What changed in this filing

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Item 1. Financial Statements

2022-04-11 compared with 2022-01-14 · 82 added, 74 removed, 338 unchanged (32% of the section changed)

22 unchanged sentences

220,000,000 common voting shares with a par value of $ 0.001 per share Issued and outstanding:

5,726,699 common shares at November 30, 2021 and at August 31, 2021

5,950,998 common shares at February 28, 2022 and 5,726,699 common shares at August 31, 2021

Additional paid-in capital

10 unchanged sentences

Dollars, except number of shares)

THREE MONTHS ENDED NOVEMBER 30,

THREE MONTHS ENDED

SIX MONTHS ENDED

Cost of goods sold

Research and development

Office and administration

Net loss from continuing operations

General and administrative

Total operating expenses

Loss from operations

( 1,448,673 )

( 1,104,514 )

( 3,452,155 )

( 1,817,635 )

Gain on disposal of assets

Discontinued operations

Income (loss) from discontinued operations

Net loss and comprehensive loss for the period

Net and comprehensive income (loss) for the period

$ ( 1,448,673 )

$ ( 3,452,155 )

Net loss and comprehensive loss attributable to:

$ ( 316,931 )

Net and comprehensive income (loss) attributable to:

Common shareholders

7 unchanged sentences

- Basic and diluted

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

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

LEXARIA BIOSCIENCE CORP.

1 unchanged sentence

(Expressed in U.S.

THREE MONTHS ENDED

SIX MONTHS ENDED

Cash flows used in operating activities

7 unchanged sentences

Bad debt expense

Noncash right-of-use lease expense

Unrealized (gain) loss on marketable securities

Unrealized foreign exchange

Non-cash right of use lease expense

Gain on disposal of assets

( 1,522,704 )

Unrealized loss on marketable securities

Shares issued for services

Lease accretion

9 unchanged sentences

Cash flows used in investing activities

Purchase of equipment

Disposal (acquisition) of assets

Intellectual property

1 unchanged sentence

Cash flows from financing activities

Repayment of loan payable

Lease payments

Net cash provided by financing Activities

Proceeds from issuance of equity

Net cash provided by (used in) financing Activities

Net cash provided by discontinued operations

5 unchanged sentences

Income taxes paid in cash

Non-cash consideration on asset disposal

Non-cash shares for services included in prepaid expenses

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

2 unchanged sentences

(Expressed in U.S.

SHARE CAPITAL

STOCKHOLDERS'

26 unchanged sentences

( 1,993,157 )

Non-controlling interest

1 unchanged sentence

( 33,822,361 )

Shares issued for services

( 1,425,777 )

Non-controlling interest

Balance February 28, 2022

( 35,248,138 )

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

1 unchanged sentence

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2021

February 28, 2022

(Expressed in U.S.

1 unchanged sentence

Lexaria Bioscience Corp.

(“Lexaria”, “we”, “our” or the “Company”) is a research and development focused biotechnology company pursuing the enhancement of the bioavailability of a diverse and broad range of active pharmaceutical ingredients (“API”) using our proprietary DehydraTECH drug delivery technology.

Revenues are received from licensing the Company’s patented technology to partners who pay either a license fee to use DehydraTECH in the manufacturing of their own products or purchase DehydraTECH manufactured products made to their specifications by Lexaria.

(“Lexaria”, “we”, “our” or the “Company”) is a biotechnology company pursuing the enhancement of the bioavailability of a diverse and broad range of active pharmaceutical ingredients (“APIs”) using our patented drug delivery technology DehydraTECH TM .

Through continued validation of our research and development our focus is on national and international application for DehydraTECH.

Revenues are primarily derived from licensing fees for the use of the Company’s patented technology to partners who pay either a fee to use DehydraTECH in the manufacturing of their own products or through the purchase of DehydraTECH manufactured products made to their specifications by Lexaria.

The Company has relationships with several consumer products companies in the CBD and nutraceuticals spaces that use Lexaria’s technology in consumer goods being sold online and at retailers in the US and Canada.

5 unchanged sentences

The losses attributable to common shareholders were $ 4.2 m, $ 4.1 m and $ 4.2 m for the years ended August 31, 2021, 2020 and 2019, respectively.

As of November 30, 2021, we had an accumulated deficit of $33.8m.

As of February 28, 2022, we had an accumulated deficit of $ 35.25 m.

We expect to continue to incur significant operational expenses and net losses in the upcoming 12 months.

2 unchanged sentences

In the fourth quarter of the year ended August 31, 2021, the Company received $ 4,015,043 from the exercise of warrants.

We may offer additional securities for sale during our fiscal year 2022 or thereafter in response to market conditions or other circumstances if we believe such a plan of financing is required to advance the Company’s business plans and is in the best interests of our stockholders.

We may offer additional securities for sale during fiscal year 2022 or thereafter in response to market conditions or other circumstances if we believe such a plan of financing is required to advance the Company’s business plans and is in the best interests of our stockholders.

The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern.

As of November 30, 2021, the Company had cash of approximately $9.7m.

As of February 28, 2022, the Company had cash of approximately $ 8.4 m.

We believe this is sufficient to enable the Company to fund its operating and R&D expenses and any capital expenditure requirements through one year from the issuance date of these unaudited consolidated financial statements.

To date, we have obtained cash and funded our operations primarily through equity financings and license agreements.

In order to continue the development of our drug candidates, at some point in the future we expect to pursue one or more capital transactions, whether through the sale of equity securities, debt financing, license agreements or entry into strategic partnerships.

There can be no assurance that we will be able to continue to raise additional capital in the future.

Impacts of COVID-19 Pandemic

The emergence of the COVID-19 pandemic in 2020 continues to present uncertainty and unforecastable new risks to the Company and its business plans.

As of November 30, 2021, there has been no material impact on the Company’s financial position as a direct result of the pandemic.

As of February 28, 2022, there has been no material impact on the Company’s financial position as a direct result of the pandemic.

However, the Company has experienced some supply chain disruptions and shortages in the timely procurement of ingredients and supplies used in both our R&D activities and production.

34 unchanged sentences

Pronouncements Issued but Not Yet Adopted

In October of 2021, the FASB issued an update to Government Assistance (topic 832) to increase the transparency of government assistance and its disclosure in the notes to the financial statements.

Amendments in this update take effect for annual periods beginning after December 31, 2021.

Early application of the amendments is permitted.

The Company does not expect the adoption of these standards to have a material impact on its consolidated financial statements

In June 2016, the FASB issued ASU No.

11 unchanged sentences

Raw materials

Work in progress

During the period ended November 30, 2021, the Company wrote down $Nil (November 30, 2020 -$1,765) in finished goods.

During the period ended February 28, 2022, the Company wrote down $Nil (February 28, 2021-$ 2,482 ) in finished goods.

Intellectual Property

13 unchanged sentences

US 10,756,180

Page 10 of 31

A continuity schedule for capitalized patents is presented below:

3 unchanged sentences

Property & Equipment

Three Months Ended November 30, 2021

Six Months Ended February 28, 2022

Accumulated Amortization

Net Balance February 28, 2022

Leasehold improvements

1 unchanged sentence

Lab equipment

For the six months ended February 28, 2022, amortization of $ 1,118 (February 28, 2021 - $ 6,010 ) was included in the cost of goods sold.

Year Ended August 31, 2021

4 unchanged sentences

Lab equipment

During the three-month period ended November 30, 2021, $231 of amortization was included in the cost of goods sold.

Page 11 of 31

Accounts Payable and Accrued Liabilities

6 unchanged sentences

Common Shares and Warrants

The fair value of share purchase warrants granted was estimated as of the date of the grant by using the Black-Scholes option pricing model.

During the quarter ended November 30, 2021, the Company issued no warrants.

In December of 2021, the Company entered a one-year media outreach agreement to SRAX Inc.

and issued 224,299 shares as consideration for an aggregate value of $ 1.2 m.

During the quarter ended February 28, 2022, the Company issued no warrants.

A continuity schedule for warrants is presented below:

5 unchanged sentences

Cancelled/expired

Balance November 30, 2021

A summary of warrants outstanding as of November 30, 2021, is presented below:

Balance February 28, 2022

A summary of warrants outstanding as of February 28, 2022, is presented below:

# of Warrants

1 unchanged sentence

Weighted Average Exercise Price $

Page 12 of 31

Stock Options

The Company has established the Equity Incentive Plan whereby the board of directors may, from time to time, grant up to 510,433 stock options to directors, officers, employees, and consultants.

The Company has established the Equity Incentive Plan whereby the board of directors may, from time to time, grant stock options up to the equivalent of 10% of the number of common shares issued and outstanding to directors, officers, employees, and consultants .

Stock options granted must be exercised within five years from the date of grant or such lesser period as determined by the Company’s board of directors.

1 unchanged sentence

The vesting terms of each grant are set by the board of directors.

The Company granted the following options during the quarter ended November 30, 2021:

Exercise Price $

The Company did not grant any options during the quarter ended February 28, 2022.

A continuity schedule for stock options is presented below:

5 unchanged sentences

Balance August 31, 2021

Balance November 30, 2021 (Outstanding)

Balance November 30, 2021 (Exercisable)

Balance February 28, 2022 (Outstanding)

Balance February 28, 2022 (Exercisable)

The fair value of share purchase options granted were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

4 unchanged sentences

Estimated fair value per option

Page 13 of 31

Product sales

1 unchanged sentence

Other revenue

Income from ongoing operations

Income from discontinued operations

Product revenues of $7k and licensing usage fees of $Nil represent significant declines in intermediate product sales and related licensing usage fees during the period ended November 30, 2021.

Income from operations

Product revenues of $ 17.5 k and licensing usage fees of $ 16 k represent a significant decrease in intermediate product sales and related licensing usage fees during the six months ended February 28, 2022.

Related Party Transactions

1 unchanged sentence

Related party transactions are recorded at the exchange amount established and agreed to between the related parties.

As at November 30, 2021, $Nil (August 31, 2021 - $5,233) was payable to and included in due to related parties.

As at February 28, 2022, $ 6,884 , included in accrued liabilities.

At August 31, 2021 - $ 5,223 was payable to and included in due to related parties.

Segment Information

4 unchanged sentences

Licensing revenues are significantly concentrated on one licensee.

Three Months Ended November 30, 2021

Six Months Ended February 28, 2022

Consolidated Total

5 unchanged sentences

( 1,351,552 )

Three Months Ended November 30, 2020

( 1,915,548 )

Six Months Ended February 28, 2021

Consolidated Total

2 unchanged sentences

Operating expenses

( 1,551,689 )

Discontinued operations

Segment income (loss)

Page 14 of 31

( 1,551,689 )

Capital Asset by Region

1 unchanged sentence

Total Net Balance

Three Months Ended November 30, 2021

Six Months Ended February 28, 2022

Leasehold Improvements

2 unchanged sentences

Capital Asset by Region

Net Balance US

Net Balance Canada

6 unchanged sentences

Right of Use Assets - Operating Lease

The Corporate office and R&D lab space located in Kelowna, British Columbia, Canada is leased until November 15, 2023, with a five-year renewal option.

In addition to minimum lease payments, the lease requires us to pay property taxes and operating costs which are subject to annual adjustments.

The Corporate office and R&D laboratory located in Kelowna, British Columbia, Canada is leased until November 15, 2023, with a five-year renewal option.

In addition to minimum lease payments, the lease requires us to pay, subject to annual adjustments, property taxes and operating costs.

Right of use assets - operating leases

7 unchanged sentences

Discount rate

Page 15 of 31

Pursuant to the terms of the Company’s lease agreements in effect, the following table summarizes the Company’s maturities of operating lease liabilities as of November 30:

Pursuant to the terms of the Company’s lease agreements in effect, the following table summarizes the Company’s maturities of operating lease liabilities as of February 28:

Total lease payments

3 unchanged sentences

Prepaid Expenses and Deposits

Prepaid expenses consist of the following at November 30, 2021, and August 31, 2021:

Prepaid expenses consist of the following at February 28, 2022, and August 31, 2021:

Advertising & conferences

4 unchanged sentences

August 31, 2021

November 30, 2021

February 28, 2022

Unrealized gains and losses from common stock are due to market price movements.

Management does not believe any remaining unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence.

Page 16 of 31

Discontinued Operations

12 unchanged sentences

The following table presents financial results of the assets:

THREE MONTHS ENDED

SIX MONTHS ENDED

Operating Expenses

1 unchanged sentence

The following table presents cash flows of discontinued operations:

THREE MONTHS ENDED

SIX MONTHS ENDED

Cash flows used in discontinued operating activities

2 unchanged sentences

Net cash provided by discontinued operations

Page 17 of 31

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of the assets:

Current Assets

Accounts receivable

Total assets classified as discontinued operations in the consolidated balance sheet

Current Liabilities

Accounts payable

Total liabilities classified as discontinued operations in the consolidated balance sheet

Subsequent Events

The three-year management contracts for our CEO and our President expired on December 31, 2021.

On December 31, 2021, the Company entered into new three-year contracts with Mr.

Chris Bunka, our CEO and Chairman of the Board and Mr.

John Docherty, our President and Board member.

These contracts are aligned with the previous contracts in that Mr.

Bunka will receive, C$356k per year and Mr.

Docherty C$310k year, with annual increases based on the annual Canadian inflation rate plus 1.5%.

The contracts are attached to this report as exhibits and a summary of the conditions and benefits of these employment contracts were previously disclosed in the Company’s report on Form 8-K, filed on January 4, 2022.

In December of 2021 the Company entered into a one-year media outreach agreement with SRAX Inc.

and issued 224,299 shares as consideration for an aggregate value of $1.2m.

Page 18 of 31

On March 8, 2022 Lexaria granted 36,700 stock options bearing an exercise price of $ 3.39 for a period of five years ending March 8, 2027.

The Options were issued pursuant to the Company’s registered Incentive Equity Plan and any common shares issued upon the exercise of the Options will be unrestricted securities.

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-Q

Item 1. Financial Statements