Q1 2024 Zomedica Corp Earnings Call & Business Update

Operator: Good afternoon, ladies and gentlemen, and welcome to the Medica First Quarter 2024 Financial Results Conference Call. At this time, all lines are in a listen-only mode.

Good afternoon, ladies and gentlemen.

Operator: Tim.

Operator: <unk> first quarter 2024 financial results conference call at this time.

Operator: All lines are in a listen only mode.

Operator: Al will make a presentation, we will conduct a question and answer session.

Operator: Instructions will be provided at that time for you to queue up for a question.

Operator: Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference over to Mike Bally at ICR Westerville. Please do so.

Operator: If anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time.

Operator: I would now like to turn the conference over to Mike Daly.

Mike Bally: Our western piece.

Mike Bally: Go ahead.

Mike Bally: Thank you, operator, and good afternoon, ladies and gentlemen. Welcome to Zomedica's first quarter 2024 earnings results and business update call. Joining me on today's call are Zomedica's Chief Executive Officer, Larry Heaton, and Chief Financial Officer, Peter Donato. Before we begin, we'd like to remind everyone that on this call, we will be making various remarks about future expectations, plans, and prospects that constitute forward-looking statements. These forward-looking statements are based on assumptions, and there are risks that results may differ materially from those statements.

Mike Bally: Thank you operator, and good afternoon, ladies and gentlemen, welcome to the Americas first quarter 2024 earnings results and business update call.

Mike Bally: Joining me on today's call are <unk>, Medical's, Chief Executive Officer, Larry Hayden and Chief Financial Officer, Peter Donato.

Mike Bally: As such, Zomedica cannot guarantee that any forward-looking statements will materialize, and you are cautioned not to place undue reliance on them. We refer to current investors, and we would refer current and potential investors to the forward-looking information and risk factors sections of our public filings available on CDAR at www.cdarplus.ca and on EDGAR at sec.gov. Forward-looking statements made on this conference call represent Zomedica's expectations as of today, Thursday, May 9, 2024. I will now pass the call over to Zomedica's Chief Executive Officer, Larry Heaton. Larry?

Mike Bally: Before we begin we'd like to remind everyone that on this call, we will be making various remarks about future expectations plans and prospects that constitute forward looking statements.

Larry Heaton: These forward looking statements are based on assumptions and there are risks that results may differ materially from those statements.

Mike Bally: As such the medica cannot guarantee that any forward looking statements will materialize and you are cautioned not to place undue reliance on them.

Larry Heaton: We refer to current and we would refer current and potential investors to the forward looking information and risk factors sections of our public filings available on SEDAR at Www Dot SEDAR, plus dossier and on Edgar at SEC Gov.

Larry Heaton: Forward looking statements made on this conference call represents the Americas expectations as of today Thursday.

Larry Heaton: May nine 2024.

Larry Heaton: I'll now pass the call over to <unk>, Medical's, Chief Executive Officer, Larry heating Larry.

Larry Heaton: Thanks Mike. I'd like to start by thanking our shareholders for their support. Wish our prospective investors and analysts and others a good afternoon and welcome all to the Zomedica first quarter earnings results and business update call. I'll start today by providing an update on the overall business, then our Chief Financial Officer, Peter Donato, will walk you through our financial results. After our prepared remarks, we'll open the phone line and the web for your questions. So, just a bit earlier today, Zomedica released its financial results for the first quarter of 2024.

Larry Heaton: Thanks, Mike.

Larry Heaton: I can start by thanking our shareholders for your support.

Larry Heaton: Which are prospective investors and analysts and others are good afternoon, and welcome all to the Dramatica first quarter earnings results and business update call.

Larry Heaton: I'll start today by providing an update on the overall business then our Chief Financial Officer, Peter Donato, who will walk you through our financial results. After our prepared remarks, we'll open the phone line and the web to your questions.

Larry Heaton: So just a bit earlier today is a Medicare released its financial results for the first quarter of 2024.

Larry Heaton: Overall, we continued to build on the momentum we generated during our record-setting 2023, which resulted in the strongest first quarter in company history. Revenue for the quarter was $6.3 million, reflecting just over 14% growth over the first quarter of 2023, with increases in both our therapeutic device and diagnostic segments, and was a higher rate of year-over-year growth than we saw in the first quarter of 2023 from the same products. This further validates our strategy to fuel growth through the expansion of our innovative product portfolio. We expect this rate of year-over-year growth to accelerate during the year.

Larry Heaton: Overall, we continued to build on the momentum we generated during a record setting 2023.

Larry Heaton: Which resulted in the strongest first quarter in company history.

Larry Heaton: Revenue for the quarter was $6 3 million, reflecting just over 14% growth over the first quarter of 2023 with increases in both our therapeutic device and diagnostics segments and with a higher rate of year over year growth than we saw in the first quarter of 2023 from the same products.

Larry Heaton: Further validating our strategy to fuel growth through the expansion of our innovative product portfolio. We expect this rate of year over year growth to accelerate during the year.

Larry Heaton: During our last earnings call, we laid out our strategic roadmap to drive growth during 2024 and beyond, and today, I'll provide an update on the progress we've made on a number of those initiatives. I'll start with our commercial organization.

Larry Heaton: During our last earnings call, we laid out our strategic roadmap to drive growth during 2024 and beyond and today I'll provide an update on the progress we've made on a number of those initiatives.

Larry Heaton: I'll start with our commercial organization.

Larry Heaton: Late last year, we recruited a new industry veteran head of sales. During the first quarter, he has been taking steps to optimize our commercial strategy and tactics to drive accelerating growth through the balance of the year and beyond to ensure the long-term success of our recently expanded product portfolio. With respect to our U.S. direct sales force, we continue to see the positive benefits of our maturing team, with our average sales rep having now been in their role for over a year.

Larry Heaton: Late last year, we recruited a new industry veteran head of sales.

Larry Heaton: During the first quarter. He has been taken steps to optimize our commercial strategy and tactics to drive accelerating growth through the balance of the year and beyond to ensure the long term success of our recently expanded product portfolio.

Larry Heaton: With respect to our U S. Direct sales force, we continue to see the positive benefits of our maturing team with our average sales rep, having now been in their role for over a year.

Larry Heaton: With the increasing penetration of our products into ecline and small animal veterinarian practices, we're seeing the impact of cross-selling opportunities. The trust we've developed with customers through their utilization of Zomedica products to date has allowed our representatives to successfully educate veterinarians on the benefits of bringing additional Zomedica technologies into their practice, furthering our penetration within our existing customer base. Another of our commercial initiatives is continued international expansion. We currently generate about 14% of our revenue by selling just RSEC and PulseVet products in certain international markets.

Larry Heaton: With the increasing penetration of our products into equine and small animal veterinarian practices.

Larry Heaton: Seeing the impact of cross selling opportunities.

Larry Heaton: Trust, we have developed with customers through their utilization of somatic of products to date has allowed for our representatives to successfully educate veterinarians are the benefits of bringing additional medical technologies into their practice furthering our penetration within our existing customer base.

Larry Heaton: Another of our commercial initiatives as continued international expansion.

Larry Heaton: We currently generate about 14% of our revenue by selling just RCC and pulse that products in certain international markets.

Larry Heaton: As I'll discuss in more detail in just a minute, in the near term, we'll be expanding our international commercialization efforts to include both VetGuardian and Truforma, followed by TruView's international launch a little later this year. Turning to an update on progress made within each of our key product lines, I'll start with the Assisi Loop family of products, in addition to adding the Assisi Loop products to our existing pulse-fed distributors and to new distributors as we establish them.

Larry Heaton: As I'll discuss in more detail in just a minute in the near term will be expanding our international commercialization efforts to include both that Guardian, Andrew former.

Larry Heaton: Followed by <unk> International launch a little later this year.

Larry Heaton: Turning to an update on progress made within each of our key product lines.

Larry Heaton: I'll start with the FCC Luke family of products.

Larry Heaton: In addition to adding the SEC loop products to our existing wholesale distributors.

Larry Heaton: And to new distributors as we establish them. We're also launching the OCC products into 10, and additional international markets through Amazon online channels this quarter.

Larry Heaton: We're also launching the Assisi products into 10 additional international markets through Amazon online channels this quarter. Work continues on expanding this innovative and proprietary targeted pulsed electromagnetic field technology into additional products beyond our current loops, dental loops, loop lounges, and calmer canine devices. Now for PulseFed.

Larry Heaton: Work continues on expanding this innovative and proprietary targeted pulsed electromagnetic field technology into additional products beyond our current lubes dental loops loop lounges, and calmer canine devices.

Larry Heaton: Now for prospects.

Larry Heaton: The primary driver of growth with PulseFed is the growth of our installed base of systems within veterinarian practices. As of the end of the first quarter, we now have over 2,000 systems in active use by customers spread across all 50 states in the United States, as well as 30 countries around the world. As our maturing sales organization gains more experience in the field, and our marketing efforts continue to extend their reach to small animal veterinarians, we expect to gain entry into many new practices, allowing us to continue to grow the installed base and drive increased utilization of our high-margin consumables.

Larry Heaton: The primary driver of growth with pulse that is the growth of our installed base of systems within veterinary practices.

Larry Heaton: As of the end of the first quarter. We now have over 2000 systems in active use by customers spread across all 50 states in the United States as well as 30 countries around the world.

Larry Heaton: Is that are maturing sales organization gains more experience in the field and our marketing efforts continued to extend their reach to small animal veterinarians, we expect to gain entree into many new practices, allowing us to continue to grow the installed base.

Larry Heaton: And drive increased utilization of our high margin consumables.

Larry Heaton: In support of those efforts, we're working to develop quality research to help expand clinical indications for use. For example, during the first quarter, multiple peer-reviewed reports of clinical studies were published that reinforced post-vet shockwave therapy as being an optimal solution for working dogs suffering from fibrotic myopathy and for horses afflicted with bleeders and, more recently, equine asthma.

Larry Heaton: And supporting those efforts, we are working to develop quality research to help expand clinical indications for use for example, during the first quarter multiple peer reviewed reports of clinical studies were published it reinforced full spec shockwave therapy as being an optimal solution for working dogs suffering from fibrotic myopathy.

Larry Heaton: And for horses afflicted with Bleeder said more recently, he quite asthma and.

Larry Heaton: In addition, we're awaiting eagerly the publication of multiple studies evaluating the potential of PulseVet to delay or even effectively prevent the onset of osteoarthritis in dogs. With these studies in hand, our marketing team can translate the proven benefits of PulseFed across these untapped use cases to help drive increased usage. Now, let's turn to TrueView.

Larry Heaton: In addition, we're awaiting easily the publication of multiple studies evaluating the potential of <unk> to delay or even effectively prevent the onset of osteoarthritis in dogs.

Larry Heaton: These studies in hand, our marketing team can translate the proven benefits of full stack across these untapped use cases to help drive increased usage.

Larry Heaton: A key growth driver for our TrueView digital cytoscopy platform is the commercial launch into international markets. To facilitate that, we're working on securing CE mark certification and expect that to be achieved soon. With a CE market in hand, we would be allowed to introduce TrueView throughout the European region, significantly expanding our market opportunity outside of the U.S. Another development we're excited about with TrueView is the introduction of AI interpretations of scanned images, which we expect to launch later this year.

Larry Heaton: Now, let's turn to attribute a key growth driver for our true view digital <unk> platform is the commercial launch at the international markets to facilitate that we're working on securing CE Mark certification and expect that to be achieved soon with.

Larry Heaton: With a CE mark in hand, we would be allowed to introduce true view throughout the European region significantly expanding our market opportunity outside of the U S.

Larry Heaton: Another development. We're excited about what you view is the introduction of AI interpretations of scan images, which we expect to launch later this year.

Larry Heaton: This will complement in-office viewing of images and telepathology reports that are currently being provided by the system and will add a new source of recurring revenue to the monthly subscriptions and charges for on-demand pathology reports that are currently generating revenue. Now, we always want to put our best foot forward with customers, especially with a new product, and so we've limited our launch activities with TrueView just a bit, pending the addition of the AI interpretation service.

Larry Heaton: This will complement and office viewing of images and tell a pathology reports that are currently being provided by the system and will add a new source of recurring revenue to the monthly subscriptions and charges for on demand apology reports that are currently generating revenue.

Larry Heaton: Now, we always want to put our best foot forward with customers, especially with the new product and so we've limited our launch activities with Tribune just a bit.

Larry Heaton: The addition of the AI interpretation service.

Larry Heaton: This has allowed us to work collaboratively with early adopting customers, and we've incorporated several enhancements to the system as a result of customer feedback. Now, turning to an update on the progress made with Truforma. We continue to be encouraged by the growing adoption of Truforma as we're seeing an uptick in increases in our installed base. Importantly, we're seeing expansion into equine veterinary practices as we benefit from our growing portfolio penetration across both equine and small animal veterinary practices.

Larry Heaton: This has allowed us to work collaboratively with early adopting customers and we've incorporated several enhancements to the system as a result of customer feedback.

Larry Heaton: Now turning to an update on the progress made with true format.

Larry Heaton: We continue to be encouraged by the growing adoption of <unk> pharma as we're seeing an uptick in increases in our installed base importantly, we're seeing expansion into equine veterinary practices as we benefit from a growing portfolio of penetration across both equine and small animal best practices.

Larry Heaton: In mid-March, we announced the publication of research supporting the capabilities of the Truforma platform specifically for the diagnosis of feline hyperthyroidism compared to the current gold standard assays, which are widely used by reference labs globally. The authors of the publication concluded that our Truforma assay more accurately identifies hyperthyroidism in cats than the current gold standard, thereby improving the early diagnosis of feline hyperthyroidism.

Larry Heaton: In mid March we announced the publication of research supporting the capabilities of the two pharma platform specifically for the diagnostics diagnosis of feline hyperthyroidism compared to the current gold standard assays, which are widely used by reference labs globally.

Larry Heaton: The authors of the publication concluded that our two former assay more accurately identifies hybrid fibroid ism and cats than the current gold standard, thereby improving the early diagnosis of feline hyperthyroidism.

Larry Heaton: Not only do these findings highlight the value of Truforma's assay in terms of its ability to deliver more accurate results and avoid misdiagnosis, but it could do so in less than 20 minutes within the veterinary clinic, saving the vet a significant amount of time when attempting to make a diagnosis by eliminating the need to have samples sent out to a reference lab. These results are highly encouraging and validate the clinical and economic benefits that the platform can bring to a veterinarian's practice.

Larry Heaton: Not only did these findings highlight the value of two farm is assay in terms of its ability to deliver more accurate results.

Larry Heaton: And avoid misdiagnosis it could do so in less than 20 minutes within the veterinary clinic saving about a significant amount of time when attempting to make a diagnosis by eliminating the need to have samples sent out to a reference lab.

Larry Heaton: These results are highly encouraging and validate the clinical and economic benefits that the platform can bring to our veterinarians practice.

Larry Heaton: One of the core benefits of our acquisition of Corvo Biotechnologies, the original developer of Truforma, was our ability to accelerate the development and commercialization of new assays. And during 2024, we expect to launch at least five new assays during the course of the year for both small animals and horses. But beyond the development and commercialization of new assays, the acquisition of QBT enabled us to do a number of things to improve the platform and the value that customers can derive from it.

Larry Heaton: One of the core benefits of our acquisition of Corvo Biotechnologies, the original developer of true format.

Larry Heaton: Our ability to accelerate the development and commercialization of new assays and during 2024, we expect to launch at least five new assays. During the course of the year for bulk small animals and horses.

Larry Heaton: But beyond development and commercialization of new assays the acquisition of GBT enabled us to do a number of things to improve the platform and the value the customers can derive from it.

Larry Heaton: Since you're definitely seeing the investments we're making reflected in our overall operating expenses and margins, I'd like to share what those investments are getting us. First, what we call our four res upgrades. As you know, we launched our first combination, or multiplex, cartridge, including both cabalamine and folate assays, in the fourth quarter of last year. Now, this has necessitated upgrading our existing Truforma instruments in the field to accommodate combining up to three assays in a single cartridge. 4Res stands for 4 resonators.

Larry Heaton: Since you're definitely seeing the investments, we're making reflected in our overall operating expenses and margins I'd like to share what those investments are getting us.

Larry Heaton: First what we call our <unk> upgrades.

Larry Heaton: As you know, we launched our first combination or multiplex cartridge, including bulk <unk> and folate assays in the fourth quarter of last year.

Larry Heaton: Now this necessitated upgrading our existing true form of instruments in the field to accommodate combining up to three assays in a single cartridge.

Larry Heaton: 4 resonators equals 3 for assays plus a control. We've now upgraded nearly all of our existing install base, and all new placements get the new model. In addition, each of the existing cartridges required revision to work in the 4S environment.

Larry Heaton: <unk> stands for four resonators for resonators equals three for assays.

Larry Heaton: The control.

Larry Heaton: We've now upgraded nearly all of our existing install base and all new placements get the new model in.

Larry Heaton: In addition, each of the existing cartridges required revision to work in the <unk> environment. This has been accomplished with auto saw ACTH canine pancreatic lipase <unk> fully assays with the balance of our menu being revised now.

Larry Heaton: This has been accomplished with cortisol, EACTH, canine pancreatic lipase, cobalamin, and folate assays, with the balance of our menu being revised now. Additionally, we leverage the human version of the Truforma instrument. When we acquired QBT, we received a significant number of Omnia instruments, which were intended for human use and are all 4Res capable, rather than keep all of them on the shelf with the rest of the assets of the human-oriented business ready for future monetization.

Larry Heaton: Second.

Larry Heaton: Leveraging the human version of the true form of instrument.

Larry Heaton: When we acquired <unk>, we received a significant number of Omnia instruments, which were intended for human use center all for less capable.

Larry Heaton: Rather than keep all of them on the shelf with the rest of the assets of the human oriented business ready for future monetization.

Larry Heaton: We're converting them into two-format instruments to meet our growing demand for placements, allowing us to save money versus manufacturing new ones from component parts. Third, over-the-air updates. Each time we launch a new assay, a software update for our installed base is needed to add the capability to run the new assay and provide appropriate reference ranges and clinical support, etc. But, up until now, this has required an in-person visit from our sales team with a USB stick to upgrade the software.

Larry Heaton: We're converting them into two former instruments to meet our growing demand for placements, allowing us to save money versus manufacturing new ones from component parts.

Larry Heaton: Sure over the air updates each time, we launch a new assay a software update for our installed base as needed to add the capability to run the new assay and provide appropriate referenced ranges in clinical support et cetera.

Larry Heaton: Up to now this has required an in person visit from our sales team with a USB stick to upgrade the software.

Larry Heaton: In the near future, we expect to release over-the-air software and firmware update capabilities to our customers, who will then be prompted when a new software update is available on the device and will be able to apply the update with the push of a button, demonstrating our dedication to accelerating the delivery of highly beneficial assays on the Truforma diagnostic platform. These capabilities further reduce barriers for customer adoption of newly launched assays, as well as provide efficient means for delivering timely enhancements for existing assays to customers.

Larry Heaton: Shortly we expect to release over the year software and firmware update capabilities to our customers who will then be prompted when a new software update is available on the device and we'll be able to acquire the update with the push of a button demonstrating our dedication to accelerating delivery of highly beneficial assays on the <unk> pharma diagnostic platform.

Larry Heaton: These capabilities further reduce barriers for customer adoption of newly launched assays as well as provide efficient means for delivering timely enhancements for existing assays to customers.

Larry Heaton: With the growth of the Trueforma installed base and the growth of the platform menu with recent assay launches, the timing couldn't be better for releasing this capability for Enhancements of Existing Assays. Since the commercial launch of the Trueforma Diagnostic Platform, we've learned a great deal about how our assays perform in the field, and we're always looking for ways to make them better. While developing new assays, Zomedica's team of specialized immunologists and microfluidics engineers discovered optimizations that can be applied to our existing assays, including an expansion of the dynamic range.

Larry Heaton: With the growth of the two former installed base and the growth of the platform menu with recent assay launches the timing couldnt be better for releasing this capability.

Larry Heaton: For enhancements of existing assays.

Larry Heaton: Since the commercial launch of the true form of diagnostic platform, we've learned a great deal about how our.

Larry Heaton: About how our assets perform in the field.

Larry Heaton: And we're always looking for ways to make them better while developing new assays somatic his team of specialized immunologists in Microfluidics engineers have discovered optimizations that can be applied to our existing assays, including an expansion of the dynamic range. For example, we expect to launch an improvement that will extend the dynamic range for one.

Larry Heaton: For example, we expect to launch an improvement that will extend the dynamic range for one of our most popular assays, canine cortisol, during the second quarter, which will improve accuracy, precision, and diagnostic utility of it and others as they are developed. Also, we can extend the use of the cartridges by dating them. When cartridges are first released, they have a relatively limited expiration date.

Larry Heaton: Our most popular assays canine cortisol during the second quarter, which will improve accuracy precision and diagnostic utility.

Larry Heaton: Yes, and others as they are developed.

Larry Heaton: Also we can extend the used by JD cartridges. Their first released they have a relatively limited exploration date work continues on an ongoing basis to extend the data which allows for larger lot sizes to be produced while not worrying about scrap costs, both of which contribute to improving margins at <unk>.

Larry Heaton: Work continues on an ongoing basis to extend the dating, which allows for larger lot sizes to be produced while not worrying about scrap costs, both of which contribute to improving margins. And finally, the development of new assays. Of course, the most important of our efforts are in the development of new assays for cats, dogs, and, more recently, horses.

Larry Heaton: Finally development of new assays of course, the most important of our efforts is in the development of new assays for cats dogs and more recently horses, we expect to launch at least five new assays. This year with two assays for horses to for dogs and one for cats with many more in development for launch next year.

Larry Heaton: We expect to launch at least five new assays this year, with two assays for horses, two for dogs, and one for cats, with many more in development for launch next year. With these added benefits and planned improvements to the platform and our offerings, we expect that you will see that the investments represent money well spent, and we are very excited about what is to come from True Forma as we move forward. Turning now to an update on VetGuardian.

Larry Heaton: With these added benefits and planned improvements to the platform at our offerings. We expect that you could see that the investments represent money well spent and we are very excited about what is to come from to form up as we move forward.

Larry Heaton: During the quarter, we saw strong adoption trends for VetGuardian as more veterinarians began to leverage the platform's capabilities within their practice. In fact, about a quarter of the clinics our reps sold VetGuardians to in the first quarter bought two or more monitors up front. As you may recall, our MyZomedica web portal can accommodate up to eight monitors at a time on a single screen. And in fact, during the first quarter, we had one customer who purchased eight monitors. Incidentally, our published Total Addressable Market Calculations use only one unit per customer to size the potential market.

Larry Heaton: Turning now to an update on vet Guardian.

Larry Heaton: During the quarter, we saw strong adoption trends revert Guardian.

Larry Heaton: More veterinarians have.

Larry Heaton: Begun to leverage the platforms capabilities within their practices.

Larry Heaton: A quarter of the clinics, our rep sold that Guardians two in the first quarter bought two or more monitors upfront.

Larry Heaton: As you May recall, our MISO medica web portal can accommodate up to eight monitors at a time on a single screen.

Larry Heaton: And in fact during the first quarter, we had one customer who purchased eight monitors.

Larry Heaton: Incidentally, our published total addressable market calculations.

Larry Heaton: So we're very pleased with the multiple monitor purchases as they represent market expansion. Our progress with VetGuardian speaks to the value customers are seeing from this innovative product and points to the increasing awareness of it as a transformative technology that helps veterinarians ensure pets are safe and supervised at the clinic during the times that they are at their most vulnerable. Additionally, on Monday, we announced the achievement of a significant milestone, the CE marking for VetGuardian.

Larry Heaton: Use only one unit per customer to size the potential market. So we're very pleased with the multiple monitor purchases as they represent market expansion.

Larry Heaton: Our progress with the Guardian speaks to the value customers are seeing from this innovative product and points to the increasing awareness of it as a transformative technology that helps veterinarians ensure pets are safe and supervised at the clinic.

Larry Heaton: During the times that they are at their most vulnerable.

Larry Heaton: This certification allows the platform to be sold throughout the EU, the European Union, and select other countries that use CE marking as a sort of validation, giving veterinary professionals who are seeking an advanced solution to elevate patient care and streamline practice operations access to this innovative technology.

Larry Heaton: Additionally, on Monday, we announced the achievement of a significant milestone CE, marking for <unk> Guardian. This certification allows us the platform to be sold throughout the EU the European Union and select other countries that use CE, marking is sort of validation given veterinary professionals, who are seeking an advanced solution to elevate patient care and streamlined.

Larry Heaton: With the CE mark in hand, we're turning our attention to a formal international launch as we evaluate and onboard additional distribution partners in this region to help meet demand for this product, which we're already seeing. We're also excited about our development projects to bring VetGuardian to the equine market. Given our deep penetration within the equine vet market with PulseVet and now with Truformel, we believe our launch of an equine VetGuardian option in late 2024 will be very well received, help drive accelerated adoption by vets in 2025 and beyond, and set the stage for potential expansion of the market opportunity to horse trainers, breeders, and owners.

Larry Heaton: Practice operations access to this innovative technology with.

Larry Heaton: With CE Mark in hand, we're turning our attention to our formal international launch as we evaluate and onboard additional distribution partners.

Larry Heaton: In this region.

Larry Heaton: To help meet demand for this product.

Larry Heaton: Which we're already seeing.

Larry Heaton: We're also excited about our development projects to bring that guardian to the equine market.

Larry Heaton: Given our deep penetration within the equine vet market with pulse fat and now withdrew formal we believe our launch of an equal in bed Guardian option in late 2024 will be very well received.

Larry Heaton: Accelerating adoption by events in 2025 and beyond.

Larry Heaton: At the same store.

Larry Heaton: Central expansion of the market opportunity.

Larry Heaton: <unk> trainers breeders and owners.

Larry Heaton: Now, as we just discussed, we have a significant number of irons in the fire as it relates to innovation within our product portfolio. We have a massive addressable market that is largely untapped, and between our commercial and product development efforts, we have an exciting opportunity to drive growth for years to come, building to an annual run rate of $50 million in revenue by the end of 2025 and increasing to an annual run rate of over $100 million two years after that.

Larry Heaton: Now as we just discussed we have a significant number of irons in the fire as it relates to innovation within our product portfolio.

Larry Heaton: We have a massive addressable market that is largely untapped.

Larry Heaton: And between our commercial and product development efforts have an exciting opportunity to drive growth for years to come.

Larry Heaton: Building to an annual run rate of $50 million in revenue by the end of 2025 and increasing to an annual run rate over $100 million too.

Larry Heaton: Two years after that.

Larry Heaton: In addition, we continue to look for opportunities to supplement our portfolio through business development and M&A activities. Leveraging our well-capitalized balance sheet, we will remain opportunistic, focusing on acquisitions and other business development deals to add products that meet our five pillars, improving the quality of care for the pet, the satisfaction of the pet parent, as well as enhancing the workflow, cash flow, and profitability of the best practice. And importantly, it would also be accretive to earnings, shortening our timeline to profitability.

Larry Heaton: In addition, we continue to look for opportunities to supplement our portfolio through business development and M&A activities.

Larry Heaton: Bridging our well capitalized balance sheet, we will remain opportunistic focusing on acquisitions and other business development deals to add products that meet our five pillars, improving the quality of care for the pet the satisfaction of the pet parent as well as enhancing the workflow cash flow and profitability of the best practice and importantly would also be accretive to earn.

Larry Heaton: <unk> shortening our timeline to profitability.

Larry Heaton: Let's talk a little bit about operations. Following our acquisition of QBT, we took steps to optimize our new Plymouth, Minnesota facility. We decreased our footprint within the facility by 17% by vacating one of the suites we had acquired and no longer needed.

Larry Heaton: So let's talk a little bit about operations. Following our acquisition of <unk>, we took steps to optimize our new Plymouth, Minnesota facility, we decreased our footprint.

Larry Heaton: Recently within the facility by 17% by vacating one of the Sweet suite acquired and no longer needed.

Larry Heaton: On the investment side, we also acquired and are in the process of installing cutting-edge automated robotic equipment, allowing us to produce a million cartridges per year in a single shift, which would produce, in turn, tens of millions of dollars of revenue. While we invested over $4 million in this equipment, we expect this technology and facility optimization to allow us to improve margins as Truforma continues to scale. Another focus area within operations is the continued protection of our robust portfolio of intellectual property, including patents and trademarks.

Larry Heaton: On the investment side, we also acquired and are in the process of installing cutting edge automated robotic equipment, allowing us to produce 1 million cartridges per year in a single shift.

Larry Heaton: It would reduce it turn tens of millions of dollars of revenue.

Larry Heaton: While we invested over $4 million in this equipment, we expect this technology and facility optimization to allow us to improve margins is through pharma continues to scale.

Larry Heaton: Another focus area within operations is the continued protection of our robust portfolio of intellectual property, including patents and trademarks.

Larry Heaton: As announced last week, we were recently issued a number of key U.S. patents related to Truforma, which brings our total Zomedica IP portfolio to 188 U.S. and international patents, with 62 additional patents pending and 131 trademarks. Now, we issued that press release about a week ago or so, but these numbers are already out of date, as we just learned of several additional international patents and additional trademarks issued since that release, bringing our total IP portfolio as of today to 201 issued U.S. and international patents, with 61 patents pending and 133 trademarks.

Larry Heaton: As announced last week, we were recently issued a number of key U S patents related to <unk> pharma, which brought our total Medicare IP portfolio to 188 U S and international patents with 62 additional patents pending at 131 trademarks.

Larry Heaton: So we issued that press release about a week ago or so but these numbers are already out of date as we just learned of several additional international patents at additional trademarks issued since that release, bringing our total IP portfolio as of today to 201 issued U S and international patents with 61 patents.

Larry Heaton: Pending at 133 trademarks.

Larry Heaton: You know, while the investment in IP, Portfolio doesn't directly correlate to increased sales, it does protect our investment in the development of innovative solutions, which enables us to devote resources to tapping into new market opportunities without the concern of fast followers attempting to copy and leverage our technology. Before I hand the call to Peter, I want to reiterate that we're proud of what we accomplished during the first quarter. We are in a great position to capitalize on the significant market opportunity that exists during the balance of this year and beyond. With that, I'll hand it over to Peter for the financial review and corporate update. After his remarks, I'll come back to provide some closing comments. Peter? Thanks, Larry.

Larry Heaton: While the investment in IP.

Peter: Portfolio doesn't directly correlate to increase sales.

Peter: Does protect our investment in the development of innovative solutions, which enables us to devote resources to tapping into new market opportunities without the concern of fast followers attempting to copy and leverage our technology.

Larry Heaton: Before I hand, the call to Peter I want to reiterate that we are proud of what we accomplished during the first quarter. We're in a great position to capitalize on the significant mark to market opportunity that exists during the balance of this year and beyond.

Larry Heaton: With that I'll hand, it over to Peter for the financial review and corporate update after his remarks I'll come back to provide some closing comments Peter.

Peter L. Donato: Thanks, Larry, and good afternoon, everyone. Total revenue for the first quarter of 2024 was $6.3 million. That's a record for the first quarter and an increase of 14% over the prior year quarter, driven by solid growth across both segments of our business. As Larry mentioned previously, we are pleased to see the increase in growth rates year over year, especially with the products that were sold in 2022, 2023, and 2024. First quarter 2024 capital revenues were $2.2 million.

Peter: Thanks, Larry and good afternoon, everyone total revenue for the first quarter of 2024 with $6 $3 million, that's a record for first quarter and an increase of 14% over the prior year quarter.

Peter L. Donato: Driven by solid growth across both segments of our business.

Peter L. Donato: As Larry mentioned previously we are pleased to see the increase in growth rates year over year, especially with the products that were sold in 2022 2023 and 2024.

Peter L. Donato: That's up 30% from $1.7 million in the first quarter of 2023. We continue to be pleased with the number of devices being put in service in the field, particularly in small animal and mixed veterinarian practices, which continue to be a focus area of our company.

Peter L. Donato: First quarter 2024 capital revenues were $2 2 million, that's up 30% from $1 $7 million in the first quarter of 2023, we.

Peter L. Donato: We continue to be pleased with the number of devices being put in service in the field, particularly in small animal and mixed that practices that continue to be a focus area of our company.

Peter L. Donato: Keep in mind that capital sales are a good leading indicator of future high-margin consumables business. It is important to note that this quarter included solid contribution from VETGuardian, which had limited sales during the first quarter of 2023. As a reminder, VETGuardian sales began with a capital purchase.

Peter L. Donato: Keep in mind that capital sales are a good leading indicator of future high margin consumables business.

Peter L. Donato: It is important to note that this quarter included solid contribution from that Guardian, which had limited sales during the first quarter of 2023.

Peter L. Donato: On the first anniversary of that sale, a monthly recurring revenue stream for monitoring services kicks in, and that will contribute to increased consumables revenue as we move further into 2024. In addition to the classic recurring revenue stream, we expect to continue to see a snowball effect on capital revenue for VET Guardian as more practices purchase a second, third, or, as Larry said just earlier, an eighth monitor. Repeat purchasing is happening at an accelerated rate.

Peter L. Donato: As a reminder, net guardian sales began with a capital purchase on the first anniversary of that sale a monthly recurring revenue stream for monitoring services kicks in that will contribute to increased consumables revenue as we move further into 2024.

Peter L. Donato: In addition to the classic recurring revenue stream, we expect to continue to see a snowball effect on capital revenue for Vet Guardian as more practices purchase a second third or as Larry said, just earlier and eighth monitor and.

Peter L. Donato: Repeat purchasing is happening at an accelerated rate.

Peter L. Donato: In the first quarter, consumables revenue grew to $4 million. That's an increase of approximately 7% over the first quarter of 2023 revenues, which checked in at about $3.8 million. Consumable revenue represented 64% of our quarterly total revenue. For the first quarter therapeutic device segments revenue from PulseFed and Assisi products, this grew to five and a half million dollars, an increase of approximately nine percent over the first quarter of 2023 revenues of five point one million dollars. This was driven by continued adoption and utilization of PulseFed.

Peter L. Donato: In the first quarter consumables revenue grew to $4 million, that's an increase of approximately 7% over the first quarter of 2023 revenues, which checked in at about $3 $8 million.

Peter L. Donato: Consumable revenue represented 64% of our quarterly total revenue.

Peter L. Donato: Our first quarter therapeutic device segments revenue from <unk> products. This grew to $5 $5 million, an increase of approximately 9% over the first quarter of 2023 revenues of $5 1 million and this was driven by continued adoption and utilization of Paul Stat.

Peter L. Donato: First quarter diagnostic segment revenues were about $744,000. That's an increase of 87% over the first quarter of last year. This was driven by significant year-over-year growth from VetGuardian and Truforma. Within the diagnostic segment, capital revenues grew over 200%, and consumable revenue grew by more than 50%. Gross profit for the first quarter of 2024 was $4.1 million, compared to $3.8 million in the first quarter of last year. Gross profit margin for the quarter was 66%, and that's in line with previously stated guidance, which we gave a range of 65% to 70%. Adjusting for our Corvo acquisition and other one-time items brings gross margins for the quarter to over 69 percent, more in line with historical levels.

Peter L. Donato: First quarter diagnostics segment revenues were about $744000, that's an increase of 87% over the first quarter of last year. This was driven by significant year over year growth from Vet Guardian and drew format within the diagnostics segment capital revenues grew over 200%.

Peter L. Donato: And consumable revenue grew by more than 50%.

Peter L. Donato: Profit for the first quarter of 2024 was $4 $1 million compared to $3 8 million in the first quarter of last year.

Peter L. Donato: Gross profit margin for the quarter was 66% and Thats in line with previously stated guidance, which we gave a range of 65% to 70% at.

Peter L. Donato: Adjusting for our <unk> acquisition and other one time items Springs gross margins for the quarter to over 69% more in line with historical levels.

Peter L. Donato: Operating expenses for the first quarter of this year were $14.5 million compared to $11.3 million in the same period of 2023, an increase of $3.2 million. When adjusted for one-time, non-recurring charges, and expenses associated with ongoing QBT operations, total operating expenses were approximately $12.6 million. And we continue to expect these operating expenses as a percentage of total revenue to decrease throughout the balance of this year. In the first quarter, we doubled our investment in R&D, with expenses checking in at around $1.8 million from last year's $900,000.

Peter L. Donato: Operating expenses for the first quarter of this year were $14 5 million compared to $11 $3 billion in the same period of 2023, an increase of $3 $2 million.

Peter L. Donato: When adjusted for onetime nonrecurring charges and expenses associated with ongoing <unk> operations total operating expenses were approximately $12 $6 million.

Peter L. Donato: And we continue to expect these operating expenses as a percentage of total revenue to decrease throughout the balance of this year.

Peter L. Donato: In the first quarter, we doubled our investment in R&D with expense checking in at around $1 8 million from last year's $900000.

Peter L. Donato: While some of these increases were driven by ongoing operation and integration costs from our acquisition of QBT, I'm pleased to report that we continue to make investments across our whole product portfolio, including CE marking for Trueforma, TrueView, and VetGuardian products, incorporating artificial intelligence into TrueView and Vanguardian products, and developing new TrueForma assays for launch later this year. In the first quarter, sales and marketing spend was $4.1 million compared to $3.4 million during the same period of 2023.

Peter L. Donato: Some of these increases were driven by ongoing operation and integration costs from our acquisition of <unk> I am pleased to report that we continue to make investments across our whole product portfolio that includes CE, marking for true forma true view and VAT Guardian products.

Peter L. Donato: Incorporating heart official intelligence into <unk>, and Guardian products and developing new pro forma assays for launch later this year.

Peter L. Donato: In the first quarter sales and marketing spend was $4 $1 million compared to $3 4 million during the same period of 2023.

Peter L. Donato: The increase was primarily due to our growing sales organization and higher trade show expenses associated with the two largest animal trade shows that are held annually in the first quarter of the year. For the first quarter of 2024, G&A expense was $8.6 million, compared to $7 million during the first quarter of 2023. The increase was almost exclusively driven by professional fees for specialized accounting, tax, and audit work associated with accounting for acquisitions, including those that were made late last year. We also had additional fees associated with ongoing programs related to regaining and maintaining compliance with the New York Stock Exchange.

Peter L. Donato: The increase was primarily due to our growing sales organization and higher trade show expenses associated with the two largest animals trade shows that are held annually in the first quarter of the year.

Peter L. Donato: For the first quarter of 2020 for G&A expense was $8 6 million <unk>.

Peter L. Donato: Compared to $7 million during the first quarter of 2023.

Peter L. Donato: The increase was almost exclusively driven by professional fees for specialized accounting tax and audit work associated with accounting for acquisitions, including those that were made late last year.

Peter L. Donato: We also had additional fees associated with ongoing programs related to regain and maintain compliance with the New York stock exchange.

Peter L. Donato: Net loss for the first quarter was $9.2 million, or a penny a share, compared to a net loss of $6.4 million, or 0.007 per share, in the first quarter of 2023. Non-GAAP EBITDA loss, which includes adjustments for stock compensation, for the three months ended March 31, 2024, was $7.5 million, compared to a loss of $4.1 million for the same period in 2023. When adjusting for non-recurring items, our adjusted non-GAAP EBITDA loss was $6.2 million.

Peter L. Donato: Net loss for the first quarter was $9 $2 million or a penny a share compared to a net loss of $6 4 million or <unk> <unk> seven per share in the first quarter of 2023.

Peter L. Donato: non-GAAP EBITDA loss, which includes adjustments for stock compensation for the three months ended March 31, 2024 was $7 5 million.

Peter L. Donato: Compared to a loss of $4 1 million for the same period in 2023, when adjusting for nonrecurring items, our adjusted non-GAAP EBITDA loss was $6 $2 million and when further adjusted for ongoing TVT integration and associated direct labor costs the loss falls to approximately five three.

Peter L. Donato: And when further adjusted for ongoing QBT integration and associated direct labor costs, the loss falls to approximately $5.3 million. Turning to the balance sheet, So Medica ended the first quarter with $90.9 million in cash, cash equivalents, and available for sale securities. Cash used in the first quarter was about $9.6 million and included operating expenses related to the QBT acquisition and other professional service fees, which I mentioned earlier when discussing our G&A expenses. The remaining $4.4 million was used for operating expenses during the quarter.

Peter L. Donato: Million.

Peter L. Donato: Turning to the balance sheet. So America ended the first quarter with $99 million in cash cash equivalents and available for sale securities.

Peter L. Donato: Cash used in the first quarter was about $9 6 million and included operating expenses related to the <unk> acquisition and other professional service fees, which I mentioned earlier when discussing our G&A expenses.

Peter L. Donato: The remaining $4 $4 million, which used for operating expenses during the quarter.

Peter L. Donato: And as a reminder, we have zero debt. Now turning to guidance, we are reiterating the guidance that we provided earlier this year. We continue to expect four-year revenue in the range of $31 million to $35 million. We continue to be able to reach the low end of this guidance range through the strength of our therapeutic devices segment, with the remainder of the growth driven by the performance of our diagnostic segment.

Peter L. Donato: And as a reminder, we have zero debt.

Peter L. Donato: Now turning to guidance, we are reiterating the guidance.

Peter L. Donato: Guidance that we've provided earlier this year, we continue to expect full year revenue in the range of $31 million to $35 million.

Peter L. Donato: We continue to be able to reach the low end of this guidance range through through the strength of our therapeutic devices segment with the remainder of the growth driven by the performance of our diagnostics segment.

Peter L. Donato: Please remember, our business is impacted by seasonality, with the first quarter being the lowest and the majority of revenues coming in the back half of the year. We expect this trend to continue throughout 2024 with sequential increases in revenue as we progress throughout the year. Beyond growing revenue, we continue to be focused on profitability. As a reminder, we expect to achieve cash flow break even or profitability when we reach an annual run rate of revenue of approximately $50 million.

Peter L. Donato: Please remember our business is impacted by seasonality with the first quarter being the lowest and the majority of revenues coming in the back half of the year.

Peter L. Donato: We expect this trend to continue throughout 2024 with sequential increase sequential increases in revenue as we progress throughout the year.

Peter L. Donato: Beyond growing revenue, we continue to be focused on profitability. As a reminder, we expect to achieve cash flow breakeven or profitability. When we reach an annual run rate of revenue at approximately $50 million.

Peter L. Donato: And as we've been stating, we expect to achieve this at some point during late 2025. In 2024, we continue to expect the burn from cash to be $12 to $18 million, and this will include some potential capex during the year. And as I've stated previously, $25 to $35 million of total cash will burn before we turn positive, cash flow positive again, expected in late 2025. As you can see, our liquidity position will remain very strong with no immediate need to raise or borrow capital in the current markets. I'll now hand the call back over to Larry for final remarks and our Q&A session.

Peter L. Donato: And as we've been stating we expect to achieve that some point during late 2025.

Peter L. Donato: In 2024, we continue to expect the burn from from cash to be $12 million to $18 million nest will include some potential capex during the year and as I've stated previously $25 million to $35 million of total cash burn before we turn positive cash flow positive again.

Larry Heaton: And expected in late 2025.

Peter L. Donato: As you can see our liquidity position will remain very strong with no immediate need to raise our borrow capital in the current markets I will now hand, the call back over to Larry for final remarks, and our Q&A session.

Larry Heaton: As you can tell, we continue to be excited about the future of Zomatica. We followed the most successful year in company history with our best first quarter ever. To help continue that momentum, as outlined earlier, we have a significant number of initiatives in place to help drive growth in the business while doing the work behind the scenes to set ourselves up to achieve profitability.

Larry Heaton: Thanks Peter.

Larry Heaton: As you can tell we continue to be excited about the future of somatic.

Larry Heaton: We followed the most successful year in company history, with our best quarter for our best first quarter ever.

Larry Heaton: To help continue that momentum as outlined earlier, we have a significant number of initiatives in place to help drive growth in the business.

Larry Heaton: While doing the work behind the scenes to set ourselves up to achieve profitability.

Larry Heaton: So, let me end our prepared remarks by again thanking those that have been supportive of Zomedica, including animal health professionals and pet parents worldwide and the many, many shareholders of Zomedica. With that, I'd be happy to open the line for questions. Operator? Thank you. Ladies and gentlemen, we will now begin the question and answer session.

Larry Heaton: So let me end our prepared remarks by again thanking those that have been supportive of Zip medica, including animal health professionals.

Speaker Change: Parents worldwide and the many many shareholders medica with that I'd be happy to open the line for questions operator.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by 2. If you are using a speakerphone, please lift the handset before pressing any key. Once again, that is star 1 should you wish to ask a question.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear from Goldman <unk> Your request.

Operator: Questions will be taken in the order received.

Operator: Should you wish to cancel your request. Please press star followed by the two.

Operator: You are using a speaker phone please lift the handset before pressing keys.

Operator: Once again that is star one should you wish to ask a question.

Larry Heaton: Operator, if there are no questions on the line now, we can go to the web questions.

Operator: Operator, if theres not questions on the line now we can go to the web questions.

Operator: Yes, please. No questions as of...

Operator: Yes, please no questions as of the moment.

Speaker Change: Okay great.

Larry Heaton: Let's take some of these from the web. Here's one.

Speaker Change: So let's take some of these from the web.

Larry Heaton: Here's one how many of your products are approved for overseas sales.

Larry Heaton: How many of your products are approved for overseas sales? So currently, we are selling the SCC Loop products, which include the Loop, the Loop Lounge, the Dental Loop, and Palmer Canine. And we're also selling, of course, PulseFed system outside the U.S. for equine applications and now for small animal applications in an increasing way. We just received the CE Mark for VET Guardian. We expect the CE Mark for TruForma yet this quarter, and then we expect the TrueView CE Mark also shortly. So once we have the CE mark, that means that we can, they're quote, approved for sale, unquote. Not exactly like that, but it means the same thing.

Larry Heaton: So currently we are selling the FCC loop products, which include the loop the loop lounge, the dental loop calmer canine.

Larry Heaton: And we're also selling of course pulse that system.

Larry Heaton: Outside the U S.

Larry Heaton: The four equine applications and now four small animal applications in an increasing way.

Larry Heaton: We just received CE Mark for <unk>, we expect CE Mark for two four months.

Larry Heaton: Yes, this quarter and then we expect <unk> CE Mark also shortly.

Larry Heaton: So once we have CE mark that means that we can.

Larry Heaton: If approved for sale in both.

Larry Heaton: Not exactly like that but it means the same thing, but they are approved for us to sell into any country in the European Union.

Larry Heaton: But they're approved for us to sell them in any country in the European Union. And there are several other countries around the world that use the CE mark, even though they're not in the European Union. So we get a really large exposure to international opportunities with the CE mark, and then certain countries have their own individual requirements. And as we assess those markets for potential, we'll do whatever we need to get those approved, should the market opportunity be significant enough.

Larry Heaton: And there are several other countries around the world that use CE, mark even though theyre not in the European Union.

Larry Heaton: So we get a really large exposure to international opportunities with the CE, Mark and then certain countries have their own individual requirements and as we assess those markets for potential.

Larry Heaton: We'll do whatever we need to.

Larry Heaton: Get those approved should the market opportunity to be significant enough to for now well actually three as we sit here today.

Larry Heaton: So two for now, well, actually, three as we sit here today, four, four, and maybe five by the end of this quarter. Second, do you expect to be able to show profitability, it says probability, but profitability in the near future, especially with your EU approval? Pete, do you want to take that one?

Larry Heaton: Four.

Pete: For it maybe five by the end of this quarter.

Larry Heaton: Second do you expect to be able to show profitability probability, but profitability in the near future, especially with your EU approval. Pete you want to take that one I stated in my prepared remarks that we expect profitability on a cash flow basis, when the annual revenue reaches about $50 million for that.

Peter L. Donato: Yeah, I mean, it's stated in my prepared remarks that we expect profitability on a cash flow basis when annual revenue reaches about $50 million, or that run rate anyway, and we expect that in late 2025. With direct reference, you know, anything, whether it's EU approval or any kind of accelerated growth might move the timeline, but right now, we're going to hold to the guidance I just said. We have a couple of questions here, Pete, about the potential for a stock buyback. Would you like to comment on that?

Pete: Run rate any way and we expect that in late 2025 with direct reference.

Pete: Anything whether its EU approval or any kind of accelerated growth.

Peter L. Donato: Might move the timeline, but right now we're going to hold to the guidance I just said.

Peter L. Donato: Okay.

Peter L. Donato: We have a couple of questions on here Pete about the potential for a stock buyback do you want to comment on that yeah that seems to always be.

Peter L. Donato: Yeah, that seems to always be, you know, a top question, both when we're out in person and on the web on these calls. You know, Larry, we've been very clear that preserving our cash to cover our burn and reduce losses through interest income is very important to us. You know, we're investing in lots of commercial expansion, as you just went through. You went through in great detail the R&D and the new products. We highlighted a lot of that today. We want to be ready to acquire new companies and technologies without incurring any debt. We feel that, you know, this far outweighs any short-term gains.

Peter L. Donato: Top question, both though when we're out in person and on the web on these calls.

Peter L. Donato: Larry we've been very clear how that preserving our cash to cover our burn and reduce losses through interest income is very important to us.

Peter L. Donato: We're investing as you just went through lots of commercial expansion you went through in great detail, the R&D and the new products, we highlighted a lot of that today.

Peter L. Donato: Want to be ready to acquire new companies and technologies without incurring any debt.

Peter L. Donato: We feel that.

Peter L. Donato: This far outweighs any short term gains in share price that we would get from a share repurchase program.

unknown: Larry Heaton, Unknown Executive, Elif McDonald, Elise McDonald, Jeffrey Rowe, Elise McDonald

Peter L. Donato: Most cases, we just wouldn't have any satisfying depreciation and stock. So we don't believe there would be any buyback large enough to have a meaningful and long term impact on the stock price. We don't believe that that will help us regain compliance and certainly.

unknown: Wouldn't help us retain from clients over the long haul so long answer Larry to no buyback.

unknown: Yep. Here's one.

unknown: Yes.

Speaker Change: Where are most of your customers.

Speaker Change: Coast East coast or central.

Larry Heaton: Where are most of your customers? West Coast, East Coast, or Central?

unknown: So.

Larry Heaton: That's a good question. We currently sell, as I mentioned earlier, PulseFed is being sold in all 50 states in the United States. But since it's primarily been up until the last couple of years that it's been for equine applications, those tend to be clustered where there's a lot of equine horse activity. So a lot in Florida, a lot in California, a lot in the West, you know, fewer in, say, you know, some of the eastern areas, but it's in every 50, it's in all 50 states.

Speaker Change: That's a good question.

Larry Heaton: We currently sell as I mentioned earlier, we have pulse that being sold in all 50 states in the United States.

Larry Heaton: But since it's primarily been up until the last couple of years that its been for equine applications.

Larry Heaton: Those tend to be clustered where theres a lot of equine a horse activity. So a lot in Florida, a lot in California, a lot in the west.

Larry Heaton: Fewer than say.

Larry Heaton: Some of the eastern areas, but it's an everyday it's in all 50 states.

Larry Heaton: Truforma, of course, we don't disclose the installed base for Truforma, but I will tell you that as of a couple days ago, somebody asked me a question, and the answer is that we now sell Truforma in 47 states in the United States. And I chatted with Kevin Klass and suggested, why don't we make that an even 50? And so we've got to focus on the remaining three states. So pretty much. It's products that we sell to small animal vets. They should really be everywhere.

Larry Heaton: <unk> pharma of course, we don't disclose.

Larry Heaton: The installed base for to pharma, but I will tell you that.

Larry Heaton: As of a couple of days ago Somebody asked me a question and it's we now sell through pharma in 47 states in the United States.

Larry Heaton: I chatted with Kevin class since suggested why don't we make that an even 50 and so we've got to focus on.

Larry Heaton: The remaining three states.

Larry Heaton: So pretty much.

Larry Heaton: It's products that we sell to small animal vet those should really be everywhere.

Larry Heaton: There's a question here. Do we sell make sales in Virginia? And the answer is yes, we do both for Pulset and also for Truforma. I'd have to check about some of the other products. [inaudible] Peter, there are a couple of questions about where we stand with the American exchange. You want to take that one? Yeah, there's been no change.

Larry Heaton: There's a question on here do we sell.

Peter: Sales in Virginia, and the answer is yes, we do.

Peter: Both for pulse that and also for two former I'd have to check to see about some of the other products.

Larry Heaton: Peters.

Larry Heaton: Peter's equate Theres a couple of questions about where we stand with the American exchange do you want to take that one yes, theres been no changes since our public guidance, we had a good conversation with the exchange in March I think we had a press release that there's been no changes to that what that means is there is no specific.

Peter L. Donato: Yeah, there's been no changes since our public guidance. You know, we had a good conversation during the exchange in March. I think we had a press release. There's been no changes to that. What that means is there's no specific duties or tasks that the exchange has asked us to do. They, you know, head down operations, trying to get the stock to 20 cents organically. So they are monitoring us. They've made it clear. We continue to dialogue with them. At this time, there's been no updates other than the one I just said. Kevin

Peter L. Donato: Duties or tasks that the exchange is asked from us.

Peter L. Donato: Head down operating trying to get the stock to 'twenty organically. So they are monitoring us they've made it clear how we continue to dialogue with them at this time, there's been no update other than what I just said.

Peter L. Donato: Okay.

Larry Heaton: All right, let's see. Well, there are some questions about cash. How much cash do we have now? And what will be our lowest point?

Kevin: Alright, let's see.

Larry Heaton: Yes.

Peter L. Donato: Yeah, so in my prepared remarks, we ended the quarter with $90.9 million, and I mentioned that we had an operating cash burn of $4.4 million in Q1, and I also said that's likely the high watermark for the year. We've been very clear that we think the burn for the entire 2024 is $12 to $18 million. Now this is the second or third time we've guided folks to that, and we also, I think either in February or certainly in April, and I've repeated it again today, we believe the low watermark or cash will be $25 to $35 million from year-end cash, which was $100 million. So then the low watermark.

Kevin: Well there are some questions about cash.

Peter L. Donato: How much cash do we have now and what will be our low point yeah. So it was also in my prepared remarks that we ended the quarter with $99 million and I mentioned that we had an operating cash burn of $4 4 million in Q1 that analysis said, that's likely the high watermark for the year.

Peter L. Donato: We've been very clear that we think the burn for the entire 2024 is $12 million to $18 million now the second or third time.

Peter L. Donato: We've guided folks to that and we also I think either in February certainly in April and I repeated it again today, we believe the low watermark of cash will be $25 million to $35 million from year end cash, which was a $100 million.

Peter L. Donato: So then the low watermark for cash would be around 65 to... 65 to 75 million. Right?

Peter L. Donato: So then the low watermark for cash would be around 65 to $65 to $75 million right and that's not counting on any acquisitions of course, and what do we think about acquisitions Theres a couple of questions for that and I mentioned that in.

Larry Heaton: And that's not counting any acquisitions, of course. And what do we think about acquisitions? There are a couple of questions about that.

Larry Heaton: And I mentioned that in the remarks, and that is, we're going to be opportunistic. The products that we have today are capable of generating hundreds of millions of dollars of revenue over time. And we have a strategic plan that sets out a pathway for us to get to that $50 million milestone and the $100 million milestone that we have talked about previously. And that's with the products that we currently have. There is no reason, however, especially since our low cash mark, as you just heard from Peter, is going to be around $65 million, and we have no debt, there's no reason why we can't make additional acquisitions.

Larry Heaton: The remarks and that is we're going to be opportunistic.

Larry Heaton: Products that we have today are capable of generating hundreds of billions of dollars of revenue over time.

Larry Heaton: And we have a strategic plan that sets out a pathway for us to get to that $50 million milestone in the $100 million milestone that we have talked about previously and thats what the products that we currently have.

Larry Heaton: There is no reason, however, especially since our low cash Mark as you just heard from Peter is going to be around $65 million and we have no debt. There is no reason why we can't make additional acquisitions.

Larry Heaton: Of course, they need to fit with our product line and our portfolio. But also, what we're looking for now would be those that would be accretive to earnings so that we would get to profitability even sooner than we currently anticipate.

Larry Heaton: Course, they need to fit with our product line in our portfolio, but also what we look at for now would be those that would be accretive to earnings. So that we would get to profitability even sooner than we currently anticipate.

Larry Heaton: Have you solved the refrigeration obstacle with the Truforma cartridges in order to expand internationally? Because I mentioned on a previous call that sending internationally was made more difficult by the need for refrigeration. And it is, that is absolutely true.

Larry Heaton: Have you solved the refrigeration obstacle with the true form of cartridges in order to expand internationally because I had mentioned on a previous call that sending international was made more difficult by the need for refrigeration and it is that is absolutely true.

Larry Heaton: The need for refrigeration makes it a little more complex. However, as I've been out and talking to international distributors, particularly equine distributors, but also small animal distributors, as it turns out, many of them, and the ones that we currently are doing business with, have cold chain capability. So a lot of vaccines and certain drugs for animals have to be refrigerated, so they already have that capability. And so for us, either we already have a distributor that has it, or the ones that we pick up as we move forward, we insist that they have that cold chain capability.

Larry Heaton: For refrigeration makes it a little more complex, however, as I've been out and talking to international distributors, particularly of equine distributors, but also small animal distributors as it turns out.

Larry Heaton: Many of them and the ones that we currently are doing business with half cold chain capability. So a lot of vaccines at certain drugs for animals have to be refrigerated. So they already have that capability.

Larry Heaton: So for us.

Larry Heaton: Either we already have a distributor that has it or the ones that we pick up as we move forward, we insist that they do have that cold chain capability and then the other thing that helps us to sort of address.

Larry Heaton: And then the other thing that helps us to sort of address that issue is the extended dating, which is one of the benefits of having control over the entire development process. Since we picked up QBT, that extended dating not only allows us to do larger lot sizes but also gives us a little more time to allow for the shipping time to international markets.

Larry Heaton: Address that issue is the extended dating which is one of the benefits of having control over the entire development process. Since we picked up <unk> that extended data not only allows us to do larger lot sizes, but also it gives us a little more dating to allow for the shipping time to international markets. So we're pretty happy with that as we move forward.

Larry Heaton: So we're pretty happy with that as we move forward. What percentage of future earnings do we feel will come from overseas? So that's almost a trick question, right?

Larry Heaton: What percentage of future earnings New we feel will come from overseas. So.

Larry Heaton: So that's almost a trick question right. So.

Larry Heaton: So it really depends upon the relative rate of growth. In the U.S., if we stopped selling in the U.S., then the increase, the percentage of sales from international, would increase and increase and increase. However, far from stopping in the U.S., we expect to accelerate growth in the U.S. And so, as long as they're on par, I'd be super happy with 15% growth going forward, as long as that includes all of our five products and we're making significant increases in international revenue. It just means that U.S. revenue would be growing at the same pace. So, we expect them for...

Larry Heaton: It really depends upon the relative rate of growth.

Larry Heaton: In the U S. If we stopped now selling in the U S. Then the increase.

Larry Heaton: Percentage of sales from international would increase and increase and increase however.

Larry Heaton: Stop it in the U S. We expect to accelerate growth in the U S.

Larry Heaton: So.

Larry Heaton: As long as they are on par it'd be super happy with 15% growth going forward as long as that includes all of our <unk> products and we're making significant increases in international revenue. It just means that the U S revenue would be growing at the same pace. So we expect for.

Larry Heaton: I don't think you meant 15% growth, Larry. You meant 15% of the overall revenue. Of the revenue, yeah. Of the overall revenue, yeah.

Speaker Change: I don't think he meant did you mean, 15% growth Larry you meant 15% of the overall hub the revenue of the overall revenue.

Larry Heaton: I mean, and listen, 15% growth is nothing to sneeze at. I mean, that's among the highest growth rates in the animal health industry, but we feel we can do a lot better than that as we move forward. Um... Let's see, what else we have on here?

Larry Heaton: of the overall revenue. Yeah. Yeah.

Larry Heaton: Unless at 15% growth soften disease that I mean, that's among the highest growth rates in the animal health industry, but.

Larry Heaton: We feel we can do a lot better than that as we move forward.

Larry Heaton: Let's see what else we got out here.

Larry Heaton: There are some, you know, there's lots of questions on here about the stock price. You know, the thing that I would have to say about that, even to the ones that are maybe not so nice in the way they ask the question, the thing I would say about that is that, you know, as a company, what we can control is the ability to operate the company efficiently and get to profitability and efficiently deploy capital to grow the value of the company, which at the end of the day is the value to the shareholders. It will fluctuate with the stock price, of course, as the market sets the price today and changes it tomorrow, but the underlying value of that stock is the value of the company.

Larry Heaton: There are some.

Larry Heaton: Theres lots of questions on here about.

Larry Heaton: About the stock price.

Larry Heaton: Yes.

Larry Heaton: The thing that I would have to say to that.

Larry Heaton: Even to the ones that are maybe not so nice in the way they ask that question.

Larry Heaton: I'd say about that is good.

Larry Heaton: As a company.

Larry Heaton: What we can control.

Larry Heaton: The ability to operate the company efficiently and get to profitability and efficiently deploy capital.

Larry Heaton: To grow the value of the company, which at the end of the day is the value to the shareholders.

Larry Heaton: It will fluctuate with the stock price of course as the market sets the price today and changes it tomorrow, but the underlying value of that stock is the value of the company.

Larry Heaton: And the value of the company increases as we increase revenue, as we maintain industry-leading margins, and as we gain profitability. These are the things that we're working on.

Larry Heaton: And the value of the company increases as we increase revenue as we maintain industry leading margins.

Larry Heaton: As we gained profitability.

Larry Heaton: These are the things that we're working on it remember it wasn't that long ago, two and a half years ago. When the company had no products on the market.

Larry Heaton: You know, remember, it wasn't that long ago, two and a half years ago, when the company had no products on the market, and really not a lot of opportunities at that point in time. Today, you have a company that shareholders own, a company that had $25 million in revenue last year, growing revenue this year, industry-leading margins, a competent management team, manufacturing capacity, and a good sales force that's growing. Inherently, it is a more valuable company.

Larry Heaton: And.

Larry Heaton: Really.

Larry Heaton: Not a lot of opportunities at that point in time today, you have a company and the shareholders own a company that has last year $25 million in revenue growing revenue this year industry leading margins.

Larry Heaton: A competent management team manufacturing capacity.

Larry Heaton: A good sales force that's growing.

Larry Heaton: Yes.

Larry Heaton: However, you know, A few years back, for whatever reason, the market priced the stock pretty high. Today, the market's pricing the stock differently. We can't control that.

Larry Heaton: Inherently it is a more valuable company however.

Larry Heaton: A few years back for whatever reason the market price the stock pretty high today, the market is pricing the stock differently.

Larry Heaton: Can't control that.

Larry Heaton: As Pete talked about, we could artificially try and impact the stock price by doing a buyback. There are other things that we've talked about before and aren't doing now to affect that in different ways. But at the end of the day, what we can focus on is to build the value of the company, and that is what we're doing. Um, Pete, any additional commentary on that?

Larry Heaton: As Pete talked about we could've artificially try and contactor stock price by doing a buyback.

Pete: There are other things that we talked about before and arent doing now due to the fact that in different ways.

Pete: But at the end of the day, what we can focus on is to build the value of the company and that is what we're doing.

Pete: Pete any additional commentary.

Peter L. Donato: I think that's right. I mean, the key is to put guidance out there. We did that for the first time in company history, and it's our job to hit that guidance and, in fact, to exceed that number. So that's what we're trying to do. And we've given guidance, I think some aggressive guidance, up to 40% or 39% potential revenue growth year over year, and 65% to 70% margins. You know what? And we've reiterated those several times already this year. So that is what we're paid to do, and that's what we're going to continue to try to do. And I think we should also clarify something.

Pete: That's right I mean, the key is to put guidance out there we did that for the first time in company history, and it's our job.

Peter L. Donato: To hit that guidance and in fact to exceed that number. So that's what we're trying to do and we've given guidance I think some aggressive guidance up to 40% or 39% potential revenue growth year over year, 65% to 70% margins.

Peter L. Donato: What and we've reiterated that will say several times already this year. So it's.

Peter L. Donato: What we're paid to do and that's what we're going to continue to try to do.

Larry Heaton: So we have a question that says you bought all the revenues you have from raising money from shareholders, not an accomplishment. And what I would say on that is that we did acquire companies with cash that the company brought in from people that bought shares, right? We sold shares. Brought cash in. Cash was on the balance sheet. I came in.

Speaker Change: I think we should also clarify something so we have a question that says you bought all the revenues you have from raised money from shareholders not an accomplishment.

Larry Heaton: And what I would say on that is that we did acquire companies with.

Larry Heaton: Cash of the company are brought in from shareholders from people that bought shares right. We sold sold shares.

Larry Heaton: We began deploying that capital, but it's not the case that we bought the revenue that we have today. For example, Pulse's revenue when we acquired it after 12 months was $12 million. They had an installed base of around 1,200. I just announced that we have an installed base of over 2,000. Two years later, they spent 10 years getting to 1,200.

Larry Heaton: Brought cash and cash was on the balance sheet I came in we began deploying that capital.

Larry Heaton: But it's not the case that we bought the revenue that we have today for example, pulse that revenue when we acquired it trailing 12 months was $12 million. They had about 1200 install base of around 1200, I just announced we have an installed base of over 2002 years later, they spent 10 years getting to 1200.

Larry Heaton: We did a <unk> of that so three quarters increase in the installed base in the last two years.

Larry Heaton: We did eight twelfths of that, so a three-quarters increase in the installed base in the last two years. The Assisi product line has been going pretty steady, and it's doing what we expected it to do. We expect it to grow going forward, especially with the launch of this year. The Guardian was on the market when we acquired it. The Trueforma product clearly is not something we acquired from anyone, and that product is growing.

Larry Heaton: The cc product line, it's been going pretty steady and it's doing what we expected it to do we expect it to grow going forward, especially with the launch of this year.

Larry Heaton: Guardian was on the market when we acquired.

Larry Heaton: The true form of products clearly is not something we acquired from anyone and that product is growing and the same thing with the.

Larry Heaton: And the same thing with the microscope; rather, those products were in development, we completed development, and as we sold them, that's all brand new revenue. The thing we pride ourselves on is not selecting good companies or good product lines to acquire, but rather, selecting product lines that are not only good to acquire but, with some effort put into them, with some development put into them, and with the right sales force selling them, can significantly increase revenue. We've done that with each of the products that we've acquired. It might not necessarily be an accomplishment, but it is something that we're very proud of.

Larry Heaton: The microscope, rather those products work in development, we completed development and as we sell them. That's all brand new revenue the thing we pride ourselves as not on selecting good companies are good product lines to acquire.

Larry Heaton: But rather to select product lines and that are not only going to acquire but also with some effort put into them with some development put into them and with the right sales force selling up can significantly increase the revenue and we've done that with each of the products that we've acquired.

Larry Heaton: It might not necessarily be an accomplishment, but it is something that we're very proud of.

Larry Heaton: Let's see what else we have here some comments with respect to fibrotic myopathy in working dogs. Um, what is the strategy for this market? I mean, I think it's almost implied by the way we talk about it, right? So what Dr. Alvarez and her colleague from the Animal Medical Center in New York, which is sort of one of the preeminent animal health hospitals in the country, her study showed that she was able to extend the working life of working dogs by on average 32 months. And these are dogs that are super expensive and are trained; it takes a long time to train them. And so that's a very big, significant impact.

Larry Heaton: Let's see what else we got here some comp some comments with respect to fibrotic myopathy and working dogs.

Larry Heaton: What is the strategy for this market.

Larry Heaton: It's almost required by the.

Larry Heaton: By how we talk about it right so what Doctor Alvarez and her colleague from the animal Medical Center in New York, which is sort of what are the pre eminent animal health hospitals in the country. What her study showed was that she was able to extend the working life of working dogs by on average 32 months and these are docs that are super expensive and are trained.

Larry Heaton: A long time to train them and.

Larry Heaton: And so thats, a very big significant impact.

Larry Heaton: Needless to say, our team is out contacting various groups that utilize working dogs. I've seen some leads come in and say, in fact, another question was, what about Canada? I saw a lead the other day from a pet owner in Canada that said, "My dog, my German Shepherd, has fibrotic myopathy."

Speaker Change: Needless to say our team is out contacting various groups that utilize working dogs.

Larry Heaton: Seen some leads come in let's say in fact, another question was what about Canada saw lead the other day from a.

Larry Heaton: Pet owner in Canada that said my dog My German Shepherd as Fibrotic Myopathy Myopathy can you Hook me up with the veterinarian that has pulse set here in Canada, and we did just that very thing.

Larry Heaton: Can you hook me up with a veterinarian that has PulseVet here in Canada? And we did just that very thing. Are we adding more products? Yes, So this year we're adding five new assays for the 2-forma product line. And we are adding an equine version of the VetGuardian product, which will come out later this year. We're adding an AI component to the TrueView microscope, which will come out later this year.

Larry Heaton: Are we adding more products.

Larry Heaton: So this year, we're adding five new assays for the two former product line.

Larry Heaton: We are adding equine version of the Vet Guardian product, which will come out later this year.

Larry Heaton: We're adding an AI component to the true view microscope.

Larry Heaton: Which will come out later this year.

Larry Heaton: So.

Larry Heaton: So... And that's not counting any products that we might acquire as we move forward. [inaudible] Let's see. Any acquisitions? We talked about that already. Is VetGuardian equine compatible?

Larry Heaton: And that's not counting any products that we might acquire as we move forward.

Larry Heaton: Let's see.

Larry Heaton: Any acquisitions, we talked about that already.

Larry Heaton: Not yet. You know, it's one thing when you have the VetGuardian hanging outside a cage, pointing at a cage where you have a dog or a cat, and they have restricted movement. But with a horse, it's different. They're in a stall; they move around. And so, as a result, there are some differences in how you need to be able to continuously hone in on or focus in on the part of the animal that will give you the vital signs that you're needing to get.

Larry Heaton: Is that Guardian equaling compatible not yet.

Larry Heaton: It's one thing when you have the big Guardian hanging outside of cage, pointing out a case, where you have a dog or a cat may have restricted movement, but with a horse it's different era and install they move around and so as a result, there are some differences in how you need to be able to continuously hauling in or focus in on.

Larry Heaton: Part of the animal that will give you the vital signs that youre needing to get that work is.

Larry Heaton: That work is ongoing. And as I mentioned earlier, we expect it to have to come out a little bit later this year. We know that it works. In other words, if you had a horse and you stood him still and pointed the thing at him, and he didn't move, or she didn't move, that works.

Larry Heaton: <unk> is ongoing and as I mentioned earlier, we expect it to come out a little bit later this year.

Larry Heaton: We know that it works in other words, if you if you had a horse at new students still a point of the thing Adam and he didn't move or she didn't move.

Larry Heaton: So we need we now just you're adjusting it so that it will work when they move.

Larry Heaton: So we are now just adjusting it so that it'll work when they move. At the current burn rate, how long before we are in trouble, and are you guys happy with the Zomedica team performance? Pete, do you want to take that one?

Speaker Change: At the current burn rate how long before we are in trouble and are you guys happy with as a medical team performance.

Larry Heaton: Pete you want to take that one yeah I think we've answered a couple of times said 12 to 18 is the burn for this year and cash flow watermark, we've guided to 65% to 70, so not running any money anytime soon.

Peter L. Donato: Yeah, I think we've answered that a couple of times. 12 to 18 is the burn for this year. And the cash flow watermark, we've guided to 65 to 70, so they won't run out of money anytime soon. Does upper management intend on repurchasing shares in the near future? I think that question might be purchasing shares as opposed to repurchasing shares. If it's with respect to individuals, you know, the management team, the board of directors, people that are privy to inside information here aren't able to purchase shares in the open market until we have what we call an open window.

Peter L. Donato: Yes.

Peter L. Donato: This upper management intend on repurchasing shares in the near future I think that question might be purchasing shares as opposed to repurchasing shares but.

Peter L. Donato: And the window opens to 48 hours after this call. And then it stays open until two weeks before the next one of these calls, the next earnings call. And during that time, people are free to purchase shares, and some may. It could be a personal decision, just like it is for every potential shareholder out there.

Peter L. Donato: If it's with respect to individuals.

Peter L. Donato: The management team the board of directors people that are Privy to inside information here.

Peter L. Donato: Are able to purchase shares in the open market until we have what we call an open window.

Peter L. Donato: And the window opens.

Peter L. Donato: 48 hours after this call.

Peter L. Donato: And then it stays open until two weeks before the next one of these calls the next earnings call.

Peter L. Donato: And during that time that people are free to purchase shares and some may be.

Peter L. Donato: Personal decision just like it is for every potential shareholder out there, having said that the window hasnt been opened for months.

Larry Heaton: Having said that, the window hasn't been open for months. Many, many months. Six months or more. Yeah, it's been six months because of the way that the fourth quarter works. And I see some questions or comments here about the timing of the fourth quarter results. Peter, do you want to comment on that?

Larry Heaton: Six months or more than six months because of the way that the fourth quarter works.

Larry Heaton: I see some questions or comments on here about the timing of the fourth quarter results. Peter you want to comment on that.

Peter L. Donato: Yeah, so we're up against FCC deadlines. I, you know, I can, you can tell by some of my prepared remarks that it was a complicated year, right? We had some very big acquisitions that were complicated in nature. And we have a pretty small staff here. I think there's three degreed accountants or something in the building. So those, that's what we were working on and it just took us a little longer this year to close the books. Yeah.

Peter: So we're up against the FCC deadlines.

Peter L. Donato: You can tell by some of my prepared remarks that it was a complicated year right. We had some very big acquisitions that were complicated in nature.

Peter L. Donato: We have a pretty small staff here I think there's three degreed accountants or something in the building. So that's what we're working on and it just took us a little longer this year to close the books.

Larry Heaton: Yep. There's a question about whether there would be any ways to have a vote on the Board of Directors. I would refer you to if you're a shareholder. Then you certainly have a right to vote on that. If not, well, buy some shares, and then you will. But if you're a shareholder, there is a proxy statement that is going around now, and you'll be asked to vote on a number of things.

Peter L. Donato: Yes.

Peter L. Donato: There's a question about would there be any ways to have a vote on the board of directors I would refer you to if you're a shareholder.

Larry Heaton: Then you certainly have the right to vote on that if not well buy some shares and then.

Larry Heaton: And you will be here at.

Larry Heaton: Shareholder there is a.

Larry Heaton: Theres a proxy statement that is going around now and you'll be asked to vote on a number of things. So you'll be asked to vote on the directors' you'll be asked to provide your advisory say on pay.

Larry Heaton: So you'll be asked to vote on the directors, you'll be asked to provide your advisory say on pay, and the auditors approve. Yeah, so some of you may have already received your proxy cards. But if not, you'll receive it in the very near term. And I encourage you to exercise your right to vote, which vote will be held at the annual meeting, which will be held on June 6 this year.

Larry Heaton: And the auditors.

Larry Heaton: <unk>.

Larry Heaton: Yes. So some of you may have already received your proxy cards, but if not you'll receive it in the very near term and I encourage you to exercise your right to vote, which will be held on the annual meeting which will be held on June six on June six this year.

Larry Heaton: Yes.

Larry Heaton: <unk>.

Larry Heaton: [inaudible] Will there be a cancer assay developed? You know, we'll continue to look at assays. Assays don't, for Truforma, assays don't generally work like that in terms of trying to decide if it's cancer or not.

Larry Heaton: Will there be a cancer assay developed.

Larry Heaton: Uh huh.

Larry Heaton: We will continue to look at assays.

Larry Heaton: Assays Don.

Larry Heaton: Former assays don't generally work like that in terms of trying to decide if it's cancer not there've been a number of companies out there that have gone down that road and as some of you know we had a collaboration early early on so medica tried to develop a blood test for cancer.

Larry Heaton: There have been a number of companies out there that have gone down that road. And as some of you know, we had a collaboration early on with Zomedica, trying to develop a blood test for cancer. It wouldn't have been the Truforma platform. It would have been something a little different.

Larry Heaton: <unk> have been the true form a platform it would have been something a little different as it turns out that technology wasn't two promising then by the time, we looked at it and it would get to somewhere else. There were a number of other companies on the market.

Larry Heaton: As it turns out, that technology wasn't too promising, and by the time we looked at it and got it to somewhere else, there were a number of other companies on the market. And I think I commented on that a couple of calls ago, or maybe three or four calls ago, whatever it was, that we looked at it and decided that, you know, it was an opportunity at this time for us to get into that business.

Larry Heaton: And I think I commented on that a couple of calls ago or maybe three or four calls ago. Whenever it was that we looked at it and decided that it wasn't opportune at this time for us to get into that business.

Larry Heaton: No.

Larry Heaton: Okay.

Larry Heaton: [inaudible] You know, that question, of course, and that was a matter of judgment at the time. The largest company in that business, PetDX, which was also a public company. They were a private company called PetDx, and they offered a blood test for cancer, and they just went under, because, as it turns out, the market for pet parents to do a diagnostic assay for cancer didn't seem to be what they were looking for.

Larry Heaton: The question of course, and that was a matter of judgment at the time the largest company in that business <unk> Dx, which was also a public company.

Larry Heaton: The public cloud.

Larry Heaton: But now they're a private company called <unk> and they offered a blood test for cancer.

Larry Heaton: And they just they just went under.

Larry Heaton: As it turns out the market for pet parents to.

Larry Heaton: Do a diagnostic assay for cancer.

Larry Heaton: Didn't seem to be what they were looking for.

Larry Heaton: And so as a result, we think that we stand by that decision, and we kind of wait and see how that market fleshes out in the future. Maybe there'll be an opportunity for us, but that'll be based on a lot of factors.

Larry Heaton: And so as a result, we think that we standby that decision and what kind of wait and see how that market flushes out in the future maybe there'll be an opportunity for us, but that will be based on a lot of factors.

Larry Heaton: Okay.

Larry Heaton: So.

Larry Heaton: Okay.

Larry Heaton: Pretty much most of these questions.

Larry Heaton: Here's one, Pete, that's definitely for you, right? Congratulations on a good R&D spend. Thank you. With regard to your CapEx spend, are you using any accelerated depreciation? Would you regard your position as conservative?

Speaker Change: Here's one Pete that's definitely for you right. Congrats on a good R&D spend. Thank you with regards to your Capex spend are you using any accelerated depreciation would you regret would you regard your position is conservative.

Peter L. Donato: Yeah, I don't know. All of that's disclosed in the K and the Q, all the methods we used for that. There's definitely a freight line method for bulk purposes, and we use a variety of accelerated methods for tax purposes. That said, we're in an NOL position, so there's not a lot of effort being. You know, it doesn't benefit us right now to accelerate any of our deductions because we're non-cash paying at this point in time.

Speaker Change: Yes, I don't know all of that is disclosed in the ending in the K and the Q all the all the methods we used for that Theres definitely.

Peter L. Donato: Great line method for book purposes, and we use a variety of accelerated methods for tax purposes that said we are wearing.

Peter L. Donato: <unk> position, so there's not a lot of effort being it doesn't benefit us right now to accelerate.

Peter L. Donato: Any of our deductions because of our noncash peg at this point in time.

Peter L. Donato: Okay.

Peter L. Donato: There's a question here: is the reverse split off the table moving forward?

Peter L. Donato: There's a question here is the reverse split off the table moving forward.

Peter L. Donato: So what we've said and continue to say is that we are exploring all options. There are many, many options on the table. What I've said publicly multiple times, Larry, is that we looked at probably two dozen or more potential remedies to get us into compliance and remain in compliance. We narrowed that down probably to six, seven, eight, maybe a couple of derivatives within those.

Peter L. Donato: So what we've said and continue to say as we explore all options. There's many many options on the table, what I've said publicly multiple times, Larry as we looked at probably two dozen or more potential.

Peter L. Donato: Potential remedies to get us into compliance and remained compliance we narrowed that down probably to 678.

Peter L. Donato: Maybe a couple of derivatives within knows and the reverse split was one of them.

Peter L. Donato: And the reverse split was one of them. You and I spoke very clearly in April that we'd heard our shareholders loud and clear. They didn't want it. You know, about 35 percent of the shares were voted. Of those 35 percent that were voted, just over 60 percent said no.

Peter L. Donato: You and I spoke very clearly in April that we've heard our shareowners Leiden unclear they didn't want it.

Peter L. Donato: We're about 35% of the shares were voted of those 35% that were voted.

Peter L. Donato: Over 60% said now so you and I spoke in.

Peter L. Donato: So, you know, you and I spoke in April. We accepted those results. We'll always think about those things. And clearly, having fewer shares out there would benefit us, for all the reasons that I've cited over and over. In fact, I just sat in on a call yesterday.

Peter L. Donato: In April we accept those results that we will always think about those things and clearly having less shares out there would benefit us.

Peter L. Donato: For all the reasons that I've cited over and over in fact, I just sat in on a call yesterday, we would have likely have been included in the Russell 2000, how we met most if not all of the criteria and likely would have been selected had our share been trading at over a dollar. So the reverse split would have helped us in that regard.

Peter L. Donato: We would likely have been included in the Russell 2000. We met most, if not all, the criteria and likely would have been selected had our share been trading at over a dollar. So the reverse split would have helped us in that regard in being in an index, but we are not putting a we didn't put a reverse split on the annual meeting ballot. And we're not doing, you know; we have no plans at this time.

Peter L. Donato: And being in an aim to see but we are not putting a we didn't put a reverse split on the annual meeting ballot and what we're not doing have no plans at this time.

Larry Heaton: Okay, and then I think maybe we'll take one more, which is what are the future plans for the human version of Truforma? And with respect to that, as we've talked about before, the product was developed for the human market, the Omnia version of the instrument, and all of the assets for the human business, whether it be the intellectual property, the clinical trial data, the FDA approval, emergency use approval, emergency use authorization for COVID testing, many parts, and some finished goods, all of those have been preserved in a sort of a pristine way.

Speaker Change: Okay, and then I think maybe it will take one more which is what is what are the future plans on the human version of true former.

Larry Heaton: And with respect to that as we've talked about before.

Larry Heaton: Product was developed for the human market the Omnia version of the instrument.

Larry Heaton: And all of the assets for the human business, whether it be the intellectual property.

Larry Heaton: Yes.

Larry Heaton: The clinical trial data the FDA approval emergency use approval or emergency use authorization.

Larry Heaton: For Covid testing.

Larry Heaton: Many parts in some finished goods all of those have been preserved in a sort of a pristine way.

Larry Heaton: We expect that as time goes on, we will seek to monetize that asset in some way. Most likely, it would be a licensing or sale of the assets to a startup that wanted to, or a strategic partner that wanted to take that product into the human market.

Larry Heaton: We expect that.

Larry Heaton: Time goes on.

Larry Heaton: We will seek to monetize that asset.

Larry Heaton: Either in some way.

Larry Heaton: Most likely it would be licensing or sale of the assets to two.

Larry Heaton: Two a startup that one or two or a strategic that wanted to take that product into the human market.

Larry Heaton: We expect that the bigger foundation we lay in the animal health market with assays across the board, and there are dozens of assays that we are contemplating launching, that will enhance the value for people to potentially want to take that into the human market. We can pair that, and we can combine that, if appropriate, with our TrueView device because, again, we own all of the human rights to that market as well.

Larry Heaton: We expect that the more the bigger foundation, we lay in the animal health market with assays across the board and there are dozens of assays that we are contemplating launching that that will enhance the value for for people to potentially want to take that into the human market. We can pair that we can.

Larry Heaton: We can combine that if appropriate with our trulia device because again, we own all of the human rights to that market as well.

Larry Heaton: And so the only other thing I would say is that, um... And this will just be a message to Rami. I'd be happy to talk to you personally. You have my email address. So give me a call or get in touch with me directly if you like. And I'd be happy to address some of your comments, just one on one. Other than that, if there are any other questions on the phone, ask the phone bank operator. If not, I would thank you all very much for your participation today and your support of Zomedica, and feel free to reach out any time with questions. Thank you, operator.

Larry Heaton: And so the only other thing I would say is that.

Larry Heaton: And this will just be.

Larry Heaton: Our message to Rami.

Larry Heaton: I'd be happy to talk to you personally you have my email address.

Larry Heaton: So give me to get in touch with me, if you like directly and I'd be happy to address some of your comments.

Larry Heaton: One on one.

Larry Heaton: Other than that if there are any other questions on the phone on the phone bank operator.

Larry Heaton: If not I.

Larry Heaton: I would thank you all very much for your participation today and your support at Medica and feel free to reach out anytime with questions.

Larry Heaton: Thank you operator.

Larry Heaton: Thank you.

Operator: Ladies and gentlemen, the conference has now ended. Thank you all for joining us. You may all disconnect.

Larry Heaton: Ladies and gentlemen, the conference.

Operator: Thank you all for joining you may all disconnect.