudited Interim Consolidated Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Expenses:
Research and development	$ 962,463	$ 630,371	$ 9,555,345	$ 3,765,332
General and administrative	1,404,952	834,570	5,557,661	3,243,232
Professional fees	279,237	293,484	1,230,151	1,001,886
Amortization - right-of-use asset	127,345		382,035
Amortization - intangible asset	273	431	810	1,810
Depreciation	70,096	86,162	201,075	150,320
Loss from operations	2,844,366	1,845,018	16,927,077	8,162,580
Loss on fixed assets		69,382	1,308	69,382
Interest expense			18,338
Gain on settlement of liabilities			(19,737)
Foreign exchange gain	1,313	(4,122)	30	(5,957)
Loss before income taxes	2,845,679	1,910,278	16,927,016	8,226,005
Income tax expense
Net loss and comprehensive loss	$ 2,845,679	$ 1,910,278	$ 16,927,016	$ 8,226,005
Weighted average number of common shares - basic and diluted (in shares)	108,038,398	94,514,905	105,711,459	92,534,667
Loss per share - basic and diluted (in dollars per share)	$ (0.03)	$ (0.02)	$ (0.16)	$ (0.09)

XML

Note 19 - Related Party Transactions and Key Management Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Key Management Personnel Compensation [Table Text Block]

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
Salaries and benefits, including bonuses	$	251,737	$	324,784	$	887,635	$	1,046,449
Stock-based compensation		100,002		-		1,744,327		-
Total	$	351,739	$	324,784	$	2,631,962	$	1,046,449

XML

Note 10 - Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Preferred Stock [Table Text Block]

	Number of
	preferred		Preferred
	stock		stock amount
Balance at December 31, 2018		-	$	-
Stock issued from financing (i)		12		11,961,397
Balance at September 30, 2019		12	$	11,961,397

XML

Note 14 - Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Contractual Maturities of Undiscounted Cash Flows of Financial Liabilities [Table Text Block]

									September 30, 2019
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		1,577,525		-		-		-		-		1,577,525
		1,577,525		-		-		-		-		1,577,525

									December 31, 2018
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		2,376,519		-		-		-		-		2,376,519
		2,376,519		-		-		-		-		2,376,519

XML

Note 11 - Common Stock

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

11. Common stock

The Company is authorized to issue an unlimited number of common shares, all without par value.

Issued and outstanding common stock:

	Number of
	common		Common
	stock		stock amount
Balance at December 31, 2017		90,225,869	$	18,244,659
Stock issuance for services		641,717		1,238,513
Stock issuance for financing, net of costs		1,861,627		3,966,362
Stock issuance due to exercise of options		1,866,996		1,923,922
Balance at September 30, 2018		94,596,209	$	25,373,456
Balance at December 31, 2018		97,598,898	$	30,410,648
Stock issuance for services (i and ii)		707,236		792,104
Stock issuance from financing (iii and iv)		9,337,529		6,690,922
Stock issuance due to exercise of options		394,735		754,148
Balance at September 30, 2019		108,038,398	$	38,647,822

(i) On January 14, 2019, the Company settled $75,000 of amounts due to a vendor by issuing 49,342 common shares valued at $55,263 at the date of issuance. The Company recorded a $19,737 gain on the settlement of liabilities during the three months ended March 31, 2019;

(ii) On January 14, 2019, the Company issued 657,894 common shares in satisfaction of $1,000,000 of all remaining milestones under a License and Supply Agreement with a third party. The Company recognized $736,841 as research and development expense, based on the value of the common stock on the date of issuance;

(iii) On January 14, 2019, the Company completed a non-brokered private placement, and issued 2,815,789 common shares. Gross proceeds of $4,280,000 were received prior to December 31, 2018.The Company recorded $465 of share issuance costs as an offset to common stock;

(iv) On March 28, 2019, the Company completed an underwritten public offering of its common stock pursuant to which the Company sold an aggregate 6,521,740 common shares for gross proceeds of $3,000,000. The Company recorded nil and $588,613 of share issuance costs as an offset to common stock in the three and nine months ended September 30, 2019.

XML

Note 7 - Intangible Assets

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

7. Intangible assets

	Computer software		Trademarks		Total intangible assets
Cost
Balance at December 31, 2017	$	5,143	$	16,236	$	21,379
Additions		-		-		-
Balance at December 31, 2018		5,143		16,236		21,379
Additions		501,487		-		501,487
Balance at September 30, 2019		506,630		16,236		522,866
Accumulated amortization
Balance at December 31, 2017		4,143		2,095		6,238
Amortization		1,000		1,083		2,083
Balance at December 31, 2018		5,143		3,178		8,321
Amortization		-		810		810
Balance at September 30, 2019		5,143		3,988		9,131
Net book value as at:
December 31, 2018	$	-	$	13,058	$	13,058
September 30, 2019	$	501,487	$	12,248	$	513,735

XML

Note 12 - Stock-based Compensation - Valuation Assumptions for Fair Value of Options Granted (Details) - $ / shares	Sep. 16, 2019	Aug. 19, 2019	Jan. 10, 2019
Volatility	89.00%	87.00%	68.00%
Risk-free interest rate	1.74%	1.48%	2.56%
Expected life (years) (Year)	2 years	2 years	2 years
Dividend yield	0.00%	0.00%	0.00%
Common share price (in dollars per share)	$ 0.42	$ 0.26	$ 1.23
Strike price (in dollars per share)	$ 0.43		$ 1.52
Minimum [Member]
Strike price (in dollars per share)		0.26
Maximum [Member]
Strike price (in dollars per share)		$ 0.75

XML

Note 11 - Common Stock - Issued and Outstanding Common Shares (Details) - USD ($)				3 Months Ended		9 Months Ended
	Mar. 29, 2019	Mar. 15, 2019	Mar. 08, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019		Sep. 30, 2018
Number of common shares (in shares)						97,598,898
Stock issuance for services						$ 792,104		$ 1,238,513
Stock issuance for financing, net of costs						$ 14,372,319		$ 3,966,362
Stock issuance due to exercise of options (in shares)	65,789	164,473	164,473	0	85,000	394,735		1,866,996
Stock issuance due to exercise of options					$ 34,608	$ 600,000		$ 1,537,024
Number of common shares (in shares)				108,038,398		108,038,398
Common Stock [Member]
Number of common shares (in shares)						97,598,898		90,225,869
Capital stock						$ 30,410,648		$ 18,244,659
Stock issuance for services (in shares)						707,236	[1],[2]	641,717
Stock issuance for services						$ 792,104	[1],[2]	$ 1,238,513
Stock issuance for financing, net of costs (in shares)						9,337,529	[3],[4]	1,861,627
Stock issuance for financing, net of costs						$ 6,690,922	[3],[4]	$ 3,966,362
Stock issuance due to exercise of options (in shares)						394,735		1,866,996
Stock issuance due to exercise of options						$ 754,148		$ 1,923,922
Stock issuance for financing, net of costs (in shares)						9,337,529	[3],[4]	1,861,627
Number of common shares (in shares)				108,038,398	94,596,209	108,038,398		94,596,209
Capital stock				$ 38,647,822	$ 25,373,456	$ 38,647,822		$ 25,373,456

[1] On January 14, 2019, the Company issued 657,894 common shares in satisfaction of $1,000,000 of all remaining milestones under a License and Supply Agreement with a third party. The Company recognized $736,841 as research and development expense, based on the value of the common stock on the date of issuance;

[2] On January 14, 2019, the Company settled $75,000 of amounts due to a vendor by issuing 49,342 common shares valued at $55,263 at the date of issuance. The Company recorded a $19,737 gain on the settlement of liabilities during the three months ended March 31, 2019;

[3] On January 14, 2019, the Company completed a non-brokered private placement, and issued 2,815,789 common shares. Gross proceeds of $4,280,000 were received prior to December 31, 2018. The Company recorded $465 of share issuance costs as an offset to common stock;

[4] On March 28, 2019, the Company completed an underwritten public offering of its common stock pursuant to which the Company sold an aggregate 6,521,740 common shares for gross proceeds of $3,000,000. The Company recorded nil and $588,613 of share issuance costs as an offset to common stock in the three and nine months ended September 30, 2019.

XML

Note 15 - Segmented Information - Long-lived Assets by Geographic Areas (Details) - USD ($)	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Assets	$ 6,611,024		$ 6,033,519
Total US property and equipment	805,218		717,088
Total US right-of-use asset	1,231,003	$ 1,613,038
CANADA
Assets	431,063		383,567
UNITED STATES
Assets	6,179,961		5,649,952
Total US property and equipment	805,218		717,088
Total US right-of-use asset	1,231,003
	$ 2,036,221		$ 717,088

XML

Note 10 - Preferred Stock (Details Textual) - USD ($)				3 Months Ended		9 Months Ended
	Jun. 07, 2019	May 09, 2019	Jan. 14, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 16, 2019	Aug. 19, 2019	Jan. 10, 2019	Dec. 31, 2018
Preferred Stock, Shares Authorized				20		20					20
Share Price								$ 0.42	$ 0.26	$ 1.23
Proceeds from Issuance of Preferred Stock and Preference Stock						$ 12,000,000
Payments of Stock Issuance Costs				$ 1,414	$ 12,328	$ 627,681	$ 36,135
Private Placement [Member]
Payments of Stock Issuance Costs			$ 465
Series 1 Preferred Shares [Member]
Preferred Stock, Shares Authorized				20		20
Preferred Stock, Stated Value Per Share				$ 1,000,000		$ 1,000,000
Series 1 Preferred Shares [Member] | Private Placement [Member]
Preferred Stock, Value, Subscriptions		$ 12,000,000
Share Price		$ 1,000,000
Proceeds from Issuance of Preferred Stock and Preference Stock	$ 7,000,000	$ 5,000,000
Payments of Stock Issuance Costs				$ 1,414		$ 38,603

XML

Note 3 - Significant Accounting Policies (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Other Comprehensive Income (Loss), Net of Tax, Total	$ 0

XML

Note 6 - Property and Equipment - Property and Equipment (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Cost, Beginning Balance	$ 987,493	$ 509,899
Cost, Additions	290,513	627,997
Cost, Disposals	(2,210)	(150,403)
Cost, Ending Balance	1,275,796	987,493
Accumulated Depreciation, Beginning Balance	270,405	138,742
Accumulated Depreciation, Depreciation	201,075	203,684
Accumulated Depreciation, Disposals	(902)	(72,021)
Accumulated Depreciation, Ending Balance	470,578	270,405
Net Book Value	805,218	717,088
Computer Equipment [Member]
Cost, Beginning Balance	170,002	151,155
Cost, Additions	218,076	18,847
Cost, Disposals	(2,210)
Cost, Ending Balance	385,868	170,002
Accumulated Depreciation, Beginning Balance	104,918	42,802
Accumulated Depreciation, Depreciation	60,561	62,116
Accumulated Depreciation, Disposals	(902)
Accumulated Depreciation, Ending Balance	164,577	104,918
Net Book Value	221,291	65,084
Furniture and Fixtures [Member]
Cost, Beginning Balance	181,879	76,058
Cost, Additions	3,414	105,821
Cost, Disposals
Cost, Ending Balance	185,293	181,879
Accumulated Depreciation, Beginning Balance	29,585	11,845
Accumulated Depreciation, Depreciation	19,885	17,740
Accumulated Depreciation, Disposals
Accumulated Depreciation, Ending Balance	49,470	29,585
Net Book Value	135,823	152,294
Laboratory Equipment [Member]
Cost, Beginning Balance	352,637	245,729
Cost, Additions	3,350	246,375
Cost, Disposals		(139,467)
Cost, Ending Balance	355,987	352,637
Accumulated Depreciation, Beginning Balance	99,696	74,875
Accumulated Depreciation, Depreciation	51,151	86,368
Accumulated Depreciation, Disposals		(61,547)
Accumulated Depreciation, Ending Balance	150,847	99,696
Net Book Value	205,140	252,941
Leasehold Improvements [Member]
Cost, Beginning Balance	282,975	36,957
Cost, Additions	65,673	256,954
Cost, Disposals		(10,936)
Cost, Ending Balance	348,648	282,975
Accumulated Depreciation, Beginning Balance	36,206	9,220
Accumulated Depreciation, Depreciation	69,478	37,460
Accumulated Depreciation, Disposals		(10,474)
Accumulated Depreciation, Ending Balance	105,684	36,206
Net Book Value	$ 242,964	$ 246,769

XML

Note 19 - Related Party Transactions and Key Management Compensation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

19. Related party transactions and key management compensation

Key management personnel are comprised of the Company’s directors and executive officers. In addition to their salaries, key management personnel also receive share-based compensation. Key management personnel compensation is as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
Salaries and benefits, including bonuses	$	251,737	$	324,784	$	887,635	$	1,046,449
Stock-based compensation		100,002		-		1,744,327		-
Total	$	351,739	$	324,784	$	2,631,962	$	1,046,449

XML

Note 15 - Segmented Information

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15. Segmented information

The Company's operations comprise a single reportable segment engaged in the research, development targeting health and wellness solutions for the companion animal. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for loss for the period, depreciation and total assets also represent segmented amounts. In addition, all of the Company's long-lived assets are in the United States of America (“US”).

	September 30,		December 31,
	2019		2018
	$		$
Total assets
Canada		431,063		383,567
US		6,179,961		5,649,952
Total US property and equipment		805,218		717,088
Total US right-of-use asset		1,231,003		-
		2,036,221		717,088

XML

Condensed Unaudited Interim Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cash flows used in operating activities:
Net loss for the period	$ (2,845,679)	$ (1,910,278)	$ (16,927,016)	$ (8,226,005)
Adjustments for
Depreciation	(70,096)	(86,162)	(201,075)	(150,320)
Amortization - intangible asset	273	431	810	1,810
Amortization - right-of-use asset	127,345		382,035
Loss on fixed assets		69,382	1,308	69,382
Stock issued for services			792,104	1,238,513
Stock-based compensation	197,988		2,539,092	7,288
Change in non-cash operating working capital
Trade and other receivable	19,558	11,885	(22,333)	(9,470)
Prepaid expenses	(122,315)	56,399	140,695	(191,365)
Deposits	21,366	(1,281,617)	(76,709)	(1,311,463)
Accounts payable and accrued liabilities	(1,378,710)	(403,423)	(798,994)	451,643
	(3,910,078)	(3,371,059)	(13,767,933)	(7,819,347)
Cash flows (used) from financing activities:
Cash proceeds from financing of preferred shares			12,000,000
Cash proceeds from financing of common shares			3,000,000	4,002,496
Cash received from stock option exercises	0	98,716	600,000	1,537,024
Cash paid on stock issuance costs	(1,414)	(12,328)	(627,681)	(36,135)
	(1,414)	86,388	14,972,319	5,503,385
Cash flows used in investing activities:
Investment in intangibles	(501,487)		(501,487)
Investment in property and equipment	(80,950)	(467,675)	(155,513)	(605,368)
	(582,437)	(467,675)	(657,000)	(605,368)
Increase (decrease) in cash and cash equivalents	(4,493,929)	(3,752,346)	547,386	(2,921,330)
Cash and cash equivalents, beginning of period	6,981,580	4,279,163	1,940,265	3,448,147
Cash and cash equivalents, end of period	2,487,651	526,817	2,487,651	526,817
Supplemental cash flow information:
Interest paid	$ 12,164		$ 18,338

XML

Note 7 - Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	Computer software		Trademarks		Total intangible assets
Cost
Balance at December 31, 2017	$	5,143	$	16,236	$	21,379
Additions		-		-		-
Balance at December 31, 2018		5,143		16,236		21,379
Additions		501,487		-		501,487
Balance at September 30, 2019		506,630		16,236		522,866
Accumulated amortization
Balance at December 31, 2017		4,143		2,095		6,238
Amortization		1,000		1,083		2,083
Balance at December 31, 2018		5,143		3,178		8,321
Amortization		-		810		810
Balance at September 30, 2019		5,143		3,988		9,131
Net book value as at:
December 31, 2018	$	-	$	13,058	$	13,058
September 30, 2019	$	501,487	$	12,248	$	513,735

XML

Condensed Unaudited Interim Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 2,487,651	$ 1,940,265
Prepaid expenses and deposits	1,497,425	1,867,034
Trade and other receivable	75,992	53,659
	4,061,068	3,860,958
Prepaid expenses and deposits		1,442,415
Property and equipment	805,218	717,088
Right-of-use asset	1,231,003
Intangible assets	513,735	13,058
	6,611,024	6,033,519
Current liabilities:
Accounts payable and accrued liabilities	1,577,525	2,376,519
	1,577,525	2,376,519
Shareholders' equity:
Series 1 preferred shares, without par value; 20 shares authorized (2018 - nil) Issued and outstanding 12 series 1 preferred shares (2018 - nil)	11,961,397
Unlimited common shares without par value; Issued and outstanding 108,038,398 common shares (2018 - 97,598,898)	38,647,822	30,410,648
Common stock subscribed		4,280,000
Additional paid-in capital	3,625,083	1,240,139
Accumulated deficit	(49,200,803)	(32,273,787)
	5,033,499	3,657,000
	$ 6,611,024	$ 6,033,519

XML

Note 19 - Related Party Transactions and Key Management Compensation - Key Management Personnel Compensation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stock-based compensation	$ 197,988	$ 0	$ 2,539,092	$ 7,288
Director and Executive Officers [Member]
Salaries and benefits, including bonuses	251,737	324,784	887,635	1,046,449
Stock-based compensation	100,002		1,744,327
Total	$ 351,739	$ 324,784	$ 2,631,962	$ 1,046,449

XML

Note 5 - Prepaid Expenses and Deposits (Details Textual)	Jul. 31, 2018 USD ($) ft²	Sep. 30, 2019 USD ($)	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Payments for Rent	$ 1,269,073
Operating Lease, Right-of-Use Asset		$ 1,231,003	$ 1,613,038
Prepaid Rent				509,380
Deposits Assets, Current		$ 1,202,814		$ 922,347
Wickfield Phoenix LLC Office Space [Member]
Area of Real Estate Property | ft²	18,640

XML

Note 7 - Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Cost, Beginning Balance			$ 21,379	$ 21,379	$ 21,379
Cost, Additions			501,487
Cost, Ending Balance	$ 522,866		522,866		21,379
Accumulated Amortization, Beginning Balance			8,321	6,238	6,238
Accumulated Amortization, Amortization	273	$ 431	810	1,810	2,083
Accumulated Amortization, Ending Balance	9,131		9,131		8,321
Net Book Value	513,735		513,735		13,058
Computer Software, Intangible Asset [Member]
Cost, Beginning Balance			5,143	5,143	5,143
Cost, Additions			501,487
Cost, Ending Balance	506,630		506,630		5,143
Accumulated Amortization, Beginning Balance			5,143	4,143	4,143
Accumulated Amortization, Amortization					1,000
Accumulated Amortization, Ending Balance	5,143		5,143		5,143
Net Book Value	501,487		501,487
Trademarks [Member]
Cost, Beginning Balance			16,236	16,236	16,236
Cost, Additions
Cost, Ending Balance	16,236		16,236		16,236
Accumulated Amortization, Beginning Balance			3,178	$ 2,095	2,095
Accumulated Amortization, Amortization			810		1,083
Accumulated Amortization, Ending Balance	3,988		3,988		3,178
Net Book Value	$ 12,248		$ 12,248		$ 13,058

XML

Note 10 - Preferred Stock - Issued and Outstanding Preferred Stock (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) shares
Balance, number (in shares) | shares
Balance, amount | $
Balance, number (in shares) | shares	12
Balance, amount | $	$ 11,961,397
Series 1 Preferred Shares [Member]
Balance, number (in shares) | shares
Balance, amount | $
Stock issued from financing, number (in shares) | shares	12	[1]
Stock issued from financing, amount | $	$ 11,961,397	[1]
Balance, number (in shares) | shares	12
Balance, amount | $	$ 11,961,397

[1] On May 9, 2019, the Company entered into subscription agreements to sell $12,000,000 of its Series 1 Preferred Shares to an accredited investor in a private placement at a purchase price of $1,000,000 per Series 1 Preferred Share; $5,000,000 of the purchase price was paid on May 9, 2019 and the remaining $7,000,000 was paid on June 7, 2019. The Company recorded $1,414 and $38,603 of share issuance costs as an offset to preferred stock in the three and nine months ended September 30, 2019

XML

Note 1 - Nature of Operations and Going Concern

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

1. Nature of operations and going concern

Zomedica Pharmaceuticals Corp. ("Zomedica" or the “Company”) was incorporated on

January 7, 2013

under the

Business Corporations Act

(Alberta) as Wise Oakwood Ventures Inc. (“WOW”) and was classified as a capital pool company, as defined in Policy

2.4

of the TSX Venture Exchange. ZoMedica Pharmaceuticals Inc. was incorporated on

May 14, 2015

under the

Canada Business Corporations Act

.

On

April 21, 2016,

the Company closed its qualifying transaction (“Transaction”), consisting of the acquisition of ZoMedica Pharmaceuticals Inc. (“ZoMedica”) pursuant to a

three

-cornered amalgamation, whereby ZoMedica was amalgamated with

9674128

Canada Inc. (which was wholly-owned by WOW) and common shares and options of the Company were issued to former holders of ZoMedica securities as consideration. The amalgamated company changed its name to Zomedica Pharmaceuticals Ltd. and WOW subsequently changed its name to Zomedica Pharmaceuticals Corp. Prior to completion of the Transaction, WOW consolidated its common shares on the basis of the

one

post-consolidation common share for every

2.5

pre-consolidation common shares. The Transaction constituted WOW’s qualifying transaction under TSX Venture Exchange Policy

2.4

–

Capital Pool Companies

. The shares of Zomedica Pharmaceuticals Corp. began trading on the TSX Venture Exchange under the new symbol “ZOM” on Monday,

May 2, 2016.

On

June 21, 2016,

the Company filed Articles of Amalgamation and vertically amalgamated with its wholly-owned subsidiary, Zomedica Pharmaceuticals Ltd.

Zomedica has

one

corporate subsidiary, Zomedica Pharmaceuticals, Inc., a Delaware company whose results and operations are included in these consolidated financial statements. The Company is a biopharmaceutical company targeting health and wellness solutions for the companion pet through a ground-breaking approach that focuses on the needs of the veterinarians themselves. Zomedica's head office is located at

100

Phoenix Drive, Suite

190,

Ann Arbor, MI

48108

and its registered office is located at Suite

1250,

639

–

5th

Avenue S.W., Calgary, Alberta

T2P

0M9.

On

November 20, 2017,

Zomedica announced that its registration statement on Form S-

1

was declared effective by the U.S. Securities and Exchange Commission and on

November 21, 2017,

the Company’s common shares began trading on the NYSE American under the symbol “ZOM”.

Going concern

The consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next

twelve

months. The Company has incurred losses from operations since inception and has an accumulated deficit of

$49,200,803

as at

September 30, 2019 (

December 31, 2018 -

$32,273,787

). The Company has funded its research and development (“R&D”) activities principally through the issuance of securities and loans from related parties. There is

no

certainty that such funding will be available going forward. These conditions raise substantial doubt about its ability to continue as a going concern and realize its assets and pay its liabilities as they become due.

In order for the Company to continue as a going concern and fund any significant expansion of its operations or R&D activities, the Company will require significant additional capital. The Company’s ultimate success will depend on whether its future product candidates receive the necessary regulatory approval and it is able to successfully market approved products. The Company cannot be certain that it will be able to receive regulatory approval for any of its future product candidates, or that it will reach the level of sales and revenues necessary to achieve and sustain profitability.

The availability of equity or debt financing will be affected by, among other things, the results of the Company’s research and development, its ability to obtain regulatory approvals, the market acceptance of its products, the state of the capital markets generally, strategic alliance agreements, and other relevant commercial considerations. In addition, if the Company raises additional funds by issuing equity securities,

its then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict its operations. Any failure on its part to raise additional funds on terms favorable to the Company or at all,

may

require the Company to significantly change or curtail its current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in the Company

not

taking advantage of business opportunities.

XML

Note 6 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Computer equipment			Furniture and equipment		Laboratory equipment			Leasehold improvements			Total
Cost
Balance at December 31, 2017	$	151,155		$	76,058	$	245,729		$	36,957		$	509,899
Additions		18,847			105,821		246,375			256,954			627,997
Disposals		-			-		(139,467	)		(10,936	)		(150,403	)
Balance at December 31, 2018		170,002			181,879		352,637			282,975			987,493
Additions		218,076			3,414		3,350			65,673			290,513
Disposals		(2,210	)		-		-			-			(2,210	)
Balance at September 30, 2019		385,868			185,293		355,987			348,648			1,275,796
Accumulated depreciation
Balance at December 31, 2017		42,802			11,845		74,875			9,220			138,742
Depreciation		62,116			17,740		86,368			37,460			203,684
Disposals		-			-		(61,547	)		(10,474	)		(72,021	)
Balance at December 31, 2018		104,918			29,585		99,696			36,206			270,405
Depreciation		60,561			19,885		51,151			69,478			201,075
Disposals		(902	)		-		-			-			(902	)
Balance at September 30, 2019		164,577			49,470		150,847			105,684			470,578
Net book value as at:
December 31, 2018	$	65,084		$	152,294	$	252,941		$	246,769		$	717,088
September 30, 2019	$	221,291		$	135,823	$	205,140		$	242,964		$	805,218

XML

Condensed Unaudited Interim Consolidated Balance Sheets (Parentheticals) - $ / shares $ / shares in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	20	20
Preferred stock, shares issued (in shares)	12
Preferred stock, shares outstanding (in shares)	12
Capital stock, unlimited common shares	Unlimited	Unlimited
Capital stock, no par value (in dollars per share)	$ 0	$ 0
Capital stock, shares issued (in shares)	108,038,398	97,598,898
Capital stock, shares outstanding (in shares)	108,038,398	97,598,898

XML

Note 18 - Loss Per Share

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

18. Loss per share

	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Numerator
Net loss for the period	$	2,845,679		$	1,910,278		$	16,927,016		$	8,226,005
Denominator
Weighted average shares - basic		108,038,398			94,514,905			105,711,459			92,534,667
Stock options		-			-			-			-
Denominator for diluted loss per share		108,038,398			94,514,905			105,711,459			92,534,667
Loss per share - basic and diluted	$	(0.03	)	$	(0.02	)	$	(0.16	)	$	(0.09	)

For the above-mentioned periods, the Company had securities outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive.

XML

Note 14 - Financial Instruments

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Financial Instruments Disclosure [Text Block]

14. Financial instruments

(a) Fair values

The Company follows ASC topic

820,

“Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC topic

820

apply to other accounting pronouncements that require or permit fair value measurements. ASC topic

820

defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and establishes a

three

level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of the hierarchy are defined as follows:

Level

1

inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level

2

inputs are inputs other than quoted prices included within Level

1

that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

Level

3

inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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

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

The carrying values of cash, trade and other receivable, accounts payable and accrued liabilities and shareholder loans payable approximates their fair values because of the short-term nature of these instruments.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does

not

believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and cash equivalents, due to related parties due to the short-term nature of these balances.

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank and a U.S. Bank. The Company’s cash is

not

subject to any external restrictions.

(c) Foreign exchange risk

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange (“FX”) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. For each Canadian dollar balance of

$1.0

 million, a +/-

10%

movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by

$0.1

 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at

June 30, 2019

and

December 31, 2018:

									September 30, 2019
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		1,577,525		-		-		-		-		1,577,525
		1,577,525		-		-		-		-		1,577,525

									December 31, 2018
	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		1 year		1 year		Total
	$		$		$		$		$		$
Third parties
Accounts payable and accrued liabilities		2,376,519		-		-		-		-		2,376,519
		2,376,519		-		-		-		-		2,376,519

XML

Note 11 - Common Stock (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

	Number of
	common		Common
	stock		stock amount
Balance at December 31, 2017		90,225,869	$	18,244,659
Stock issuance for services		641,717		1,238,513
Stock issuance for financing, net of costs		1,861,627		3,966,362
Stock issuance due to exercise of options		1,866,996		1,923,922
Balance at September 30, 2018		94,596,209	$	25,373,456
Balance at December 31, 2018		97,598,898	$	30,410,648
Stock issuance for services (i and ii)		707,236		792,104
Stock issuance from financing (iii and iv)		9,337,529		6,690,922
Stock issuance due to exercise of options		394,735		754,148
Balance at September 30, 2019		108,038,398	$	38,647,822

XML

Note 15 - Segmented Information (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Long-lived Assets by Geographic Areas [Table Text Block]

	September 30,		December 31,
	2019		2018
	$		$
Total assets
Canada		431,063		383,567
US		6,179,961		5,649,952
Total US property and equipment		805,218		717,088
Total US right-of-use asset		1,231,003		-
		2,036,221		717,088

XML

Note 1 - Nature of Operations and Going Concern (Details Textual) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Retained Earnings (Accumulated Deficit), Ending Balance	$ (49,200,803)	$ (32,273,787)

XML

Note 10 - Preferred Stock

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Preferred Stock [Text Block]

10. Preferred stock

The Company is authorized to issue up to

20

shares of our Series

1

Preferred Shares, all without par value, and each having a stated value of

$1,000,000.

The Series

1

Preferred Shares do

not

have voting rights except to the extent required by applicable law and are

not

convertible into the Company’s common shares. Holders of the Series

1

Preferred Shares will

not

be entitled to dividends but, in lieu thereof, will receive Net Sales Payments (“Net Sales Payments” is defined as annual payments equal to

9

percent of sales) until such time as the holders have received total Net Sales Payments equal to

9

times the aggregate stated value of the outstanding Series

1

Preferred Shares. The Company will have the right to redeem the outstanding Series

1

Preferred Shares at any time at a redemption price equal to

9

times the aggregate stated value of the Series

1

Preferred Shares outstanding less the aggregate amount of the Net Sales Payments paid (the “Redemption Amount”).

Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series

1

Preferred Shares will be entitled to a liquidation preference equal to the stated value of the Series

1

Preferred Shares less the Net Sales Payments paid on the Series

1

Preferred Shares.

In the event of a fundamental transaction (defined to include an amalgamation, merger or other business combination transaction involving our company in which our shareholders do

not

have the right to cast more than

50%

of the votes that

may

be cast for the election of directors, or a sale, lease or other disposition of the properties and/or assets of our company as an entirety or substantially as an entirety to a

third

party), the holders of the Series

1

Preferred Shares will be entitled to receive consideration for their Series

1

Preferred Shares equal to a multiple of the stated value of the Series

1

Preferred Shares ranging from

5.0

to

9.0

depending on the timing of the fundamental transaction, subject to a cap equal to the redemption amount. The Company has assessed the likelihood of any Net Sales Payments to the Series

1

Preferred shareholders to be remote.

Issued and outstanding preferred stock:

	Number of
	preferred		Preferred
	stock		stock amount
Balance at December 31, 2018		-	$	-
Stock issued from financing (i)		12		11,961,397
Balance at September 30, 2019		12	$	11,961,397

(i) On May 9, 2019, the Company entered into subscription agreements to sell $12,000,000 of its Series 1 Preferred Shares to an accredited investor in a private placement at a purchase price of $1,000,000 per Series 1 Preferred Share; $5,000,000 of the purchase price was paid on May 9, 2019 and the remaining $7,000,000 was paid on June 7, 2019. The Company recorded $1,414 and $38,603 of share issuance costs as an offset to preferred stock in the three and nine months ended September 30, 2019

XML

Note 6 - Property and Equipment

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6. Property and equipment

	Computer equipment			Furniture and equipment		Laboratory equipment			Leasehold improvements			Total
Cost
Balance at December 31, 2017	$	151,155		$	76,058	$	245,729		$	36,957		$	509,899
Additions		18,847			105,821		246,375			256,954			627,997
Disposals		-			-		(139,467	)		(10,936	)		(150,403	)
Balance at December 31, 2018		170,002			181,879		352,637			282,975			987,493
Additions		218,076			3,414		3,350			65,673			290,513
Disposals		(2,210	)		-		-			-			(2,210	)
Balance at September 30, 2019		385,868			185,293		355,987			348,648			1,275,796
Accumulated depreciation
Balance at December 31, 2017		42,802			11,845		74,875			9,220			138,742
Depreciation		62,116			17,740		86,368			37,460			203,684
Disposals		-			-		(61,547	)		(10,474	)		(72,021	)
Balance at December 31, 2018		104,918			29,585		99,696			36,206			270,405
Depreciation		60,561			19,885		51,151			69,478			201,075
Disposals		(902	)		-		-			-			(902	)
Balance at September 30, 2019		164,577			49,470		150,847			105,684			470,578
Net book value as at:
December 31, 2018	$	65,084		$	152,294	$	252,941		$	246,769		$	717,088
September 30, 2019	$	221,291		$	135,823	$	205,140		$	242,964		$	805,218

In

February 2019,

the Company reclassified

$135,000

out of prepaid assets into property and equipment.

XML

Note 14 - Financial Instruments - Contractual Maturities of Undiscounted Cash Flows of Financial Liabilities (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Accounts Payable and Accrued Liabilities, Maturity Less Than 3 Months	$ 1,577,525	$ 2,376,519
Accounts payable and accrued liabilities, Maturity 3 to 6 Months
Accounts payable and accrued liabilities, Maturity 6 to 9 Months
Accounts payable and accrued liabilities, Maturity 9 to 12 Months
Accounts payable and accrued liabilities, Maturity Greater Than 1 Year
Accounts payable and accrued liabilities	1,577,525	2,376,519
Contractual Financial Liabilities, Maturity Less Than 3 Months	1,577,525	2,376,519
Contractual Financial Liabilities, , Maturity 3 to 6 Months
Contractual Financial Liabilities, Maturity 6 to 9 Months
Contractual Financial Liabilities, Maturity 9 to 12 Months
Contractual Financial Liabilities, Maturity Greater Than 1 Year
Contractual Financial Liabilities	$ 1,577,525	$ 2,376,519

XML

Note 12 - Stock-based Compensation - Details of the Issued Stock Options (Details) - $ / shares				9 Months Ended
		Aug. 19, 2019	Jan. 10, 2019	Sep. 30, 2019	Dec. 31, 2018
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]		$ 1.52
Number of Options, Options Outstanding (in shares)				7,040,265	422,004
Number of Vested Options (in shares)				7,040,265
Options 1 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	$ 0.26
Options 2 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	0.35
Options 3 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	0.45
Options 4 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	0.55
Option 5 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	0.65
Option 6 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)	[1]	$ 0.75
January 10, 2019 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 1.52
Number of Options, Options Outstanding (in shares)				5,540,265
Number of Vested Options (in shares)				5,540,265
Weighted Avg Remaining Life (Year)				1 year 102 days
August 16, 2019 [Member] | Options 1 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.26
Number of Options, Options Outstanding (in shares)				500,000
Number of Vested Options (in shares)				500,000
Weighted Avg Remaining Life (Year)				1 year 321 days
August 16, 2019 [Member] | Options 2 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.35
Number of Options, Options Outstanding (in shares)				100,000
Number of Vested Options (in shares)				100,000
Weighted Avg Remaining Life (Year)				1 year 321 days
August 16, 2019 [Member] | Options 3 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.45
Number of Options, Options Outstanding (in shares)				100,000
Number of Vested Options (in shares)				100,000
Weighted Avg Remaining Life (Year)				1 year 321 days
August 16, 2019 [Member] | Options 4 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.55
Number of Options, Options Outstanding (in shares)				100,000
Number of Vested Options (in shares)				100,000
Weighted Avg Remaining Life (Year)				1 year 321 days
August 16, 2019 [Member] | Option 5 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.65
Number of Options, Options Outstanding (in shares)				100,000
Number of Vested Options (in shares)				100,000
Weighted Avg Remaining Life (Year)				1 year 321 days
August 16, 2019 [Member] | Option 6 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.75
Number of Options, Options Outstanding (in shares)				100,000
Number of Vested Options (in shares)				100,000
Weighted Avg Remaining Life (Year)				1 year 321 days
September 16, 2019 [Member]
Weighted Avg Exercise Price, Options Granted (in dollars per share)				$ 0.43
Number of Options, Options Outstanding (in shares)				500,000
Number of Vested Options (in shares)				500,000
Weighted Avg Remaining Life (Year)				1 year 350 days

[1] As of the year ended December 31, 2018, the weighted average exercised price in CDN$ was $2.65.

XML

Note 11 - Common Stock (Details Textual) - USD ($)			1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 28, 2019	Jan. 14, 2019	Dec. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Gain (Loss) on Settlement of Liabilities						$ 19,737
Research and Development Expense, Total				962,463	630,371	9,555,345	3,765,332
Payments of Stock Issuance Costs				1,414	12,328	627,681	36,135
Proceeds from Issuance of Common Stock						3,000,000	$ 4,002,496
Private Placement [Member]
Stock Issued During Period, Shares, New Issues		2,815,789
Proceeds from Issuance of Private Placement			$ 4,280,000
Payments of Stock Issuance Costs		$ 465
Public Offering [Member]
Stock Issued During Period, Shares, New Issues	6,521,740
Payments of Stock Issuance Costs				$ 0		$ 588,613
Proceeds from Issuance of Common Stock	$ 3,000,000
One Creditor [Member]
Debt Conversion, Converted Instrument, Amount		$ 75,000
Common Stock, Number of Shares, Issued		49,342
Common Stock, Value, Issued		$ 55,263
Gain (Loss) on Settlement of Liabilities		$ 19,737
Celsee [Member]
Common Stock, Number of Shares, Issued		657,894
Common Stock, Value, Issued		$ 1,000,000
Research and Development Expense, Total		$ 736,841