What changed in this filing

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Item 1. Business

2021-11-29 compared with 2020-10-15 · 252 added, 327 removed, 265 unchanged (69% of the section changed)

Cautionary Note Regarding Forward-Looking Statements

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

Any statements contained herein that are not statements of historical fact may be forward-looking statements.

These statements relate to future events or our future financial performance.

Any forward-looking statements are based on our present beliefs and assumptions as well as the information currently available to us.

In some cases, you can identify forward-looking statements by terminology such as "may", “will”, "should", “could”, “targets”, “goal”, "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" set forth in Item 1(A) in this report on Form 10-K, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

We caution you not to place undue reliance on any forward-looking statements as they speak only as of the date on which such statements were made, and we undertake no obligation to update any forward-looking statement or to reflect the occurrence of an unanticipated event.

New factors may emerge and it is not possible to predict all factors that may affect our business and prospects.

Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Our audited annual consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”).

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this report.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars.

All references to "C$" or "CDN$" refer to Canadian dollars and all references to "common shares" and "shares" refer to the common shares in our capital stock, unless otherwise indicated.

As used in this report, the terms "Lexaria" "we", "us", "our" and "Company" mean Company and/or our subsidiaries, unless otherwise indicated.

General and Historical Overview of Our Business

The Company was formed December 9, 2004 under the laws of the State of Nevada.

In March of 2014, the Company began work in the fields of enhanced delivery of active ingredients and drugs.

From the filing of its first patent application in 2014, Lexaria today has roughly 60 patent applications pending around the world, with 17 patents granted to date, all related to its DehydraTECH TM technology (“DehydraTECH”) that enhances certain characteristics of oral ingredient and drug delivery.

Additional early stage investigation has been conducted of topically-administered products such as patches, creams and lotions.

Lexaria is a biotechnology company seeking to enhance the bioavailability of a broad variety of active pharmaceutical ingredients (“APIs”) with its DehydraTECH TM drug delivery technology.

DehydraTECH combines lipophilic APIs with specific fatty acid and carrier compounds thereby improving the way APIs enter the bloodstream while increasing the effectiveness of fat-soluble active molecules allowing lowering overall dosing and promoting healthier oral ingestion methods.

DehydraTECH can be used with a wide variety of APIs encompassing fat-soluble vitamins, non-steroidal anti-inflammatory drugs (“NSAIDs”) pain medications, hormones, phosphodiesterase inhibitors, antivirals, nicotine and its analogs, and all cannabinoids including tetrahydrocannabinol (“THC”) for a variety of therapeutic indications, including hypertension, SARS-CoV-2/COVID-19 and HIV/AIDS.

The Company’s technology applies to a host of different ingestible or topically administered product formats including foods, beverages, oral suspensions, tablets, capsules, creams, lotions, and skin patches.

Lexaria began filing patents for DehydraTECH in 2014 with two initial US provisional patent application filings by the original inventors Poppy’s Teas LLC, which Lexaria acquired by way of exclusive, worldwide license rights and controlling interest in the founding company.

We have since increased the number of patent applications to approximately 60 with 23 patents granted worldwide to date.

In addition to the US patent filings, the Company has also pursued international patent protection through filings under the Patent Cooperation Treaty, followed by national filings in over 40 jurisdictions of highest commercial potential thereunder.

Our patent family includes intellectual property addressing the manufacturing and processing methods used to combine the long chain fatty acids with active pharmaceutical ingredients.

Lexaria’s patent applications developed from its Research and Development programs (“R&D”) currently include fat-soluble versions of vitamins, NSAIDs, nicotine, cannabinoids, hormones, phosphodiesterase inhibitors, and antivirals.

2018 animal studies demonstrated a propensity for its DehydraTECH technology to elevate the quantity of drug delivered across the blood-brain-barrier.

2018 animal studies demonstrated a propensity for DehydraTECH technology to elevate the quantity of drug delivered across the blood-brain-barrier.

This expanded our patent applications and opened possibilities for improved delivery of certain central nervous system-targeted drugs that require additional R&D.

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Other than for R&D purposes, Lexaria does not produce, manufacture, market or distribute drugs.

Our common stock is quoted on the OTCQX under the symbol "LXRP" and on the Canadian Securities Exchange under the symbol “LXX”.

We maintain our registered agent's office and our U.S.

business office at Nevada Agency and Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501.

Our telephone number is (755) 322-0626.

The address of our principal executive office is Unit 100–740 McCurdy Road, Kelowna BC V1X 2P7.

We have administrative functions located in Phoenix, Arizona.

Our main corporate website is located at www.lexariabioscience.com.

Due to the implementation of British Columbia Instrument 51-509 on September 30, 2008, by the British Columbia Securities Commission (“BCSC”), we have been deemed to be a British Columbia based reporting issuer.

As such, we are required to file certain information and documents at www.sedar.com.

Although we have experimented with consumer product development in the past, those activities occupy a declining amount of our corporate time.

We first began selling trial amounts of ViPova branded black tea fortified with hemp oil and utilizing our technology, in January 2015 and added additional flavours over time.

We also began offering our first coffee and hot chocolate also fortified with full spectrum hemp oil, and also under the ViPova brand.

Beginning in January 2021 we discontinued sales of consumer products, but offering a variety of self-made beverages to consumers helped us to establish the ViPova brand and helped us to develop final consumer product formulations and understand consumer needs

Generating meaningful revenue from consumer product sales was challenging and we were unable to achieve widespread retail distribution.

We continue to be open to the possibility of generating sales from international markets, in those locations where hemp oil fortified foods are permissible by law.

ViPova branded products are owned by our wholly owned PoViva Corp.

Lexaria Energy, TurboCBD and ChrgD + branded products are owned 100% by Lexaria Bioscience Corp.

Through our product development we have communicated to the industry the versatility of our technology in specific CPG formats and we believe this strategy has been successful in assisting us in technology licensing discussions with potential new clients.

We believe the range of products available and under development are sufficient to prepare for revenue growth and potentially profitable long-term operations if we are able to generate sufficient business clientele demand.

Our business strategy contains an element that we believe will be more impactful to future corporate growth that involves the further development and out-licensing of our intellectual property of molecule delivery that enhances bioactivity or absorption.

We have no plans to offer for sale any products containing THC in quantities higher than 0.3%.

We have discontinued all direct business activities related to non-FDA-approved uses of THC, including our former business practice of licensing our technology to businesses that were legally state-licensed to offer THC products.

We also plan to license our technology to other companies for the delivery of molecules other than THC or cannabinoids, such as nicotine which we have licensed to Altria Ventures Inc., an indirect wholly owned subsidiary of Altria Group, Inc.

Our October 31, 2017, announcement of the USPTO Notice of Allowance for our first patent granted and the subsequent granted patents of our technology in the US and in many other countries around the world related to new molecule groups, along with our ongoing patent filing and grants, may enhance our ability to successfully pursue our licensing initiatives during fiscal 2022.

We continue to communicate the benefits of our technology to potential licensing partners;

with higher absorption levels a manufacturer could perhaps infuse smaller amounts of active molecules into a product, potentially reducing their manufacturing input costs;

to provide higher bioavailability with the dosing limits being imposed or contemplated in many jurisdictions;

to infuse beverages while masking the flavor and smell of the active molecules;

and to reduce delivery times to the bloodstream.

We believe these to be meaningful competitive advantages that may lead to the potential to generate licensing revenue, and will pursue these opportunities within the cannabinoids, nicotine, and other bioactive molecular markets both within the USA and also internationally, in those locations where they are legal and regulated by government.

Subject to budgetary availability, we also plan to conduct additional in vitro and in vivo studies testing the absorption of many API’s – CBD, NSAIDs, vitamins, PDE5 inhibitors, antiviral drugs, nicotine, and others– to substantiate the effectiveness of our technology.

More than simply satisfying scientific curiosity, successful tests could lead to increased awareness and acceptance of our technology as a meaningful method by which to deliver some or all of the named molecules more effectively than their current delivery methods.

Therefore, absorption tests could become an important element leading towards higher rates of acceptance of our technology licensing initiatives.

We will pursue technology licensing opportunities as a method of generating highly profitable revenue streams over long periods of time.

In addition, while nine of our US patents and eight of our Australian patents have been granted to date, we now have received granted patents in the European Union, Japan, India and Mexico, and have multiple other applications filed in the US and around the world.

It is not possible to forecast with certainty when, or if, our remaining patents pending will become granted patents.

But if our remaining patent applications do become granted patents, our ability to generate meaningful license revenue from our intellectual property may increase from multiple jurisdictions outside of the US.

We will continue to pursue our remaining patents pending as vigorously as we are able, since the successful granting of more of those applications could lead to material increases in shareholder value.

We are pursuing patent protection in more than 40 countries around the world.

Available Information

The address of our principal executive office and research laboratory is #100–740 McCurdy Road, Kelowna, British Columbia, Canada V1X 2P7.

Our common stock is quoted on the Nasdaq under the symbol “LEXX”.

We file annual, quarterly, and current reports, proxy statements and other information with the U.S.

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These filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov.

Our Internet address is https://www.lexariabioscience.com/ (this website address is not intended to function as a hyperlink and the information contained on our website is not intended to be a part of this Report).

We make available free of charge on https://www.lexariabioscience.com/investors/regulatory-filings/ our annual, quarterly and current reports, and amendments to those reports, as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.

We may from time to time provide important disclosures to investors by posting them in the Investor Relations section of our website, as allowed by the SEC's rules.

The information on the website listed above is not and should not be considered part of this Report and is intended to be an inactive textual reference only.

Our corporate website is located at www.lexariabioscience.com (this website address is not intended to function as a hyperlink and the information contained on our website is not intended to be a part of this Report ).

We make available free of charge on https://www.lexariabioscience.com/investors/regulatory-filings/ our annual, quarterly, and current reports, and amendments to those reports if any, as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.

We may from time to time provide important disclosures to investors by posting them in the Investor Relations section of our website.

We maintain our registered agent's office and our U.S.

business office at Nevada Agency and Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501.

Our telephone number is (755) 322-0626.

Lexaria Bioscience Corp.

is a British Columbia based reporting issuer in Canada and as such, we are required to file certain information and documents at www.sedar.com.

Our Current Business

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We continue to investigate national and international opportunities to investigate expansions and additions to our intellectual property portfolio.

We plan to perform additional human clinical investigations in late calendar 2020 and early 2021 related to enhanced DehyraTECH formulations of cannabidiol in pre- and mildly-hypertensive middle-aged subjects to gather additional information on blood pressure reduction potential.

Lexaria also plans to conduct during calendar 2020 and 2021 evaluations of DehydraTECH’s ability to improve the oral delivery characteristics and pharmacological performance of certain anti-viral drugs.

Patents have been filed specifically for the use of DehydraTECH with cannabinoids for the treatment of heart disease.

We plan to perform additional human clinical investigations in late calendar 2021 and throughout 2022 related to enhanced DehydraTECH formulations of cannabidiol in pre- and mildly hypertensive middle-aged subjects to gather additional information on blood pressure reduction potential.

Lexaria also plans to conduct during fiscal 2022, evaluations of DehydraTECH’s ability to improve the oral delivery characteristics and pharmacological performance of certain other APIs.

We will continue to seek beneficial acquisitions of intellectual property if and when we believe it is advisable to do so.

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During the past fiscal year, the Company experienced the following significant corporate developments:

On September 17, 2019, the Company announced the publication of the final study results in the peer reviewed medical journal, “Advances in Therapy” of its 2018 human clinical study evaluating CBD delivery and effectiveness using its patented DehydraTECH powered TurboCBD capsules available on the PubMed.gov website with the identification of PMID:

Advances in Therapy focuses on clinical medicine and pharmaceutical research and has been published continually since 1984.

The study was conducted and well tolerated in 12 healthy young male athletes and accordingly, an additional study to assess blood pressure reduction potential in middle-aged volunteers with pre- or mild-hypertension has been designed which in July 2020 received ethics board approval by a European university research hospital.

On or around October 21, 2019, the Company submitted an amendment to its Health Canada research license, which was originally granted on August 9, 2019, to allow for human organoleptic sensory testing.

The amendment to the licence was approved by Health Canada on June 8, 2020 and remains effective until August 9, 2023.

On November 13, 2019 the Company closed the first tranche of a non-brokered private placement financing resulting in the issuance of 1,554,245 units at a price of $0.45 per unit with each unit being comprised of one common share and one share purchase warrant for gross proceeds of $699,410.25.

The warrants are exercisable for a period of two years at an exercise price of $0.80 per share until November 13, 2020 and thereafter at a price of $1.20 per share until November 13, 2021.

On November 28, 2019 the Company closed the second tranche of a non-brokered private placement financing resulting in the issuance of 269,500 units at a price of $0.45 per unit with each unit being comprised of one common share and one share purchase warrant for gross proceeds of $121,275.

The warrants are exercisable for a period of two years at an exercise price of $0.80 per share until November 28, 2020 and thereafter at a price of $1.20 per share until November 28, 2021.

On January 14, 2020, the Company announced that it had entered into a definitive 10-year agreement, via its subsidiary Lexaria Hemp Corp., with Boldt Runners Corporation (dba Cannadips) to provide DehydraTECH on an exclusive basis in the U.S.

for use in oral pouches containing CBD.

On January 22, 2020, the Company announced that it expanded its relationship with the Cannadips brand by way of entering into a definitive 10-year agreement, via its subsidiary Lexaria CanPharm ULC, to provide Lexaria’s patented Technology on an exclusive basis in the U.S.

for use in oral pouches containing over 0.3% THC.

On February 26, 2020, the Company terminated the definitive 5-year agreement, entered into by its subsidiary Lexaria Hemp Corp., to provide DehydraTECH to a private Nevada-based company for its utilization in certain CBD-based beverages which was originally announced on May 7,2019 due to lack of performance by the licensee.

On March 4, 2020, the Company announced that it had amended its license agreement with Universal Hemp LLC, a B2B manufacturing company of hemp-derived bulk ingredients to remove the exclusivity rights originally associated with the license and to reduce the aggregate minimum performance fees from $3,750,000 to $132,500.

On March 19, 2020, the Company announced that it had commenced a program to research the benefits of its DehydraTECH Technology in connection with enhancing the delivery of certain antiviral drugs.

On April 21, 2020 the Company announced the filing of a strategic new US patent application under a new patent family “Compositions and Methods for Enhanced Delivery of Antiviral Agents” to utilize its DehydraTECH process in connection with antiviral drugs for the purposes of combatting infectious disease conditions including, but not limited to, the novel coronavirus disease 2019 (“COVID-19”), MERS, SARS, influenza, herpes and AIDS.

On May 4, 2020, the Company entered into material contracts with certain investors for the sale of up to 8,866,211 shares of common stock and warrants to purchase up to 8,866,211 shares of common stock for gross proceeds of $2,039,229.

The warrants have a five year term and are exercisable at $0.35 per share.

The financing closed in two tranches on May 6, 2020 and May 11, 2020.

On May 5, 2020 the Company terminated the definitive 5-year agreement, entered into by its subsidiary Lexaria Canpharm ULC, to provide DehydraTECH to a private California-based company for its utilization in certain THC-based beverages which was originally announced on April 24, 2019 due to lack of performance by the licensee.

On or around June 18, 2020, Lexaria submitted a grant application to the U.S.

National Institutes of Health (NIH) entitled "In vitro and in vivo animal exploratory pharmacokinetic and preliminary efficacy modelling of select orally administered antiviral compounds following DehydraTECH formulation enhancement" pursuant to their National Institute of Allergy and Infectious Diseases (NIAID) Funding Opportunity Announcement (FOA) RFA-AI-20-028 - Partnerships for Countermeasures against Select Pathogens.

This grant application, which has not yet been reviewed or approved, is for funding to support Lexaria’s second round of planned studies related to COVID-19 treatment possibilities.

On June 24, 2020 the Company announced the results of the 2020 Annual and Special Meeting held June 23, 2020.

The Company held the Meeting whereby there were 47,819,789 shares of the Company represented in person or by proxy at the meeting, constituting 53.38% of the Company’s issued share capital as at May 13, 2020, being the record date of the Meeting.

The matters voted upon at the Meeting and the final voting results are set forth below:

Matter Being Voted On

To Elect Chris Bunka as a director

To Elect John Docherty as a director

To Elect Nicholas Baxter as a director

To Elect Ted McKechnie as a director

To Elect Brian Quigley as a director

To Appoint Davidson & Company LLP as Auditors

To Approve a Reverse Stock Split on a ratio of not less than 2 current shares for one reverse stock split share and not more than 30 current shares for one reverse stock split share

To Approve an amendment to the Company’s Bylaws

To ratify the lawful actions of the directors for the past year

All of the proposals were described in detail in the Company’s proxy statement filed with the SEC via Edgar and with the BCSC and Ontario Securities Commission via SEDAR on May 25, 2020.

On June 29, 2020 the Board of Directors Lexaria Bioscience Corp.

(the “Company”) approved the issuance of 347,222 restricted common shares to IRTH Communications, LLC (“IRTH”) bearing a deemed aggregate value of $100,000 or $0.288 per share as partial compensation for investor relations services to be provided to the Company.

In addition, the Company has also agreed to pay IRTH a cash fee of $7,500 per month for the Services and may, at its sole discretion, engage IRTH to provide additional services at additional costs.

On July 8, 2020, the Company’s subsidiary, Lexaria Nicotine LLC received written confirmation from Altria Ventures Inc.

(“AVI”) that the First Warrant Tranche Trigger, as defined in the Warrant and Option Agreement entered into on January 15, 2019 had been reached and accordingly, AVI has until 11:59 pm on October 8, 2020 (EST) to exercise the warrants to purchase additional Class B membership units of Lexaria Nicotine LLC.

The findings of the Phase 1 research and development program, on which the First Warrant Tranche Trigger was dependent, were published in the Company’s news release dated July 16, 2020.

On July 21, 2020, the Company announced filing an application with a senior stock exchange in the United States to request an uplisting of the Company’s common stock.

On July 28, 2020, the Company announced that it has received ethics board approval by a European university research hospital to conduct an exploratory clinical study using cannabidiol (“CBD”) formulated together with its patented DehydraTECH™ technology to assess blood pressure reduction potential in volunteers with pre- or mildly- hypertensive, middle-aged volunteers.

On August 31, 2020, the Company announced a research and development (“R&D”) framework agreement with British American Tobacco (Investments) Limited (“BAT”) to investigate Lexaria’s technology for potential use in nicotine products.

R&D work under the Agreement will be paid for by BAT.

During the past fiscal year, the Company was granted an aggregate of four new patents in the following jurisdictions, Europe, India and Japan.

On December 9, 2020, CanPharm completed a disposition to Hill Street Beverage Company Inc.

(“Hill Street”) of its use and licensing rights to use its DehydraTECH technology specifically in association with non-pharmaceutical products containing cannabis molecules that contain 0.3% or greater THC.

On January 11, 2021, Lexaria effected a reverse stock split that was conducted on a 1-for-30 basis on the Company’s issued share capital and on any outstanding warrants and options, whereby the exercise prices of such outstanding convertible securities were adjusted accordingly.

On January 12, 2021, Lexaria became a Nasdaq listed company and announced the pricing of a public offer of 1,828,571 units, with each unit comprising one share of common stock and one warrant to purchase one share of common stock at $5.25 per unit.

The warrants issued pursuant to this public offering were listed on the Nasdaq under the symbol LEXXW and have an exercise price of $6.58 per share.

They are immediately exercisable, and expire five years from issuance date.

The underwriter was granted 30-day option to purchase up to an additional 274,285 shares of common stock and/or warrants to purchase up to the same amount of common stock, which option was exercised in full by H.C.

Wainwright & Co.

who acted as sole book-running manager for the offer.

Gross proceeds of $11.04 million were ultimately received from the offering and Lexaria also issued five-year warrants to H.C.

Wainwright & Co.

entitling them to purchase up to 166,781 shares of common stock with an exercise price of $6.58 per share.

Pursuant to certain tail rights held by Bradley Woods & Co.

Lexaria paid Bradley Woods $316,999.62 and issued Bradley Woods five-year warrants to purchase 60,385 shares of common stock at an exercise price of $6.58 per share.

On January 14, 2021, Mr.

Al Reese, Jr., was appointed to Lexaria’s board of directors.

With the appointment of Mr.

Lexaria established a fully independent audit and finance committee and comply with the financial expert requirements of the Nasdaq.

On March 24, 2021, Lexaria announced results from a shelf-stability study.

DehydraTECH CBD beverages demonstrated 93.4% of target CBD potency a year after production.

The beverages also exhibited zero microbial growth over the period.

Furthermore, the samples had intra-beverage variance less than 1% in CBD potency across various fractions (top, middle, and bottom) without mixing or agitation, indicating a very stable emulsion.

On April 15, 2021, Lexaria announced the appointment of Gregory Downey as Chief Financial Officer, to replace outgoing Allan Spissinger whose contract ended on May 31, 2021.

During the spring of 2021, Lexaria commenced its human clinical study HYPER-H21-1 of DehydraTECH CBD, which is intended to validate DehydraTECH CBD’s effect on hypertension, and is a randomized, double-blind, controlled study expected to enroll 24 subjects with symptoms of either pre-hypertension or mild hypertension.

A single 300 mg dose of DehydraTECH 2.0 CBD formulation will be compared against a non-DehydraTECH control of matched concentration.

Time series blood pressure and heart rate analyses are primary objectives of the study.

Secondary objectives include pharmacokinetic speed and rate of absorption of CBD and main metabolites as well as assessment of inflammatory markers of cardiovascular disease and nitric oxide biomarkers.

On July 5, 2021, the Company announced that it would, effective on market close July 7, 2021, voluntarily delist from the Canadian Securities Exchange (“CSE”) since an overwhelming majority of trading has moved to the Nasdaq resulting in saving management time, effort, and fees.

On June 7, 2021, Lexaria provided an update on HYPER-H21-1 progress, stating that 24 volunteers, ranging in age between 45 to 65, were dosed and the treatment was well tolerated with no serious adverse events or side effects observed or reported.

The early results of this study were disclosed in July 2021 noting a difference between the DehydraTECH-CBD formulation and the control arm at the 20-minute mark was statistically significant at the 2.5% level.

Lexaria commenced a subsequent human trial study, designated as HYPER-H21-2, and completed its patient dosing in late July 2021.

Initial results from the trial were disclosed subsequent to the year end.

HYPER-H21-2 evaluated 16 volunteers who were pre or mildly hypertensive and received three separate doses of 150mg DehydraTECH 2.0 CBD versus placebo.

HYPER-H21-2 concentrated on monitoring blood pressure reduction continuously over 24 hours and studying central arterial stiffness, physical activity and sleep quality.

The Company experienced the following significant corporate developments subsequent to August 31, 2021

On September 22, 2020, Lexaria announced that U.S.

10,756,180 was granted that provides patent claims that protect the use of Lexaria's DehydraTECH technology together with cannabinoids, nicotine, nonsteroidal anti-inflammatory drugs, or vitamins in mix and serve beverage formats.The patent is entitled “Food and Beverage Compositions Infused With Lipophilic Active Agents and Methods of Use Thereof”.

Impact of COVID-19

The emergence of COVID-19 beginning in January of 2020, now in over 220 countries and territories around the world, presents significant and unforecastable new risks to the Company and its business plan.

Restrictions on national and international travel, and required business closures, have made it increasingly difficult to carry out normal business activities related to corporate finance efforts, to the pursuit of new customers, and to retail customers throughout North America who might otherwise access the products of our business partners and licensees.

As a result, the COVID-19 pandemic will almost certainly increase risks of lower revenues and higher losses.

We are monitoring our licensees and are working with them, where possible, to prevent default and contract terminations.

In some cases we have had to issue termination of contract notices in accordance to provisions within our contracts.

The Company is encountering significant challenges in executing its business plan and normal business operations as a result of COVID-19 and does not have sufficient resources to withstand a protracted term during which most business activities are curtailed.

We have implemented cost containment initiatives to reduce operating expenses and preserve cash that include dismissal of one employee, termination of contracts with two consultants and reduction of compensation payable to certain other consultants as a result of the COVID-19 pandemic.

The Company currently has seven (7) employees and/or independent contractors who dedicate all or a majority of their time to the business of the Company and eight (8) consultants.

We may need to dismiss additional employees or terminate services contracts to preserve resources.

We have not had to close operations or locations as our contractors and staff can work remotely and our third-party facilities continue to operate.

To the date of this report, we have not directly had to quarantine contractors or staff, however we have implemented additional safety precautions and measures for their protection.

Due to our historic and current geographic diversity of our contractors and employees, we have long established and ongoing experience in remote work and collaboration.

Our procedures and controls have been built over time to address remote working requirements.

We have not experienced any significant impacts on our material supply chains but have noted increased timelines from some third-party research facilities regarding their ability to conduct research and testing.

To date, this has not significantly impacted our R&D programs, but we cannot predict whether our R&D programs will be impacted in the future.

The Company is simultaneously investigating emerging opportunities related to the COVID-19 crisis in relation to its patented Technology that has been tested for its superior delivery of other compounds and drugs, and whether any of these characteristics might be applicable to compounds or drugs used to treat symptoms caused by the Coronavirus.

It is unknown at this time whether there is any such applicability.

On March 19, 2020, the Company announced that it intends to conduct a pilot human pharmacokinetic exploratory study in healthy volunteers of three antiviral drugs that have previously been studied against other coronavirus strains, comparing DehydraTECH formulations to controls without Lexaria’s Technology.

It intends to conduct the study at a leading Canadian University where a study design and plan have been submitted for ethics board approval.

Pending the successful execution and outcome of this study, additional research may include expanded pharmacokinetic and pharmacodynamic screening, including studies in appropriate coronavirus animal models for efficacy evaluation.

If the Technology is proven to increase delivery effectiveness of antiviral drugs, the Company intends to make it available to researchers throughout the world looking to maximize the effectiveness of their own drug investigations.

Subsequent to March 19, 2020, the Internal Review Board (“IRB”) of one of the Universities advised us to limit the study to two of the original antiviral drugs.

Based on the requirements of the IRB we have modified the study to two antiviral drugs and are continuing to await the outcome of the ethics board review underway and may require additional regulatory approvals before it can plan to begin this study.

The Company continues to monitor governmental programs being released to assist with the COVID-19 pandemic.

To the date of this report we have received a C$40,000 Canada Emergency Business Account (“CEBA”) for our subsidiary Kelowna Management Services Corp.

(“KMSC”) with 0% interest and no principal payments required until December 31, 2022, after which the account is converted to a 3 year term loan at 5% annual interest paid monthly.

C$10,000 is forgivable if the account is paid back C$30,000 after December 31, 2020 and prior to December 31, 2022.

We have also received $30,732 (C$42,076) from the Canada Emergency Wage Subsidy (“CEWS”) program for the employees in our subsidiary KMSC that reduced costs therein.

Subsequent to the August 31, 2021 fiscal year, Lexaria was granted an additional two patents, one in Japan and our first in Mexico.

On September 7, 2021, Lexaria announced partial results from its human clinical study HYPER-H21-2 which evaluated DehydraTECH processed CBD in a 24-hour study of volunteers with mild to moderate hypertension.

At selected times during the 24-hour study, volunteers with mild to moderate hypertension averaged as much as a 20 mmHg (i.e., 23%) decrease in blood pressure relative to placebo and over the 24-hour ambulatory monitoring period, volunteers averaged a significant reduction of 7.0% (p < 0.001) in systolic pressure with DehydraTECH-CBD relative to placebo.

On September 8, 2021, Lexaria announced that it had commenced the process for preparing an Investigational New Drug application for the purposes of filing same with the Food and Drug Administration with respect to registering its DehydraTECH-processed CBD as a pharmaceutical treatment for hypertension.

On October 5, 2021, Lexaria announced results from its oral nicotine absorption study NIC-A21-1 which revealed that DehydraTECH-nicotine delivered via the oral pouch product format required only 2 to 4 minutes to deliver nicotine levels in blood plasma comparable to levels achieved at 45 minutes with concentration-matched controls.

DehydraTECH-nicotine also reached statistically significant peak blood plasma levels up to 10-fold higher overall than controls (p=0.004) while still clearing from blood virtually as quickly as the controls.

On October 13, 2021, Lexaria announced the that its oral tetrahydrocannabinol (“THC”) absorption study THC-A21-1 revealed that DehydraTECH-THC delivered, via oral ingestion, required only 15 minutes to deliver THC levels in blood plasma comparable to levels achieved at 45 minutes with concentration-matched controls.

During the study DehydraTECH-THC delivered more THC into the bloodstream than the industry standard medium chain triglyceride (“MCT” or “coconut oil”) based control formulation from the 2-minute mark onwards, then dropped rapidly to the same level as the MCT control by the 6-hour mark.

On November 1, 2021, Lexaria commenced its first animal study EPIL-A21-1 to determine if DehydraTECH-CBD evidences superior treatment of seizure activity when compared to generic cannabidiol and Epidiolex and subsequently announced the following new research studies for the 2022 year:

This 6-week efficacy study of approximately 60 volunteers who suffer from hypertension, will provide extensive data to Lexaria on how DehydraTECH-CBD treats hypertension and may provide additional long-term health benefits, including its effects on 24-hour ambulatory blood pressure;

arterial stiffness and autonomic balance;

brain structure and function through brain magnetic resonance imaging;

blood biomarkers (including lipids such as cholesterol and more);

renal, hepatic, sleep quality / daytime sleepiness / sleep disorders;

actigraphy, geriatric depression scale, perceived stress, and Beck anxiety inventory.

This PK study will evaluate the ability of DehydraTECH to enhance the delivery characteristics of estrogen.

Estrogen helps to control the menstrual cycle but also controls cholesterol and protects bone health.

This efficacy study will evaluate DehydraTECH-CBD with and without nicotine for the potential treatment of dementia.

Alzheimer’s disease is the most common form of dementia and accounts for at least 60% of all cases, and nicotine is already showing promising results related to Alzheimer’s treatment.

This efficacy study will focus on the ability of DehydraTECH-CBD to potentially affect treatment of rheumatoid disease.

Given CBD’s postulated efficacy related to inflammation, Lexaria will explore a possible role for CBD in this area of investigation.

Rheumatic diseases are autoimmune and inflammatory diseases that cause the immune system to attack joints, bones, muscles, and organs.

Science and Technology

Lexaria is a biotechnology, oral, topical and drug delivery R&D company focused on developing and out licensing DehydraTECH for improved consumer experiences, rapidity, and delivery of bioactive compounds in oral and topical products.

Lexaria is a drug delivery R&D company focused on developing and out licensing DehydraTECH for improved consumer experiences, rapidity, and delivery of bioactive compounds in oral and topical products.

The Company is focusing its capital and management time on its pursuit of intellectual property, technology licensing opportunities, and an expanding portfolio of patent pending applications.

In 2014, the Company acquired the IP that formed our first patent application that was filed in the same year.

From that first patent application, due to ongoing R&D investigation and work by Company management, we now have approximately 60 patent applications pending around the world, with 17 patents granted.

All of our applications and granted patents relate to DehydraTECH that enhances certain characteristics of oral ingredient and drug delivery.

From that first patent application, due to ongoing R&D investigation and work by Company management, we now have approximately 50 patent applications pending around the world, with 23 allowed/patents granted.

All of our applications and allowed/granted patents relate to DehydraTECH and its enhancement of certain characteristics of oral ingredient and drug delivery.

Additional early-stage investigation has been conducted of topically-administered products such as patches, creams and lotions.

The Company developed a variety of demonstration products throughout 2015 to demonstrate the potential uses for DehydraTECH to both consumers and potential licensees.

Seven (7) flavors of teas, hot chocolate, coffee, and two (2) flavors of protein energy bars were produced – all utilizing DehydraTECH for the more palatable and efficient delivery of bioactive molecules.

The Company developed a variety of demonstration products beginning in 2015 to demonstrate the potential uses for DehydraTECH to both consumers and potential licensees.

These included teas, coffee, and protein energy bars – all utilizing DehydraTECH for the more palatable and efficient delivery of cannabinoids.

The Company subsequently developed additional demonstration products including powder filled capsules and mix and serve powders for beverage incorporation also utilizing DehydraTECH for the more palatable and efficient delivery of bioactive molecules.

The Company gained extensive experience and knowledge from the formulation and production of these demonstration products that facilitates assisting our licensees with the integration of DehydraTECH in their products.

In the production of our intermediate products for product manufacturers to use, each raw material, intermediate stage and completed product is assessed for compliance with all applicable regulations, and that the inputs and the finished products meet all applicable legal and quality standards including and as it relates to content;

In the production of our intermediate products for product manufacturers to use, each raw material, intermediate stage and completed product is assessed for compliance with all applicable regulations, and to ensure that the inputs and the finished products meet all applicable legal and quality standards including and as it relates to content;

molds and mildews;

heavy metals;

and may measure additional components.

and additional components.

The US Federal Government, through the US Department of Health and Human Services, owns US Patent #6630507, which among other things, claims that

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and CB2 receptors are found with the human immune system and have been linked to anti-inflammatory and other responses.

Despite independent scientific findings in many locations around the world, some regulatory agencies do not officially recognize that a human endocannabinoid system exists.

Over one hundred different cannabinoids have been isolated from the cannabis plant, most of which do not have psychoactive properties.

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Endocannabinoids are produced naturally in the human body while phyto cannabinoids are produced in several plant species, most abundantly in the cannabis plant.

CBD is one of the major Phyto cannabinoid forms of cannabinoids and is not psychoactive, often contributing more than 35% of the extracts from the cannabis plant resin.

Cannabidiol (“CBD”) is one of the major phyto cannabinoid and is not psychoactive, often comprising more than 35% of the extracts from the cannabis plant resin.

CBD occurs naturally in other plant species beyond cannabis.

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Legislative reform regarding CBD from hemp is continually evolving.

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Status of Operations

Lexaria has a main corporate website (www.lexariabioscience.com) as well as smaller e-commerce focused websites devoted to consumer products.

The majority of product sales have taken place through the e-commerce websites.

A contracted national distribution center ensures rapid and accurate fulfillment of all orders.

A 1-800 ordering center has also been placed into operation.

Most of Lexaria’s revenues are generated from third party businesses either licensing the intellectual property associated with DehydraTECH for incorporation into their products or purchasing DehydraTECH infused intermediate product as a raw material for use within their own products.

Intellectual Property

Since our first patent filing in 2014 for DehydraTECH, we have increased the number of patent applications to approximately 50 and to date have been allowed/granted 23 patents worldwide as of the date of this filing.

The substance of the patents center on the use of DehydraTECH in a variety of products including those that are ingested or topically administered such as CBD, food, beverage, patches, creams, lotions et cetera.

Patents have been filed (and granted in both Australia and the EU) specifically for the use of DehydraTECH with cannabinoids for the treatment of heart disease.

The pending and granted patents also cover the manufacturing and processing methods used to combine fatty acids with active pharmaceutical ingredients.

This includes heating and drying methods and use of excipients and substrates.

Below we summarize Lexaria’s allowed/granted patents.

Issued/Allowed Patent #

Patent Family

US 9,474,725 B1

Food and Beverage Compositions Infused with Lipophilic Active Agents and Methods of Use Thereof

US 9,839,612 B2

US 9,972,680 B2

US 9,974,739 B2

US 10,084,044 B2

US 10,103,225 B2

US 10,381,440

US 10,374,036

US 10,756,180

AU 2015274698

AU 2017203054

AU 2018202562

AU 2018202583

AU 2018202584

AU 2018220067

AU 2016367036

Methods for Formulating Orally Ingestible Compositions Comprising Lipophilic Active Agents

AU 2016367037

Stable Ready-to-Drink Beverage Compositions Comprising Lipophilic Active Agents

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On June 11, 2015, Lexaria initiated the simultaneous filing of a U.S.

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and Vitamins.

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In December 2015, the Company filed two further provisional patent applications in the U.S.

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2015274698) and protects DehydraTECH for twenty years.

Additional patent grants include, but are not limited to:

the use of DehydraTECH as a delivery platform, “composition of matter” claims that protect the specific combination of substances which enable improved taste and bio absorption properties, that protect processes for making specific compositions of matter for enhanced cannabinoid delivery utilizing DehydraTECH.

Additional patent grants include, but are not limited to the use of DehydraTECH as a delivery platform, “composition of matter” claims that protect the specific combination of substances which enable improved taste and bio absorption properties, that protect processes for making specific compositions of matter for enhanced cannabinoid delivery utilizing DehydraTECH.

Of note, Lexaria has received issuance of patents in its second and third patent families representing the first time the Company has been granted claims for use of DehydraTECH in connection with the treatment of specific diseases and medical conditions affecting humans, which the Company believes will prove to be of significance to the pharmaceutical industry sector as it further develops and grows.

Our portfolio consists of the following granted patents:

Issued Patent #

Patent Issuance Date

Patent Family

US 9,474,725 B1

Food and Beverage Compositions Infused With Lipophilic Active Agents and Methods of Use Thereof

US 9,839,612 B2

US 9,972,680 B2

US 9,974,739 B2

US 10,084,044 B2

US 10,103,225 B2

US 10,381,440

US 10,374,036

US 10,756,180

AUS 2015274698

AUS 2017203054

AUS 2018202562

AUS 2018202583

AUS 2018202584

AUS 2018220067

AUS 2016367036

Methods for Formulating Orally Ingestible Compositions Comprising Lipophilic Active Agents

AUS 2016367037

Stable Ready-to-Drink Beverage Compositions Comprising Lipophilic Active Agents

The Company does not know and cannot know whether these strategies will be successful, or if successful, how long it will take to gain customer loyalty.

It can be a challenge to be successful by introducing new consumer products utilizing DehydraTECH to a competitive retail marketplace, and we can offer no assurances that our licensees’ products will be commercially successful.

To date, the Company has not realized significant revenues from its licensees or from the production of its products.

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International Patent Protection

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Our pursuit and development of our technology has expanded our potential area of impact, both geographically and by sector.

Because of the applicability of DehydraTECH to many market sectors across the globe, we have taken the necessary steps to protect that intellectual property within global markets in sectors such as cannabinoids, nicotine, vitamins, and pharmaceuticals.

Because of the applicability of DehydraTECH to many market sectors across the globe, we have taken the necessary steps to protect that intellectual property internationally.

Additional Molecules

Lexaria does not intend to create or produce consumer products ourselves, rather, our business plan is to encourage existing participants within these sectors to license and utilize DehydraTECH to enable enhanced performance of their products.

Some of these additional lipophilic bioactive molecules of interest are summarized below, and additional molecules of interest are continually being evaluated.

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Viruses and bacteria cause the most common infectious diseases in the world today.

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makes up over one-half of the global market.

The opioids market (such as morphine) form the largest single pain management sector but are known to be associated with serious dependence and tolerance issues.

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The opioids market (such as morphine) forms the largest single pain management sector but are known to be associated with serious dependence and tolerance issues.

Some of the most commonly known NSAIDs are ASA (Aspirin), Ibuprofen (Advil, Motrin), and Acetaminophen (Tylenol - Acetaminophen is not accepted by all persons to be an NSAID).

Although NSAIDs are generally a safe and effective treatment method for pain, they have been associated with a number of gastrointestinal problems including dyspepsia and gastric bleeding and certain adverse effects on human kidneys.

The global vitamin and supplement market is worth $68 billion according to Euromonitor.

The category is both broad and deep, comprised of many popular and some lesser known substances.

Vitamins in general are thought to be an $8.5 billion annual market in the U.S.

is the largest single national market in the world, and China and Japan are the 2nd and 3rd largest vitamin markets.

Vitamin E is fat soluble and can be incorporated into cell membranes which can protect them from oxidative damage.

Global consumption of natural source Vitamin E was 10,900 metric tons in 2013 worth $611.9 million.

On August 11, 2015, Lexaria signed a license agreement with PoViva Tea LLC for $10,000, granting Lexaria a 35-year non-exclusive worldwide license to unencumbered use of PoViva Tea LLC’s IP Rights, including rights of resale.

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(formerly PoViva Tea LLC) granted Lexaria an exclusive license to use DehydraTECH technology for a period of time ending 25 years after the date of the last patent granted to PoViva Corp.

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Scientific testing and validation

CBD and Other Cannabinoid Programs

Our experimentation with, and validation of DehydraTECH technology has been ongoing since 2015.

On August 24, 2015, the Company announced achievements in enhanced gastro-intestinal absorption of CBD utilizing DehydraTECH.

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By comparison, orally consumed cannabis edibles typically deliver cannabinoids at an average bioavailability rate of only 5% (Karschner et al.

The Company’s findings suggested that DehydraTECH may achieve a five-fold improvement in cannabinoid absorption in edible form over that which can be achieved without its proprietary process and formulation enhancements.

This conceptually supports that DehydraTECH represents a significant breakthrough in cannabinoid delivery by approximating the high absorption levels achieved as though through administration by smoking, but without the associated negative effects on human health caused by smoking.

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The tests were completed in two phases culminating with testing using simulated intestinal fluid conditions that delivered these findings.

These results were stronger than earlier iterations of the tests that did not use a simulated intestinal fluid environment and contributed to Lexaria’s understanding of the mechanisms at work.

DehydraTECH could significantly reduce individual serving requirements for CBD to consumers.

This could lead to reduced costs of consumption for consumers.

Lexaria believes that the use of DehydraTECH to enhance the absorption of CBD in the recent laboratory tests, is applicable to anti-viral, THC, nicotine, NSAIDs and other lipophilic compounds widely used today.

During January 2015, Lexaria conducted a study of nitric oxide levels in humans, as a biomarker for absorption of CBD, with the expectation that it would provide additional evidence of the efficient absorption of CBD from DehydraTECH -enhanced oral products enhanced with hemp oil, by demonstrating the elevation of nitric oxide in the human body in response to oral ingestion.

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This provided clinical support for the CBD bioavailability enhancing properties of DehydraTECH, on the premise that bioavailable CBD is known to elevate levels of the endocannabinoid anandamide in the human body which, in turn, stimulates release of nitric oxide in the vascular system.

Consuming the Technology-enhanced oral products resulted in elevated levels of nitric oxide within the body.

The results of the study indicated that all of Technology-enhanced oral products elicited significant increases in salivary nitric oxide, achieving levels from 110 µM to as high as 220 µM in the test subjects.

The liquid oral products generally had faster initial responses in as little as 15 minutes after product ingestion, whereas the initial responses from the solid oral products required 30 minutes.

The faster response time with the liquid oral products was to be expected, given the relative ease of digesting liquids versus solids.

All products sustained their maximum levels of nitric oxide detection through to the 60-minute end-points used in the study, indicating a need for additional study to determine the length of time that nitric oxide levels remain elevated following production consumption.

Six healthy human subjects (3 male and 3 female) between the ages of 22 and 65 years of age were recruited for the small pilot study.

Subjects were screened for cardiovascular and allergic response to hemp products, were non-smokers and did not have any history of substance or alcohol abuse.

One product was studied per day across all six subjects, with each subject consuming a full product serving size.

Subjects were required to refrain from eating food or using vape products for at least 12 hours before test article administration on each day of the study.

Nitric oxide levels in the test subjects were assessed using a commercially available, colorimetric test kit designed to quantify systemic nitric oxide via a detectable salivary marker.

Immediately before test article administration each day, all subjects were required to demonstrate a negative baseline nitric oxide saliva test.

Subjects were considered to have a negative test strip reading at a level of 20 µM according to the test strip scale, and positive readings anywhere above this.

Subjects performed salivary nitric oxide testing at 15, 30, 45 and 60 minutes’ post-consumption of each product.

All subjects remained sedentary from baseline through to the completion of testing for each product.

In August of 2018 we released the results from our randomized, placebo-controlled, double-blind European human clinical study that evaluated TurboCBD capsules- a proprietary, DehydraTECH powered, CBD fortified hemp oil capsule developed by Lexaria.

The degree and speed of CBD absorption into blood plasma and potential cardiovascular and cognitive performance enhancement in 12 healthy male volunteers were studied.

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In August of 2018 we released the results from our randomized, placebo-controlled, double-blind European human clinical study that evaluated a DehydraTECH-CBD hemp oil capsule developed by Lexaria.

The degree and speed of CBD absorption into blood plasma and potential cardiovascular and cognitive performance enhancement in 12 healthy male volunteers was studied.

Key metabolic and hemodynamic performance findings linked to bioavailability enhancements were revealed in the study as released in February 2019, which compared a 90 mg dose of Lexaria’s DehydraTECH enhanced TurboCBD capsules to a 90 mg dose without DehydraTECH (the “positive control”) as well as a placebo, as follows:

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p=0.017 and P=0.002 respectively);

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Finally, over the six-hour study, analysis of the total area under the curve (AUC) demonstrated that Lexaria’s DehydraTECH enhanced TurboCBD capsules resulted in a notable trend for higher levels of CBD in the bloodstream overall than the positive control formulation with total AUC of 10,865 ± 6,322 observed with Lexaria’s formulation compared to 7,115 ± 2,978 observed with the positive control (95% CI;

Furthermore, when normalized to body mass, the AUC at the peak CBD concentration was markedly and significantly (95% CI;

p=0.02) higher with the TurboCBD 90 mg dose compared to the 90 mg dose positive control formulation.

These results corroborate and confirm other in vitro and in vivo studies that evaluated DehydraTECH.

Although this study evaluated absorption only of CBD and its metabolites, Lexaria believes nearly identical bioavailability enhancement results would be achieved with other cannabinoids.

During March of 2019 we also launched an in vivo research program to test Lexaria designed nanotech enhancements comprised of eleven separate animal studies and released initial results during May 2019 demonstrating measurable quantities of cannabidiol into blood in as little as 2 minutes.

In each arm of the animal studies, 10 male Sprague-Dawley rats were administered CBD at 25mg per kg of bodyweight.

Delivery of CBD into the bloodstream was monitored over a 60-minute duration.

In the first animal study results it announced, Lexaria compared its standard DehydraTECH formulation that combined cannabinoids with long-chain fatty acids (“LCFA”) using Lexaria’s patented dehydration processing technique to a concentration-matched formulation utilizing coconut oil which is a commonly used MCT oil in the cannabis edibles industry, with the following key findings:

During March of 2019 we also launched an in vivo research program to test Lexaria-designed DehydraTECH enhancements (“Enhanced DehydraTECH”) comprised of eleven separate animal studies and released initial results during May 2019 demonstrating measurable quantities of cannabidiol into blood in as little as 2 minutes.

At 2 minutes DehydraTECH’s LCFA formulation delivered measurable CBD in blood, compared to no measurable CBD in blood until 6 minutes and onwards for the MCT oil formulation.

At 15 minutes DehydraTECH’s LCFA formulation achieved a CBD blood concentration level that was 475% more than the MCT oil formulation;

and, the DehydraTECH LCFA formulation CBD blood levels reached at 15 minutes were greater than the CBD blood levels reached by the MCT oil formulation at any time point during the 60-minute evaluation.

At 60 minutes DehydraTECH’s LCFA formulation achieved a CBD blood concentration level of 319% more than the MCT oil formulation.

Over the entire 60-minute study, the animals that received the standard DehydraTECH LCFA formulation achieved an average maximum CBD blood concentration level that was 334% more than the average maximum blood concentration level of the animals that received the MCT oil formulation (p<0.0021).

Over the entire 60-minute study, the area under the curve (AUC) (total quantity of CBD delivered) for the Lexaria DehydraTECH LCFA formulation was 389% more than the MCT oil formulation (p<0.0011).

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Lexaria also tested for brain tissue concentrations to quantify 8-hour CBD delivery from the DehydraTECH-enabled LCFA formulation compared to the MCT oil formulation and DehydraTECH’s LCFA formulation outperformed the MCT oil formulation by 246%.

The Company released additional results from its March 2019 research program wherein animal testing proved that combining Lexaria’s DehydraTECH delivery technology with generic nanotech techniques delivered 1,137% more CBD into animal brain tissue following oral ingestion than certain existing industry formulations.

Lexaria combined its DehydraTECH delivery technology with a standard form of nanotechnology and analyzed subsequent delivery into brain tissue following oral ingestion.

The Company released additional results from its March 2019 research program wherein animal testing proved that Enhanced DehydraTECH delivered 1,137% more CBD into animal brain tissue following oral ingestion than certain existing industry formulations.

Delivery of CBD into the brain was reported 8 hours after dosing, as follows:

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and during the same time points from 717% to 1098% more CBD than the generic industry MCT coconut oil formulations.

Enhanced DehydraTECH delivered more CBD to blood in just 12 minutes than the MCT coconut-oil formulation was able to achieve at any point during the 1-hour test duration.

Enhanced DehydraTECH is even faster acting, reaching a maximum blood concentration level (“tmax”) in just 45 minutes compared to traditional DehydraTECH at 50 minutes and the MCT coconut oil formulation at 57 minutes.

Enhanced DehydraTECH delivered an astonishing 1,937% more CBD into animal brain tissue after 8 hours compared to generic industry MCT coconut oil formulations;

Enhanced DehydraTECH delivered 1,937% more CBD into animal brain tissue after 8 hours compared to generic industry MCT coconut oil formulations;

and 487% more than traditional DehydraTECH.

Both traditional DehydraTECH and Enhanced DehydraTECH delivered maximum blood concentration levels prior to the 60-minute end-of-test, with levels tapering off thereafter.

The DehydraTECH technology therefore demonstrates both fast onset and fast offset as tested which is of interest for dose titration purposes when repeated dosing is desired.

During 2021, we also commenced further DehydraTECH formulation enhancement and performance optimization work.

In May of 2021, we announced findings from Study HYPER-A21-1 that included three new "DehydraTECH 2.0" CBD formulation variations.

All three new DehydraTECH 2.0 formulations delivered improved performance when compared to both Lexaria's original DehydraTECH and Enhanced-DehydraTECH concentration-matched formulations, as well as to a MCT oil-based control formulation representative of standard industry practices.

These three DehydraTECH 2.0 formulations delivered between 1,068% and 2,178% more CBD during the study period than the standard MCT control formulation, and they also were up to 123% more effective than Lexaria’s original Enhanced DehydraTECH formulation.

The three new DehydraTECH 2.0 formulations also delivered between 907%-1,737% more CBD into brain tissue than the MCT oil-based control formulation, similar to the up to 1,937% increase over the MCT oil based control formulation determined previously for Lexaria's original Enhanced DehydraTECH formulations.

Also during 2021, further DehydraTECH 2.0 formulation work was reported later in May from Study HYPER-A21-2.

One of the DehydraTECH 2.0 formulations tested in this study produced the strongest absorption enhancement results Lexaria has ever recorded, at 2,708% more CBD into bloodstream during the study period than the representative industry standard MCT control formulation.

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Based on our many successes in enhancing CBD absorption in animals, and pursuant to our initial success in reducing blood pressure in our 2018 clinical study, Lexaria progressed to more advanced clinical studies later in 2021.

In July of 2021, we reported findings from Study HYPER-H21-1, in which human blood pressure was reduced across both male and female volunteers and was most pronounced with DehydraTECH-CBD in the first 10-50 minutes of the study.

Blood pressure reduction from baseline was greatest when measured via systolic pressure.

In a subset of volunteers who were Stage 2 hypertensive, peak systolic blood pressure reductions from baseline were observed of as much as approximately 13 mmHg by the 50-minute time point with DehydraTECH-CBD, and systolic BP remained depressed throughout almost the entire 3-hour duration of the study.

There was also a tendency for a greater reduction in relative diastolic pressure from baseline with DehydraTECH-CBD than the concentration matched, generic CBD control tested in this study.

This was most notable in the initial 10 to20 minute period post-dosing evidencing statistical significance at the 20-minute timepoint (p=0.025).

As well, there was a tendency for relative Mean Arterial Pressure ("MAP") to be reduced greater from baseline with the DehydraTECH-CBD than the concentration matched, generic CBD control;

again, most notably in the initial 20 minutes post-dosing.

By comparison, in Lexaria's 2018 human clinical study, 120 minutes were required to achieve the same level of MAP reduction, demonstrating superior rapidity of onset of the CBD formulation used in Study HYPER-H21-1 relatively speaking.

Lexaria was also pleased that its DehydraTECH-CBD was well tolerated by all subjects, with no serious adverse events or side effects observed or reported.

In September of 2021, we reported findings from Study HYPER-H21-2, in which human blood pressure was significantly reduced using DehydraTECH-CBD through the course of a 24 ambulatory study design.

At selected times during the 24-hour study, volunteers with mild to moderate hypertension averaged as much as a 20 mmHg (i.e., 23%) decrease in BP relative to placebo.

Over the 24-hour ambulatory monitoring period, volunteers averaged a significant reduction of 7.0% (p < 0.001) in systolic pressure, a significant reduction of 5.3% (p < 0.001) in MAP and a significant reduction of 3.5% in diastolic pressure relative to an increase in diastolic pressure (-0.8 vs.

p<0.001) from baseline with DehydraTECH-CBD relative to placebo.

Also, of note, DehydraTECH-CBD triggered its most significant effects upon blood pressure attenuation through the overnight period while subjects slept and in the early morning period.

This observation could have tremendous value therapeutically as these periods of the day are most often associated with cardiac stress and infarct events in hypertensive patients when people rise suddenly from and/or become increasingly active relative to the supine/sleeping state.

At the time of this filing, Lexaria has reported that it is pursuing two additional clinical studies that will also investigate the safety and effectiveness of DehydraTECH-CBD for hypertension (i.e., Studies HYPER-H21-3 and HYPER-H21-4).

In addition, Lexaria has reported that it has also formally begun the process toward preparation and filing of an Investigational New Drug (“IND”) application with the Food and Drug Administration (“FDA”) with its DehydraTECH-CBD as a prospective registered pharmaceutical treatment for hypertension.

Beyond Lexaria’s hypertension pursuits with DehydraTECH-CBD, it also announced in November of 2021 that it has commenced important new investigational work (Study EPIL-A21-1) exploring whether DehydraTECH-CBD evidences superior ability to inhibit seizure activity compared to both generic CBD and the world’s only licenced pharmaceutical CBD formulation for treating seizure disorders, Epidiolex.

And, looking forward to 2022, Lexaria has also announced that it is expecting to conduct additional animal studies to evaluate the potential benefits of DehydraTECH-CBD for other disease conditions of interest, including dementia via Study DEM-A22-1, rheumatoid conditions via Study RHEUM-A22-1 and diabetes via Study DIAB-A22-1.

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We have also completed our first study evaluating DehydraTECH used in a topical cream formulation for absorption of CBD through human skin.

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Lexaria’s DehydraTECH-enabled topical formulation, absent either of the commercial penetration enhancers, was the fastest acting for absorption into the epidermis, dermis or through the skin into the systemic fraction representing permeation into the underlying circulatory system.

Lexaria’s DehydraTECH-enabled product also had no odour even without the use of perfumes, contrary to other cannabinoid industry products that can be quite strongly odoriferous without the use of masking perfumes.

Furthermore, Lexaria’s DehydraTECH-enabled topical formulation without the addition of either of the commercial penetration enhancers, demonstrated the highest overall average quantity of CBD delivered through the skin and into the representative systemic fraction of all the formulations tested, with as much as a 225% increase in CBD permeability when compared to the highest performing commercial penetration enhancer formulation assessed and almost a 1,900% increase in CBD permeability when compared to a control formulation that was devoid of both DehydraTECH or any commercial penetration enhancers.

The commercial skin penetration enhancers only demonstrated performance that was on par or superior to the DehydraTECH-enabled formulations tested in so far as total CBD absorption into the shallow epidermis or dermis was concerned.

We have also completed our first ingestible nicotine in vivo (animal) absorption study.

Lexaria is pursuing the use of DehydraTECH as a possible new nicotine delivery method, an edible dose absorbed through the gastrointestinal tract, with potential both as a nicotine replacement therapy as well as an alternative product format for regular tobacco users.

DehydraTECH delivered the following major nicotine absorption performance improvements:

Finally, beyond CBD, we also conducted investigative work with another cannabinoid compound, THC, during 2021.

In Study THC-A21-1, we demonstrated that DehydraTECH-THC delivered via oral ingestion required only 15 minutes to deliver THC levels in blood plasma comparable to levels achieved at 45 minutes with concentration-matched controls.

During the study DehydraTECH-THC delivered more THC into bloodstream than the industry standard MCT based control formulation from the 2-minute mark onwards, then dropped rapidly to the same level as the MCT control by the 6-hour mark.

These data may be of significance to prospective pharmaceutical applications for DehydraTECH-THC based therapeutics, pending further pursuit in this area.

Nicotine Programs

We have also completed ingestible nicotine in vivo (animal) absorption study work.

In a study reported in April of 2018, DehydraTECH delivered the following major nicotine absorption performance improvements:

1,160% faster delivery of equivalent peak quantities of nicotine to the bloodstream than achieved with controls (within 15 min vs.

2.9 hours), 148% gain in the quantity of peak nicotine delivery to the bloodstream relative to controls, 560% higher brain levels of nicotine where nicotine effects are focused, compared to controls, lower urine levels of nicotine excreted than controls, for enhanced nicotine activity and bioavailability over the course of the study, lower quantities of key liver metabolites in the bloodstream than controls as hypothesized, suggesting bypass of first pass liver metabolism.

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The study was designed to principally assess the relative ingestible nicotine absorption performance of DehydraTECH -powered formulations compared to concentration-matched control formulations that lacked any form of delivery enabling technology in rats.

Nicotine was administered in a nicotine polacrilex derivative format as is widely commercialized today in nicotine replacement therapy products such as chewing gums.

Twelve male rats were divided into four groups of three, such that DehydraTECH and control formulations were each tested at a 1 mg/Kg and 10 mg/Kg dosage level.

Formulations were administered orally and all rats were cannulated for blood collection at multiple intervals over an 8 hour duration post-dosing with the first data collection at the 15-minute mark.

Urine and feces were also collected for up to a 24-hour duration post-dosing, and essential organ tissue samples were also collected for examination after the study.

All samples were subjected to analytical testing in order to quantify the levels of nicotine therein, as well as the levels of three major liver metabolites thereof, hydroxycotinine, nicotine N’-oxide and cotinine, in order to assess the relative metabolite levels absorbed by the different formulations.

Lexaria’s hypothesis was tested to prove that DehydraTECH would influence more rapid and complete intestinal bio absorption of nicotine lymphatically with less metabolic degradation by the liver.

All animals were also assessed for general tolerability of the administered formulations.

The study was conducted at the same independent laboratory in Philadelphia where the Company completed its initial CBD absorption study in 2015.

The DehydraTECH formulations generally achieved faster absorption, higher peak absorption, and higher overall quantities of nicotine, on average, in the blood than the concentration-matched control formulations at both the 1mg and 10 mg/Kg doses tested.

Furthermore, as previously reported, there were no obvious signs of gastrointestinal distress such as vomiting or diarrhea indicating that the animals appeared to tolerate the treatment well.

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Nicotine blood levels were evaluated multiple times over a period of 8 hours after dosing.

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Analysis of the liver metabolites revealed, as expected, that overall levels in the blood of two of the three metabolites studied were higher in the control group than in the DehydraTECH formulation group at the 10 mg/Kg dose.

This result was especially pronounced in the 45-minute to 2-hour time interval post-dosing which is consistent with the expected timing of release of metabolites in higher quantity into the bloodstream by the liver following normal physiological processing of ingested nicotine with the control preparation, compared to DehydraTECH that is believed to elude first pass liver metabolism.

The DehydraTECH formulation also demonstrated lower quantities of nicotine in the rat urine at both doses, which is consistent with the fact that the levels of nicotine in the rat blood remained higher over the duration of the study with the DehydraTECH formulation than with the control.

The study also revealed that the DehydraTECH formulation at the 10 mg/Kg level achieved up to 5.6-times as much nicotine upon analysis of the rat brain tissue than was recovered with the matching control formulation.

These findings together perhaps suggest prolongation of nicotine effectiveness with the DehydraTECH formulation which may also be beneficial in humans to control cravings over an extended time-period from a single edible nicotine dose.

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In our follow-up third-party in vivo statistically significant study, including two groups of 20 animals, further defining delivery of nicotine in edible form at each of the 2, 4, 6, 8 and 10-minute intervals post-dosing, with 90.2% greater delivery than the concentration-matched control formulation by the 10-minute mark (95% CI;

Following the above study, additional study work was reported in August of 2018 by way of a follow-up third-party in vivo statistically significant study, including two groups of 20 animals.

This study further demonstrated delivery of nicotine in edible form at each of the 2, 4, 6, 8 and 10-minute intervals post-dosing, with 90.2% greater delivery than the concentration-matched control formulation by the 10-minute mark (95% CI;

p=0.044), and significantly greater absorption levels than the control formulation at all subsequent time points in the study.

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On average, Lexaria’s technology delivered 203 ng/mL to the blood in aggregate of the 2, 4, 6, 8, 10, 12 and 15-minute time points, compared to only 120 ng/mL in aggregate over the same period by the control, an improvement of 70% (95% CI;

In addition to the above described scientific testing and validation studies, Lexaria has also conducted various cannabinoid formulation experiments, together with potential DehydraTECH licensees, on chocolates, candies, gummies, mouth-melts, chocolate bars, protein bars, beverages such as beer, spices, tea, coffee, supplements and more over the past several years.

Beverage formulations have produced cannabinoid water-based products including de-alcoholized beer that mask unwanted cannabis flavor and are fast acting.

Chocolate formulations were reported as being the fastest acting, most consistent, and best-tasting products relative to comparator control formulations in approximately 70% of cases in a 2017 consumer study.

As well, on March 22, 2016, Lexaria announced results from another chocolate formulation consumer study in which test subjects ranked those chocolates that had been created with DehydraTECH as the best tasting, most palatable and providing the best overall experience of the chocolates sampled.

Furthermore, the test subjects in that study indicated a time of onset of the cannabis oil effects in as little as 15-20 minutes on average.

The study included 12 volunteers who were all regular cannabis consumers with experience ingesting conventional edibles.

All chocolates used in the study were blinded (unmarked) in order that the subjects could not discern the product formulations applied.

During March of 2020, we also announced that we were commencing a program to study the prospective benefits of Lexaria’s DehydraTECH drug delivery platform for enhancing delivery and effectiveness of certain antiviral drugs in the fight against coronavirus disease COVID-19.

As an initial step, the Company announced that it intends to conduct a pilot human pharmacokinetic exploratory study in healthy volunteers of three antiviral drugs that have previously been studied against other coronavirus strains, comparing DehydraTECH formulations to controls without DehydraTECH.

It intends to conduct the study at a leading Canadian University where a study design and plan have been submitted for ethics board approval.

If DehydraTECH is proven to increase delivery effectiveness of antiviral drugs, the Company intends to make its Technology available to researchers throughout the world looking to maximize the effectiveness of their own drug investigations.

Thereafter, during 2021, we also pursued study work in animals to investigate the pharmacokinetic performance of certain DehydraTECH 2.0 nicotine formulations specifically via the oral buccal/sublingual route of administration instead of the oral ingestible route of administration investigated previously.

In October of 2021, we reported upon Study NIC-A21-1 conducted in male beagle dogs, which demonstrated that DehydraTECH nicotine delivered via the oral pouch product format required only 2 to 4 minutes to deliver nicotine levels in blood plasma comparable to levels achieved at 45 minutes with concentration-matched controls.

Two nicotine formats were investigated in Study NIC-A21-1, namely nicotine benzoate and nicotine polacrilex.

In the study, the generic nicotine benzoate pouch required approximately 45 minutes to reach its peak delivery rate whereas the DehydraTECH nicotine benzoate pouch reached peak delivery rates at both 8 minutes and again at 30 minutes.

In fact, just 4 minutes after the pouch was placed in the mouth, the DehydraTECH-nicotine had reached a higher delivery level than the generic achieved at any point during the study.

Similarly, the generic nicotine polacrilex pouch also required approximately 45 minutes to reach its very subdued peak delivery rate while the DehydraTECH nicotine polacrilex pouch achieved a comparable level in just 2 minutes.

The DehydraTECH nicotine polacrilex pouch delivered over 10 times the nicotine level in blood plasma at peak than the generic version.

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The Company continually focuses on new R&D programs to expand on its understanding of DehydraTECH, including (i) plans for in vitro absorption tests on Vitamin E and Ibuprofen, having received positive results from its in vitro testing on Nicotine;

and (ii) plans for defining the molecular compatibility, absorption rates, timing and viable formats of delivery of DehydraTECH.

In addition, the Company intends to investigate the potential of additional commercial applications for DehydraTECH.

These include, but are not limited to ongoing programs to explore methods to integrate nanoemulsification chemistry techniques together with DehydraTECH and to further enhance intestinal bioabsorption rates with its technology, as well as ongoing programs to expand the types and breadth of product form factors into which DehydraTECH can be applied.

Depending on how many of these tests are undertaken, R&D budgets are expected to vary significantly.

It is in our best interests to remain flexible at this early stage of our R&D efforts in order to capitalize on potential novel findings from early-stage tests and thus re-direct research into specific avenues that offer the most reward.

Antiviral Drug Programs

We commenced this work initially reporting upon improved delivery in an animal study conducted with the antiviral drugs darunavir and efavirenz, with which we reported significant enhancements in drug delivery announced in December of 2020 in Study VIRAL-A20-1.

Thereafter, we progressed to further study work with other drugs with antiviral properties including remdesivir and ebastine, where we demonstrated improved drug delivery in animal testing in Study VIRAL-A20-2, as well as effective inhibition of the SARS-CoV-2 virus that is responsible for COVID-19 in in vitro testing via Study VIRAL-C21-3 reported in June of 2021.

Finally, we also reported significant improvements in drug delivery in animal using another compound with antiviral properties, colchicine, in Study VIRAL-A20-3, announced in July of 2021.

Technology out-licensing

On May 14, 2016, the Company entered into a Licensing Agreement with Nuka Enterprises, LLC (“Nuka”) for a two-year period, to utilize DehydraTECH to create, test, manufacture, and sell marijuana-infused consumable and/or topical products, in the state of Colorado, with an option of extending the terms of the Licensing Agreement to Washington, Oregon, and California.

On April 30, 2018, the Company announced a new 10-year renewal licensing agreement with Nuka, maker of 1906 brand cannabis chocolates and other edible products.

The new agreement provides Nuka with semi-exclusive ability to utilize the Technology across the U.S.

Nuka also acquired an option to expand its products and brand to Canada, including using Lexaria’s existing chocolate and confections contract manufacturer licensee Cannfections Group Inc.

The agreement incorporates new rights in product categories in addition to the original chocolate formats, which include candies, beverages, capsules and pills, and topical creams.

On May 21, 2019, we announced a major expansion in operations by Nuka over the next two years into Illinois, Ohio, Massachusetts, Michigan and other states.

The comprehensive semi-exclusive agreement provides Nuka and 1906 with competitive technological advantages until 2028.

A second license provides Nuka and 1906 with the immediate ability to utilize DehydraTECH for CBD across the U.S.

On January 25, 2018, the Company announced it entered a definitive technology licensing agreement with a 7-year term with Cannfections Group Inc.

whereby Lexaria is providing its patented Technology to empower next-generation performance in cannabis infused chocolates and candies to be developed and sold in Canada and internationally.

This license is not currently generating operational revenue.

On January 15, 2019, the Company announced that its wholly-owned subsidiary Lexaria Nicotine and Altria Ventures Inc., an indirect wholly owned subsidiary of Altria Group, Inc.

(“Altria”), executed definitive agreements to pursue innovation in oral, reduced risk nicotine consumer products using Lexaria’s patented Technology.

Altria was granted a license to use Lexaria’s Technology for oral nicotine delivery forms on an exclusive basis in the United States and a non-exclusive basis elsewhere globally.

Altria will pay Lexaria Nicotine a royalty on revenue generated from the sale of nicotine products containing DehydraTECH, until such time it may acquire 100% ownership in Lexaria Nicotine.

There is no requirement that Altria must acquire 100% ownership in Lexaria Nicotine.

Altria is obligated to continue investing into Lexaria Nicotine in order to retain the exclusivity provisions within their license for the U.S region and it is not known if Altria will continue to make the investment payments;

if they do not make the payments, their license for the U.S.

region reverts back to non-exclusive.

On May 7, 2019, the Company announced that it entered a definitive 5-year agreement, via its subsidiary Lexaria Hemp Corp., to provide Lexaria’s patented Technology to a private Nevada-based company for its utilization in certain CBD-based beverages to be produced and sold across the U.S.

that may include any combination of ready-to-drink beverages such as non-alcoholic beers, wines and spirits;

cold or hot coffee or teas, sports drinks and more.

Pursuant to the disposition of assets of CanPharm, all of the Company’s licenses associated with THC molecules for non-pharmaceutical purposes were assigned to Hill Street.

As part of an asset purchase agreement entered into between CanPharm and Hill Street, on November 18, 2020, Lexaria Hemp Corp.

(“Hempco”) entered into a 10-year license agreement with Hill Street to license DehydraTECH with respect to multiple products infused with CBD, replacing all previous agreements between the parties.

On January 15, 2019, the Company announced that its wholly owned subsidiary Lexaria Nicotine granted a license to use the DehydraTECH for oral nicotine delivery forms on an exclusive basis in the United States and a non-exclusive global basis to Altria Ventures Inc., an indirect wholly owned subsidiary of Altria Group, Inc.

During fiscal 2021, Altria relinquished their exclusive rights and retain non-exclusive rights within the U.S.

On July 11, 2019, the Company announced that it entered a definitive 5-year agreement, via its subsidiary Hempco, to license DehydraTECH to Universal Hemp LLC, for the production of infused powder substrates for inclusion in finished goods.

This license was subsequently terminated on August 30, 2021.

On December 27, 2019, the Company, via Hempco entered into a 10-year US exclusive license agreement with Boldt Runners Corporation (“Boldt Runners”) for the use of DehydraTECH in connection with manufacturing CBD infused oral pouch products.

Subsequent to the year ended August 31, 2021, Boldt Runners relinquished their exclusive rights and maintain non-exclusive rights.

Subsequent to the year end, on September 16, 2021, Hempco entered into a 10-year license with GlobalCanna Inc.

for the use of DehydraTECH in multiple CBD infused products in the country of Canada.

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On July 10, 2019, the Company announced that it entered a definitive 5-year agreement, via its subsidiary Lexaria Hemp Corp., to provide Lexaria’s Technology to Nic’s Beverages Ltd for use in CBD-based beverages to be produced and sold throughout the United States.

On July 11, 2019, the Company announced that it entered a definitive 5-year agreement, via its subsidiary Lexaria Hemp Corp., to provide Lexaria’s Technology to Universal Hemp LLC, a B2B manufacturing company of hemp-derived bulk ingredients to the nutraceutical and consumer packaged goods industries to be produced and sold across the U.S.

immediately, and in Canada when regulations permit.

Agreed to minimum payments over the life of the 5-year agreement are $3,750,000.

On March 4, 2020, this license was revised to remove exclusivity provisions that Universal Hemp previously enjoyed and reduce the minimum fees payable over the term of the license to $132,500.

On July 24, 2019, the Company announced that it entered a 10-year Joint Manufacturing Partnership (JMP) with Hill Street to produce commercial products including processed THC cannabis and/or CBD hemp powder including among other categories;

tablets, capsules, or packets for sale in Canada and for export where permitted.

The JMP will also produce similar powders as a bulk ingredient for manufacturing processes for sale to other licensed producers seeking to use DehydraTECH to create their own products for sale within Canada.

Profits from this business unit will be shared equally between Hill Street and Lexaria.

In addition Hill Street also replaced its previous license agreement with two new licences to DehydraTECH, one being for the production of CBD beverages (on a non-exclusive basis) globally (excluding Mexico) and the other being for the production of THC beverages (on a semi-exclusive basis) globally (excluding Mexico) for a period of 10 years.

Due to Hill Street not acquiring OneLeaf Cannabis Corp., the THC beverage license may be cancelled by either party on ten (10) days’ notice.

Pursuant to the JMPs and the CBD beverage license, Hill Street will pay an annual licensing fee of $15,000 and a minimum quarterly fee of $10,000.

Pursuant to the terms of the JMP agreements, Lexaria will pay or issue an aggregate of $250,000 in restricted common shares to Hill Street upon the acquisition by Hill Street of a Health Canada cannabis producer license.

As of August 31, 2020, negotiations are underway with Hill Street related to the execution, consolidation, and applicability of the various agreements with the Company.

The continuation of our business interests in these sectors is dependent upon obtaining further financing, a successful program of development, and, ultimately, achieving a profitable level of operations.

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There is uncertainty as to whether we can obtain additional long-term financing if we do in fact require it.

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Our business plan anticipates that we will hire two to four additional staff during fiscal 2021 to enhance operations in our office and licenced laboratory space.

However, the effects of the COVID-19 pandemic call into question our ability to hire additional staff.

We hired two additional staff members during fiscal 2021 to enhance operations in our office and licenced laboratory space.

We currently have eight staff members and do not anticipate hiring large numbers of new staff members during fiscal 2022.

We expect to be able to utilize contracted third parties for our R&D testing programs, instead focusing our capital on higher value-added aspects of our research and development, and scientific test planning.

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There can be no assurance that our competitors are not currently developing, or will not in the future develop, technology that is equally or more effective or is more economically attractive than any of our current or any enhanced versions of DehydraTECH.

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Competition in alternative health sectors and in consumer products in the U.S.

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These technologies can enable exceptional water solubility of ingredients and can impart improved intestinal bio absorption as a result, but do not necessarily offer the breadth of performance and value enhancing benefits that Lexaria’s DehydraTECH technology offers to its licensees.

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Competition in nicotine, alternative nicotine delivery and nicotine cessation sectors in the U.S.

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We believe that if we can educate and influence consumers to adopt a food-grade edible product format, and if US regulatory bodies authorize such formats, we may be able to offer a competitively successful new product format that utilize DehydraTECH.

The legal marijuana industry is comprised of several sub-sectors and is legal under different guidelines in many U.S.

states though it remains illegal federally in the U.S.

Notwithstanding, the overall sector is generally recognized to be one of the fastest growing in the U.S., with state-legal revenue of over $8 billion in 2016.

Independent projections and publicized reports expect revenue of $30 billion or more in 2025, both as the sector gains in credibility and acceptance, and as more and more states legalize either medical use or adult recreational use;

In June of 2019 there were eleven states and one district that had legalized medical and recreational use, and more than twenty-two other states that had legalized medical use.

In any fast-growing industry, competition is expected to be both strong and also difficult to evaluate as to the most effective competitive threats.

While we are an early adopter providing technology to the cannabinoid sector, there are already reports of more than 300 public companies that have claimed to be involved in the sector in some fashion;

and an unknown number of private companies.

While we are an early adopter providing technology to the cannabinoid sector, there are reports of large numbers of public companies that have claimed to be involved in the sector in some fashion, and an unknown number of private companies.

Our current strategies may prove to be ineffective as the sector grows and matures, and if so, we will have to adapt quickly to changing sectoral circumstances.

Accordingly, the Company intends to aggressively pursue technology out-licensing opportunities not only within the cannabinoids sector where it is already active, but also across other sectors where DehydraTECH is patent allowed and/or pending, include opportunities in the vitamin and supplements sector, the pain relief sector, and the nicotine products sector.

The Company limits our relationships within the US cannabis industry to ancillary involvement based on out-licensing of DehydraTECH technology to state licensed entities.

During the year ended August 31, 2021 the Company sold the rights to DehydraTECH using THC and no longer involved in this market segment.

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Lexaria believes that DehydraTECH offers a host of benefits beyond what competing technologies can offer, including superior oral palatability, a more appealing and all-natural ingredient compositional profile from an oral product and beverage formulation perspective, more predictable time of delivery into bloodstream and certain target tissues, and superior scalability and cost effectiveness from a manufacturing perspective.

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Lexaria believes that these competitive advantages together with its wealth of scientific data showing noteworthy bio absorption enhancements with DehydraTECH constitute a compelling value proposition for its prospective licensees, and it intends to continue to pursue license arrangements in the multiple bioactive ingredient sectors identified in its issued and pending patent applications.

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Compliance with Government Regulation

Thirty-nine states in the U.S.

have passed some form of legislation related to that state’s permission to grow, cultivate, sell or use marijuana and/or CBD either for medical purposes or for recreational or “adult use” purposes;

or both (disa.com).

have passed some form of legislation related to that state’s permission to grow, cultivate, sell, or use marijuana and/or CBD either for medical purposes or for recreational or “adult use” purposes, or both (disa.com).

The various state legislation is not necessarily harmonious with one another.

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DehydraTECH is only licensed to those companies that have met and comply with state regulations for the sale or distribution of cannabis related products in the licensed territory where they operate.

Lexaria does not currently manufacture or sell any CBD or THC-related consumer products.

Lexaria’s position is that, just as a telephone company provides communications services, and an electric company provides electrical power, our provision of technological services to a state-legal cannabis company is in compliance with laws and required regulations.

DehydraTECH also has applications in completely separate sectors such as vitamins, NSAIDs, and nicotine.

Lexaria disposed of its assets that were related to the provision of technology to THC-related companies in December of 2020.

DehydraTECH also has applications in completely separate sectors such as vitamins, CBD for applications under pursuit for medical applications registered with the FDA, NSAIDs, and nicotine.

We have no products nor operations in any of these sectors today, although we have commenced formulation development for research and validation purposes in each of these areas.

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As a result of the possibility of Lexaria being involved in a number of disparate business sectors, compliance with government regulations could require significant resources and expertise from our Company.

Farm Bill, which passed in December 2018, and the ambiguity regarding the incorporation of CBD into ingested and topical products has had significant impacts on the industry segments that we operate and have products in and potentially changes some of the regulatory compliance risks that may affect our business.

Farm Bill, which passed in December 2018, and the ambiguity regarding the incorporation of CBD into ingested and topical products has had significant impacts on the industry segments that we operate and potentially changes some of the regulatory compliance risks that may affect our business.

The bill includes lifting restrictions on advertising, marketing, banking, and other financial services as well as allowing interstate commerce for hemp and hemp-derived CBD, removing barriers for intellectual property protections under federal law such as patents and trademarks, as well as several other measures that may positively impact these industry segments overall.

The impact the Bill may have on other regulatory bodies and their regulations will require ongoing monitoring to determine the outcome and timing of any revisions.

Marijuana Production in the United States

In the United States it is still illegal under federal law to grow, cultivate and sell medical or adult use marijuana.

However approximately thirty-two states have approved medical marijuana for use and at least ten states have approved adult use regulations.

The United States Federal Government Justice Department has released memos that will respect the individual states where strict guidelines are followed and enforced so that the health, safety and security are protected at all times by state authorities but there is no assurance that federal laws will not at any time be more vigorously enforced.

If the individual state framework fails to protect the public the federal government will act in enforcing the Controlled Substances act of 1970 and the DEA will enforce the federal law.

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Our company has not entered into, and has no intention to enter, any prospective or definitive arrangement to cultivate, produce or distribute marijuana or related products in the United States.

Our proximity to the marijuana industry is limited to ancillary involvement based on out-licensing of DehydraTECH to state licensed entities.

Contractors and Employees

Employees and Contractors

We utilize employees, sub-contractors and consultants for the company’s intellectual property development and licensing, and business operations.

We have four employees (including one executive officer) and may add research personnel during the next 12 month period to expand our internal R&D capacity.

We have six employees and may add research personnel during the next 12-month period to expand our internal R&D capacity.

None of our employees is represented by a labor union and we consider our employee relations to be good.

We primarily engage with consultants to serve our executive needs.

We also engage with consultants to serve our needs.

The Company has an agreement with CAB Financial Services Ltd., wholly owned by Chris Bunka, for a 3-year term management contract as Chief Executive Officer effective January 1, 2019.

The annual compensation payable is CDN$350,000 per year.

The Company appointed Mr.

John Docherty as President of Lexaria effective April 15, 2015.

The Company compensates Mr.

Docherty by way of an employment agreement and an agreement with Docherty Management Limited, wholly-owned by Mr.

John Docherty with annual compensation of CAD$300,000 for a 3-year term effective January 1, 2019.

The Company, as of the date of this Form-10K, is negotiating a contract agreement with Mr.

Bunka to take effect January 1, 2022.

The Company has engaged Mr.

John Docherty for a 3-year term effective January 1, 2019 as its President.

The Company, as of the date of this Form-10K, is negotiating a contract agreement with Mr.

Docherty to take effect January 1, 2022.

Both of the Chief Executive Officer and the President of the Company are entitled to the following performance incentives:

Performance Incentives

a performance bonus equal to 50% of the annual compensation may be payable upon the completion of certain performance criteria as determined by the board of directors of Lexaria;

compensation equal to 2% of the consideration received by the Company from the sale of a subsidiary, excluding certain circumstances;

Certain compensation to be paid upon a change of control excluding certain circumstances and participation in the Company’s approved stock option plans.

On July 1, 2018 the Company executed an updated three-year consulting contract with M&E Services Ltd.

(M&E), a company wholly-owned by Mr.

Allan Spissinger, with monthly compensation of CAD$12,000 including an 8% annual increase.

The Company may pay Mr.

Spissinger a bonus from time to time, at its sole discretion.

Spissinger will be entitled to receive additional common stock-based and stock option-based bonuses upon achieving certain milestones during the time of his consultancy with the Company.

Compensation equal to 1% of the consideration received by the Company from the sale of a subsidiary, excluding certain circumstances.

Our business plan contemplates increases in the number of employees and other personnel over the next 12-month period to enhance operational, sales and our in-house R&D capacity dependant upon adequate funding.

certain compensation to be paid upon a change of control excluding certain circumstances;

participation in the Company’s approved equity incentive plan.

When beneficial to do so we will continue to outsource contract employment or engagements as needed.

It is not possible to accurately project potential needs into the future based on circumstances that may or may not occur.

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Research and Development

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and (ii) further define molecular compatibility, absorption rates, timing, and viable formats of delivery.

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The Company continually focuses on new R&D programs to investigate potential additional commercial applications for the incorporation of DehydraTECH.

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Lexaria has its wholly owned subsidiaries;

Lexaria CanPharm ULC, Lexaria CanPharm Holdco, PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp.

Lexaria CanPharm ULC, Lexaria CanPharm Holding Corp., PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp.

and Lexaria Pharmaceutical Corp., and our majority owned subsidiary Lexaria Nicotine LLC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business