What changed in this filing

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Item 1. Financial Statements

2023-04-14 compared with 2023-01-17 · 144 added, 111 removed, 251 unchanged (50% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S.

Marketable securities

7 unchanged sentences

Total Non-current Assets

LIABILITIES and STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable and accrued liabilities

Deferred revenue

Lease payable

Total Current Liabilities

Long Term Liabilities

Lease payable

3 unchanged sentences

Share Capital

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

5,950,998 common shares at November 30, 2022 and at August 31, 2022

220,000,000 common voting shares with a par value of $ 0.001 per share

Issued and outstanding:

5,950,998 common shares at February 28, 2023

and at August 31, 2022

Additional paid-in capital

5 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

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

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S.

Dollars, except number of shares)

THREE MONTHS ENDED

For the Three Months Ended

For the Six Months Ended

Cost of goods sold

Research and development

Office and administration

General and administrative

Total operating expenses

$ ( 1,310,638 )

$ ( 1,448,673 )

Net loss for the period

$ ( 3,079,944 )

4 unchanged sentences

$ ( 1,425,776 )

$ ( 3,054,075 )

$ ( 3,418,933 )

Non-controlling interest

Basic and diluted loss per share

Weighted average number of common shares outstanding

Weighted average shares outstanding

- 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 unaudited condensed consolidated interim financial statements.

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S.

THREE MONTHS ENDED

For the Six Months Ended

Cash flows used in operating activities

7 unchanged sentences

Unrealized loss on marketable securities

Unrealized foreign exchange

Shares issued for services

Lease accretion

4 unchanged sentences

Due to related parties

Net cash used in by operating activities

Operating lease liability

Deferred revenue

Net cash used in operating activities

$ ( 2,473,590 )

13 unchanged sentences

Supplemental information of cash flows:

Income taxes paid in cash

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

Non-cash shares for services included in prepaid expenses

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S.

STOCKHOLDERS'

For the Six Months Ended February 28, 2023 and 2022

Balance August 31, 2022

$ ( 39,098,528 )

$ ( 316,414 )

Stock based compensation

4 unchanged sentences

$ ( 40,854,472 )

$ ( 329,776 )

Stock based compensation

( 1,298,131 )

Non-controlling interest

Balance February 28, 2023

$ ( 42,152,603 )

$ ( 342,283 )

Balance August 31, 2021

$ ( 31,829,204 )

$ ( 202,085 )

Stock based compensation

4 unchanged sentences

$ ( 33,822,361 )

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

$ ( 212,410 )

Shares issued for services

( 1,425,776 )

Non-controlling interest

Balance February 28, 2022

$ ( 35,248,137 )

$ ( 235,307 )

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

LEXARIA BIOSCIENCE CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2022

(Expressed in U.S.

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2023

Nature of Business

Lexaria Bioscience Corp.

(“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 (“API”) using our proprietary DehydraTECH drug delivery technology.

Revenues are generated from licensing contracts for the Company’s patented DehydraTECH technology based on the terms of use and defined geographic and licensing arrangements.

We derive income from our third party contracted manufacturing of B2B DehydraTECH enhanced products made to customer specifications that are sold online and in-store in the US and Canada.

(“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 (“API”) using DehydraTECH TM , our patented proprietary drug delivery technology.

We are primarily a research and development company that continues to investigate the benefits of using DehydraTECH with numerous molecules.

Revenues are generated from intellectual property (“IP”) licensing contracts for DehydraTECH based on the terms of use and defined geographic and licensing arrangements.

We derive income from our third party contracted manufacturing of Business-to-Business (“B2B”) DehydraTECH enhanced products which are made to customer specifications and sold online and in stores in the US.

We also perform contract services in R&D for customer specific formulations that are used in comparison testing to customers’ existing products.

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Since inception, the Company has incurred significant operating and net losses.

The losses attributable to shareholders were $ 7.4 m, $ 4.2 m and $ 4.1 m for the years ended August 31, 2022, 2021 and 2020, respectively.

As of November 30, 2022, we had an accumulated deficit of $ 40.9 m.

Annual losses attributable to shareholders were $ 7.4 m (2022), $ 4.2 m (2021) and $ 4.1 m (2020).

As of February 28, 2023, we had an accumulated deficit of $ 42.2 m.

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

Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the stage and complexity of our R&D studies and corporate expenditures, additional revenues received from the licensing of our technology, if any, and the receipt of payments under any current or future collaborations we may enter into.

The recurring losses from operations and negative cash flows from operations raise substantial doubt about the Company’s ability to continue as a going concern.

As of November 30, 2022, the Company had cash of approximately $4.5m and carries no significant debt other than amounts payable in the short term.

Also, on August 12, 2022, we entered into a sales agreement with Maxim Group LLC, (“Maxim”), pursuant to which we may offer and sell shares of our common stock with an aggregate offering price of up to $5,925,000 under the At-The-Market (“ATM”) Offering.

The sales agreement provides that Maxim will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the ATM Offering.

As of January 17, 2023 we have not sold any shares under the ATM Offering.

Based on our existing working capital and access to an ATM offering, as disclosed above management believes the Company has sufficient working capital to satisfy the Company’s estimated liquidity needs for the next 12 months.

Because of the above factors, the Company believes that this alleviates the substantial doubt in connection with the Company's ability to continue as a going concern.

However, there is no assurance that management’s plans will be successful due to the current economic climate in the United States and globally.

The recurring losses and negative cash flows from operations raise substantial doubt about the Company’s ability to continue as a going concern.

These financial statements do not contain any adjustments that might result for this uncertainty.

The Company entered into a sales agreement with Maxim Group LLC, (“Maxim”) on August 12, 2022, pursuant to which we may offer and sell shares of our common stock with an aggregate offering price of up to $5,925,000 under an At-The-Market (“ATM”) Offering.

This agreement provides that Maxim will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the ATM.

We may also offer securities for sale during our fiscal year 2023 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.

Based on our existing working capital and access to an ATM, management believes the Company has sufficient working capital to satisfy the Company’s estimated liquidity needs for the next 12 months.

In making this assessment, the Company believes that this alleviates the substantial doubt in connection with the Company's ability to continue as a going concern.

However, there is no assurance that management’s plans will be successful.

If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate some or all of its research and development programs, preclinical and clinical testing or commercialization efforts, which could adversely affect its business prospects.

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, 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 B2B production.

As of February 28, 2023, there has been no material impact on the Company’s financial position as a direct result of the pandemic.

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 B2B production.

Management views this situation as transitory but cannot predict the length of time it may take for these disruptions to dissipate or if there will be a significant economic effect on the Company’s operations.

2 unchanged sentences

We do not know when it will become practical to relax or eliminate some or all these measures entirely.

The economic effect of a prolonged pandemic is difficult to predict and could result in material financial impact in the Company’s future reporting periods.

The economic effect of a prolonged pandemic is difficult to predict and could result in a material financial impact in the Company’s future reporting periods.

Significant Accounting Policies

2 unchanged sentences

These interim consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries;

Lexaria CanPharm ULC, Lexaria CanPharm Holdings Corp., PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp., and Lexaria Pharmaceutical Corp., and our 83.33 3% owned subsidiary Lexaria Nicotine LLC with the remaining 16.66 7% owned by Altria Ventures Inc., an indirect wholly owned subsidiary of Altria Group, Inc.

Lexaria CanPharm ULC, Lexaria CanPharm Holdings Corp., PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp., and Lexaria Pharmaceutical Corp., and our 83.333 % owned subsidiary Lexaria Nicotine LLC with the remaining 16.66 7% owned by Altria Ventures Inc.

an indirect wholly owned subsidiary of Altria Group, Inc.

All significant intercompany balances and transactions have been eliminated upon consolidation.

Basis of Presentation

The Company’s unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

The Company’s unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (US GAAP) have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

Interim results are not necessarily indicative of results for a full year or any subsequent period.

Interim results are not necessarily indicative of results for a full year or for any subsequent period.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated annual financial statements and notes thereto included in our annual report filed on Form 10-K for the year ended August 31, 2022.

10 unchanged sentences

Estimates and Judgments

The preparation of financial statements in conformity with U.S.

GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of financial statements in conformity with US GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Some of the Company’s accounting policies require us to make subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

7 unchanged sentences

The components of Marketable Securities were as follows:

Unrealized Gains

Unrealized Losses

August 31, 2021

$ ( 219,427 )

August 31, 2022

$ ( 1,102,236 )

November 30, 2022

February 28, 2023

$ ( 1,181,867 )

Marketable securities represented the common shares of Hill Street Beverage Company Inc.

held by Lexaria.

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

In management’s opinion based on the evaluation of available information at the quarter ended November 30, 2022, unrealized losses represent temporary impairments.

Accounts Receivables

Accounts receivable at November 30, 2022 and August 31, 2022 consist of the following:

Marketable securities held by Lexaria represent available-for-sale common stock of Hill Street Beverage Company Inc.

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

In management’s opinion based on the evaluation of available information at February 28, 2023, unrealized losses represent temporary impairments.

Accounts Receivable

Accounts receivable at February 28, 2023 and August 31, 2022 consist of the following:

Trade and deposits

Territory license fees

Inventory at November 30, 2022 and August 31, 2022 consist of the following:

Inventory at February 28, 2023, and August 31, 2022, consists of the following:

Raw materials

During the three month period ended November 30, 2022, inventory valued at $ 25,243 was expensed to research and development.

Work in progress

During the six-month period ended February 28, 2023, raw materials inventory valued at $ 29,391 was expensed to R&D.

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Prepaid Expenses and Deposits

Prepaid expenses consist of the following at November 30, 2022, and August 31, 2022:

Prepaid expenses consist of the following at February 28, 2023 and August 31, 2022:

Advertising & conferences

3 unchanged sentences

Intellectual Property, net

The following is a list of US capitalized patents held by the Company:

The following is a list of capitalized US patents held by the Company:

Issued Patent #

18 unchanged sentences

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Property & Equipment, net

Three Months Ended

November 30, 2022

Property & Equipment

Six Months Ended February 28, 2023

Period Amortization

Accumulated Amortization

Leasehold improvements

$ ( 221,704 )

Furniture fixtures equipment

Lab equipment

August 31, 2022

$ ( 427,890 )

Year Ended August 31, 2022

Period Amortization

Accumulated Amortization

Leasehold improvements

$ ( 194,685 )

Furniture fixtures equipment

Lab equipment

During the three-month period ended November 30, 2022, $2,438 of depreciation was included in cost of goods sold.

$ ( 101,900 )

$ ( 379,993 )

During the six month period ended February 28, 2023, amortization of $ 2,883 was included in cost of goods sold.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at November 30, 2022 and August 31, 2022 consist of the following:

Accounts payable and accrued liabilities at February 28, 2023 and August 31, 2022 consist of the following:

Accounts Payable

4 unchanged sentences

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A breakdown of our revenues by type for the three months ended November 30, 2022 and 2021 are as follows:

Three Months Ended

During the period ended November 30, 2022, the Company recognized B2B product revenues of $ 29,100 (2021 - $ 7,000 ) that relate to sales of our intermediate products for use by B2B customers in their products.

Licensing revenue consist of IP licensing fees for transfer of the DehydraTECH technology in line with definitive agreements and also includes royalty fees.

The Company recognized $ 63,435 (2021 - $Nil) in licensing revenue in the same period.

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, 2022, the Company issued no warrants.

A continuity schedule for warrants is presented below:

A breakdown of our revenues by type for the six months ended February 28, 2023 and 2022 are as follows:

Six Months Ended February 28,

During the six month period ended February 28, 2023, the Company recognized licensing revenue consisting of IP licensing fees for transfer of the DehydraTECH technology in line with definitive agreements and also includes royalty fees.

B2B product revenues of $ 30,300 (2022 - $ 17,512 ) were recorded that relate to sales of our intermediate products for use by B2B customers in their products.

The Company recognized $ 80,310 (2022 - $ 16,160 ) in licensing revenue in the same period.

Common Shares, Warrants and Options

There was no change to our issued and outstanding shares during the six-months ended February 28, 2023.

During the six months ended February 28, 2023, no warrants were issued or exercised.

A continuity schedule for warrants for the six months ended February 28, 2023, is presented below:

Number of Warrants

Weighted Average Exercise Price

Balance August 31, 2022

Cancelled/expired

Balance November 30, 2022

A summary of warrants outstanding as of November 30, 2022, is presented below:

# of Warrants

Weighted Average

Remaining Contractual Life

Weighted Average Exercise

1.96 - 2 .00 years

1.38 - 2.29 years

Balance February 28, 2023

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A summary of warrants outstanding as of February 28, 2023, is presented below:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (years)

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 an Equity Incentive Plan whereby the board of directors may grant up to 510,433 stock options 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.

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

The exercise price of an option is equal to or greater than the closing market price of the Company’s common shares on the day preceding the date of grant.

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, 2022:

Exercise Price $

A continuity schedule for stock options is presented below:

The Company granted the following options during the six months ended February 28, 2023:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value $

Contractual Life

Remaining Life) 4.64

A continuity schedule for stock options is presented below:

Average Exercise

Weighted Average Remaining Contractual

Balance August 31, 2021

1 unchanged sentence

Balance August 31, 2022

Balance November 30, 2022 (granted)

Balance November 30, 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:

Balance February 28, 2023 (granted)

Balance February 28, 2023 (exercisable)

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The fair value of stock options granted in the six months ended February 28, 2023 were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

Expected volatility

4 unchanged sentences

$ 1.60 - $ 2.58

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As of February 28, 2023, the total unrecognized non-cash compensation costs are $ 95,369 related to 27,500 non-vested stock options with a weighted average price of $ 4.40 .

These costs are expected to be recognized over a weighted average period of 0.37 years.

All non-vested options are attributable to employees.

Commitments, Significant Contracts and Contingencies

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 are located in Kelowna, British Columbia, Canada.

The facility 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 other operating costs which are subject to annual adjustments.

February 28, 2023

August 31, 2022

Right of use assets - operating leases

52,444 91,041

( 10,104 ) ( 38,597 )

Total lease assets

42,340 52,444

49,989 89,393

Lease payments

( 11,204 ) ( 44,600 )

Interest accretion

Total lease liabilities

39,629 49,988

Operating lease cost

52,444 52,444

Operating cash flows for lease

11,204 44,599

Remaining lease term

Discount rate

7.25 % 7.25 %

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, 2022:

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, 2023:

2023 (six months remaining)

Total lease payments

2 unchanged sentences

current obligations under leases

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Segment Information

2 unchanged sentences

The Company has identified two reportable segments:

Intellectual Property and Products.

Intellectual Property and B2B Products.

Licensing revenues are significantly concentrated on one licensee.

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Three Months Ended

November 30, 2022

Six Months Ended February 28, 2023

Consolidated Total

6 unchanged sentences

$ ( 2,943,013 )

Three Months Ended

November 30, 2021

$ ( 3,079,944 )

Six Months Ended February 28, 2022

Consolidated Total

External revenue

Cost of goods sold

4 unchanged sentences

$ ( 1,351,552 )

$ ( 185,056 )

$ ( 1,915,548 )

$ ( 3,452,156 )

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Capital Asset by Region

Six Months Ended February 28, 2023

Addition Canada

Net Balance Canada

Total Net Balance

Three Months Ended

November 30, 2022

Leasehold Improvements

2 unchanged sentences

Capital Asset by Region

Year Ended August 31, 2022

Addition Canada

1 unchanged sentence

Total Net Balance

Year Ended August 31, 2022

Leasehold Improvements

1 unchanged sentence

Lab Equipment

Subsequent Events

Subsequent to February 28, 2023, the Company sold 34,652 shares under the ATM Offering for gross proceeds of $ 114,456 with an average price of $ 3.30 per share.

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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-Q

Item 1. Financial Statements