What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-04-14 compared with 2023-01-17 · 102 added, 110 removed, 126 unchanged (63% of the section changed)

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

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in US$.

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

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in US dollars.

All references to “common shares” and “shares” refer to the common shares in our capital stock, unless otherwise indicated.

The terms “Lexaria” “we”, “us”, “our” and “Company” mean the Company and/or our subsidiaries, unless otherwise indicated.

The following discussion should be read in conjunction with our condensed financial statements and accompanying notes in this quarterly report on Form 10-Q, and our audited financial statements with notes in our annual report on Form 10-K for the year ended August 31, 2022.

Lexaria’s patented DehydraTECH technology improves the delivery of bioactive compounds while promoting healthy ingestion methods, lowers overall dosing, and is highly effective in active molecule delivery available in a range of formats from oral ingestible to oral buccal/sublingual to topical products.

DehydraTECH substantially improves the rapidity and quantity of Active Pharmaceutical Ingredients (“API”) transport to the blood plasma and brain using the body’s natural process for distributing fatty acids via the oral route.

This technology extends across many categories beyond the primary pharmaceutical focus of the Company from foods and beverages to cosmetic products and nutraceuticals.

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Applications of this technology extends across many categories beyond the primary pharmaceutical focus of the Company from foods and beverages to cosmetic products and nutraceuticals.

Our mission is to obtain FDA approval for a DehydraTECH – CBD drug for use on hypertension.

Lexaria operates a federally licensed, in-house research laboratory and continues to build upon our intellectual property portfolio with 28 patents granted internationally and roughly 50 patents pending worldwide.

Lexaria is advancing several R&D activities in both preclinical and future clinical programs.

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In fiscal 2022 we completed three human studies on hypertension with the results of our fourth and largest hypertension study to date continuing to be released throughout fiscal 2023.

Preliminary results announced in October 2022

The FDA provided us with a positive written response from our pre-IND meeting regarding DehydraTECH-CBD for the treatment of hypertension.

The FDA confirmed that it has agreed with Lexaria’s proposal to pursue a 505(b)(2) new drug application (“NDA”) regulatory pathway for our program.

We continue working toward our IND filing which is anticipated to be in late fiscal 2023 or early 2024.

During the year ended August 31, 2022, we also completed studies in NSAIDS, THC, PDE5s and nicotine.

The Company continues to engage in small R&D projects and B2B formulation for third parties who are evaluating our technology for use in their product.

Our current patent portfolio includes patent family applications or grants pertaining to our method of improving bioavailability and taste, and the use of DehydraTECH as a delivery platform for a wide variety of Active Pharmaceutical Ingredients (“APIs”) including, but not limited to, fat soluble vitamins;

The Company continues to engage in small R&D projects and B2B formulation for third parties who are evaluating our technology for use in their products.

Our current patent portfolio includes patent family applications or grants pertaining to our method of improving bioavailability and taste, and the use of DehydraTECH as a delivery platform for a wide variety of APIs including, but not limited to, fat soluble vitamins;

anti-viral drugs;

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Lexaria is advancing several R&D activities in both preclinical and clinical programs.

Currently, our primary research program is the investigation of cannabidiol (CBD) for the reduction of hypertension.

Currently, our primary research program is the investigation of cannabidiol (CBD) for the reduction of hypertension leading to an application under the FDA for an Investigational New Drug (“IND”).

Other programs include nicotine for oral pouches and nicotine replacement therapy, hormones, diabetes, dementia and others.

From time to time the Company will engage in contract R&D for third parties who are interested in evaluating DehydraTECH in their products.

The FDA has provided a written response from our pre-IND meeting regarding DehydraTECH-CBD for the treatment of hypertension and has agreed with Lexaria’s proposal to pursue a 505(b)(2) new drug application (“NDA”) regulatory pathway for our program.

We continue working toward our IND filing which is anticipated to be in late fiscal 2023 or early 2024.

During the quarter ended November 30, 2022, Lexaria incurred $829,489 (Nov 2021- $458,709) in R&D expenditures.

During the quarter ended February 28, 2023, Lexaria incurred $696,178 (Feb 2022- $275,686) in R&D expenditures.

Specific R&D programs are in ongoing development and align to our financial ability to undertake each research phase for each API.

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Fiscal 2023 continues to highlight the direction of our research and development programs with confirmatory results from our ongoing programs.

We continue to devote an increasing proportion of our resources and focus towards pharmaceutical applications.

We continue to devote an increasing proportion of our resources and focus toward pharmaceutical applications.

Investigational New Drug

The FDA provided Lexaria with a positive written response on August 10, 2022 from our pre-IND meeting regarding DehydraTECH-CBD for the treatment of hypertension.

The FDA confirmed that it has agreed with Lexaria’s proposal to pursue a 505(b)(2) new drug application (“NDA”) regulatory pathway for our program.

We continue working toward our IND filing which is anticipated to be in late fiscal 2023 or early 2024.

We have begun the process of selecting our contract research organization (“CRO”) to perform the IND study which will be a Phase 1(b) study that we are designating HYPER-H23-1.

We have begun certain manufacturing work associated with that study in advance of our IND filing and corresponding response from the FDA.

Along with our CRO, we will soon begin certain administrative tasks associated with the IND study as we prepare for what we anticipate to be first-in-patient dosing during Q1 of our 2024 fiscal year.

The first results of our hypertension study HYPER-H21-4 were announced on October 27, 2022, with the primary safety and efficacy objectives being met.

The study showed, among other things, a sustained drop in blood pressure in normally active hypertensive patients following multiple weeks of oral cannabidiol ("CBD") therapy, using Lexaria's patented DehydraTECH-CBD capsule formulation.

On December 21, further results were released from our multi-week human clinical hypertension study HYPER-H21-4, indicating superior cannabidiol ("CBD") blood absorption levels from our patented DehydraTECH-CBD™ relative to those of published, pharmaceutical-grade CBD industry comparators.

On November 1, 2022, the Company announced that independent review board ("IRB") approval has now been received for human clinical nicotine study NIC-H22-1.

The study is a 36-person human pharmacokinetic ("pk") randomized, double blinded, cross-over study conducted in current cigarette smokers, wherein each person will visit the laboratory to be dosed three times over a period of weeks.

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On December 21, 2022 further results were released from this multi-week human clinical hypertension study, indicating superior cannabidiol ("CBD") blood absorption levels from our patented DehydraTECH-CBD™ relative to those of published, pharmaceutical-grade CBD industry.

On February 21, 2023 the Company announced additional findings demonstrating a potentially novel mechanism of action in reducing blood pressure.

These latest results from study HYPER-H21-4 imply that the antihypertensive effects of DehydraTECH-CBD may be explained, at least in part, by its interaction with the sympatho-chromaffin system via catestatin modulation.

This suggests a potentially unique mechanistic benefit upon cardiovascular regulation with DehydraTECH-CBD treatment that has not previously been demonstrated, to our knowledge, with testing of CBD for blood pressure reduction.

Additional study endpoint analyses as described in the complete study protocol are still underway and any relevant material findings will be reported upon as these findings become available.

In March 2022, Lexaria initiated an animal study to determine if DehydraTECH-CBD evidences superior treatment of seizure activity when compared to Epidiolex.

Epidiolex is an FDA-approved oral solution prescription CBD available to children 1 year of age and older to treat seizures associated with Lennox-Gastaut syndrome, Dravet syndrome or tuberous sclerosis complex.

On November 29, 2022, Lexaria announced findings from the study indicating its patented DehydraTECH-CBD has demonstrated performance enhancements compared to one of the world's leading anti-seizure medications, Epidiolex®, generally at a lower DehydraTECH-CBD dose.

Additional work has been completed in study program EPIL-A21-1 with the final study designed to establish an ED50 (i.e., the dose required to achieve seizure inhibition in 50% of the animals tested) for DehydraTECH-CBD in this animal model, where ED50 determination is a common performance metric in preclinical animal studies for developmental therapeutics.

This ED50 study is designed to corroborate the experimental findings to date.

Final results are expected to be released in the third quarter of fiscal 2023.

On November 8, 2022 commencement of animal study program DEM-A22-1 was announced.

The study is designed to determine whether DehydraTECH-CBD may offer therapeutic utility against diabetes and dementia respectively.

We are expecting the results of this study program in Q4 of fiscal 2023.

We announced the commencement of animal study program DIAB-A22-1 on November 8, 2022.

On March 2, 2023 the Company announced that its diabetes animal model study has completed and produced at least three positive outcomes including weight loss in obese diabetic-conditioned animals, together with improved triglyceride and cholesterol levels.

Additional study work is nearing completion with results expected in fourth fiscal quarter of 2023.

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On November 1, 2022, the Company announced that independent review board approval had been received for human clinical nicotine study NIC-H22-1.

The study is a 36-person human pharmacokinetic randomized, double blinded, cross-over study conducted in current cigarette smokers, wherein each person will visit the laboratory to be dosed three times over a period of weeks.

During each visit only one oral nicotine pouch will be administered and evaluated:

either DehydraTECH-nicotine;

On!™ brand manufactured by Altria™;

brand manufactured by Altria;

or Zyn brand manufactured by Swedish Match.

The study had earlier faced certain time extensions due to manufacturing and logistics, those issues have since been resolved.

Initial dosing began on December 20, 2022.

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On November 8 and 10, 2022 commencement of animal study programs DIAB-A22-1 and DEM-A22-1 were announced, designed to determine whether DehydraTECH-CBD may offer therapeutic utility against diabetes and dementia respectively.

On November 29, 2022 results from our animal study EPIL-A21-1 were released.

Study EPIL-A21-1 was designed to determine whether DehydraTECH-CBD could provide similar seizure inhibiting efficacy, using an established, vehicle-controlled, acute animal seizure model induced by electrical stimulation, at lower doses than were required with Epidiolex®.

The study successfully demonstrated performance enhancements compared to Epidiolex as one of the world's leading anti-seizure medications.

Epidiolex is currently the world's only commercially approved, CBD-powered anti-seizure drug.

Impact of COVID-19

The COVID-19 pandemic continues to present uncertainty and unforecastable new risks to the Company and its’ business plan.

To date, we have not experienced a material impact on our financial statements, impairments of any of our assets or any major business disruptions, including with our vendors.

We have made modifications to our normal operations including requiring team members to work remotely on a staggered basis.

To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel.

At this time, these measures will continue in force for the near term.

We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state, provincial, or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

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

The study had earlier faced certain time extensions due to manufacturing and logistics issues which have since been resolved.

Dosing continued during the second and into the third fiscal quarter of 2023.

At the date of this report, the study is nearing completion.

Results are anticipated to be released in the fourth quarter of 2023.

Off-Balance Sheet Arrangements

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We believe that understanding the basis and nature of the estimates, judgments and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

We considered the impact of the COVID-19 pandemic on the assumptions and estimates used and determined that there were no material adverse impacts on the financial statements for the period ending February 28, 2023.

For a discussion of our critical accounting estimates, please read Note 4.

Estimates and Judgements as found in the financial statements in our Annual Report on Form 10-K for the year ended August 31, 2022.

There have been no material changes to the critical accounting estimates as previously disclosed in our 2022 10-K.

There have been no material changes to the critical accounting estimates as previously disclosed in our 2022 Form 10-K.

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Capital Assets

Capital assets, consisting of property and equipment are stated at cost less accumulated depreciation and depreciated using the straight-line method over their useful lives or otherwise by units of production.

Capitalized patent costs represent legal costs incurred to establish US patents.

All other patent costs are expensed as incurred.

When US patents reach a mature stage, any associated legal costs are typically maintenance fees and therefore expensed as incurred.

Capitalized patent costs are amortized on a straight-line basis over the remaining life of the patent.

In the period ended November 30, 2022, the Company recognized $2,255 in amortization attributable to capitalized patents.

Revenue Recognition

Licensing revenue from intellectual property

Our revenues from licenses that grant the right to access our intellectual property, which we consider symbolic licenses of IP, are recognized over time following the transfer and use of our patented infusion technology DehydraTECH .

Royalty revenues are recognized in the period in which our licensees sell the related products, which in certain cases may require us to estimate our royalty revenue.

Usage fees from intellectual property

We recognize usage fees from B2B clients in the period in which the counterparty completes the manufacturing of products which incorporate DehydraTECH enabled APIs.

We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable.

We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue.

Product revenue

We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable.

We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue.

Cost of sales

Cost of sales includes all expenditures incurred in bringing the goods to the point of sale This includes third-party manufacturing and handling costs, direct costs of the raw material, inbound freight charges, warehousing costs, and applicable overhead expenses.

Funding Requirements

We anticipate that our expenditures will increase in connection with our ongoing R&D program, specifically with respect to our animal and human clinical trials of our DehydraTECH formulations for the purposes of treating hypertension, dementia and diabetes.

As we move forward with our Investigational New Drug application with the FDA, we anticipate that our expenditures will further increase and accordingly, we expect to incur increased operating losses and negative cash flows for the foreseeable future.

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Through November 30, 2022, we have funded our operations primarily with proceeds from the sale of our common stock.

The Company has consistently incurred recurring losses and negative cash flows from operations, including net losses of $1,769,306 and $2,003,482 for the three months ended November 30, 2022 and 2021, respectively.

As we move forward with our IND application with the FDA, we anticipate that our expenditures will further increase and accordingly, we expect to incur increased operating losses and negative cash flows for the foreseeable future.

Through February 28, 2023, we have funded our operations primarily through the proceeds from the sale of common stock.

The Company has consistently incurred recurring losses and negative cash flows from operations, including net losses of $3,079,944 and $3,452,155 for the six months ended February 28, 2023 and 2022, respectively.

The continuation of Lexaria as a going concern depends on raising additional capital and/or attaining and maintaining profitable operations.

The accompanying financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations.

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

As of the issuance date of these consolidated interim financial statements, we expect our positive working capital of approximately $5.07m as at November 30, 2022 will be sufficient to fund our operating expenses and capital expenditure requirements through the forthcoming 12 months from the issuance date of this report.

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’s plans to improve cash flows, 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.

Results of Operations for our Period Ended November 30, 2022, and 2021

Our net loss and comprehensive loss for the three months ended and the changes between those periods for the respective items are summarized as follows:

Three Months Ended

The recurring losses from operations and net capital deficiency do raise doubt about the Company’s ability to continue as a going concern within one year following the date that these consolidated financial statements are issued.

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On August 12, 2022, we entered into an At-The-Market (“ATM”) Offering equity distribution 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.

The equity distribution agreement entitles Maxim to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the ATM.

As of the issuance date of these consolidated interim financial statements, we expect our approximately $3.3m cash at February 28, 2023, along with funds anticipated from both our ATM and brokered financing will be sufficient to fund our R&D programs, operating expenses and capital expenditure requirements through the forthcoming 12 months from the issuance date of this report.

Results of Operations for the Period Ended February 28, 2023 and 2022

Our net loss for the six months ended for the respective items are summarized as follows:

Six Months Ended February 28,

Research and development

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Other general and administrative

Fees from intellectual property licencing increased by $63k and B2B sales increased by $22k with other sales marginally higher by $2k year-over year.

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Fees from intellectual property licensing increased by $64k and B2B sales increased by $12.8k with other sales slightly higher by $15k year- over year.

Research and Development

Expenditures on R&D increased by $371k year-over year for the period ended November 30, 2022, as the company continued with applied research and development programs in our pharmaceutical division with our primary focus being on DehydraTECH-CBD to treat hypertension.

General and Administrative

Our other general and administrative expenses decreased overall by $63k during the period ended November 30, 2022, over the same period last year.

Advertising and promotion were up by $210k in the quarter with slight increases in investor relations and office expense.

Unrealized losses on marketable securities were less in the current year ($78k vs $340k).

Non-cash stock-based compensation on options granted and vested ($69k vs $121k).

Expenditures on R&D increased by $791k year-over-year for the period ended February 28, 2023, as the Company continues with applied research and development programs in our pharmaceutical division with our primary focus being on DehydraTECH-CBD to treat hypertension.

Consulting Fees and Salaries

Consulting fees and salaries decreased by $417k primarily due to the prior years recognition of stock-based compensation costs in the quarter ended November 30, 2021 and recognition of contractors and salaries as R&D expenses.

In the six months ended February 28, 2023 consulting fees and salaries decreased by $547k primarily due to the prior years’ recognition of stock-based compensation costs recorded for contractors ($287K) and employees ($121K), and the payment of management bonuses in the second quarter of 2022.

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Legal and Professional Fees

Our professional fees decreased by $47k during the period compared to the same prior year period.

Previous year expenditures were higher due to increased patent and trademark filings, higher accounting fees and the utilization of additional advisory services.

Our legal and professional fees decreased by $168k during the period compared to the same prior year period.

Previous year expenditures were higher due to increased patent and trademark filings and the utilization of additional legal advisory services.

General and Administrative

Our other general and administrative expenses decreased overall by $363k during the period ended February 28, 2023, over the same period last year.

Advertising and promotion was down by $140k in the current period with a slight decrease in investor relations ($35k) offset by an increase in office expenses ($34k).

Unrealized losses on marketable securities were less in the current year ($80k vs $281k).

Liquidity and Financial Condition

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Cash flows used in operating activities

$ (2,473,590 )

$ (2,443,593 )

Cash flows used in investing activities

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Decrease in cash

$ (2,541,116 )

$ (2,557,422 )

Operating Activities

Net cash used in operating activities increased by $68k for the period compared with cash used in operating during the same period in 2021.

This difference was largely due to decreased stock-based compensation ($69k vs $409k) unrealized losses on marketable securities ($78k vs $340k) and a reduction in prepaid expense balance in the quarter of $316k vs $82k in the prior year.

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Net cash used in operating activities increased by $30k for the period compared with cash used during the same period in 2022.

This difference was largely due to decreased stock-based compensation ($79k vs $409k), unrealized losses on marketable securities ($80k vs $281k) and an increased reduction in prepaid expenses balance in the current six months ended of $257k vs $97k in the prior year.

Investing Activities

Net cash from investing activities decreased by $23k over 2022 due to decreased spending on acquisitions of equipment.

Net cash used in investing activities decreased by $25k over 2022 due to decreased spending on acquisitions of equipment.

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Financing Activities

The change in net cash provided from financing activities was immaterial.

The change in net cash used in financing activities in the prior year relate to the reduction of the lease liability.

Liquidity and Capital Resources

We have incurred net losses of approximately $7.4m and $4.2m respectively in the past two fiscal years.

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

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 related expenditures, the receipt of additional payments on the licencing of our technology, if any, and the receipt of payments under any current or future collaborations we may enter into.

We expect to continue to incur significant expenditures for R&D and operational activities resulting in net losses in the upcoming 12 months and beyond.

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 related expenditures, the receipt of additional revenues from the licensing of our technology and B2B sales, if any, and the receipt of payments under any current or future collaborations we may enter into.

As the Company continues with our IND application process and progresses into the clinical development of our initial product candidate, the need for substantial capital resources increases.

Our existing cash will not be sufficient to complete the full development, testing and commercialization of an FDA approved product candidate.

To achieve this objective, we will require substantial funding.

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.

As of January 17, 2022 no shares have been sold under the ATM.

To achieve this objective, we will require substantial funding in the future.

On August 12, 2022, we entered into an equity distribution agreement with 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 an ATM.

The equity distribution 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.

As of April 1, 2023 we have sold 34,652 shares into the market through the ATM for gross proceeds of $114,546.

During the first half of fiscal 2023 we did not sell any shares.

Subsequent to the six months ended February 28, 2023, we issued 34,652 shares of our common stock in a series of sales under the ATM at an average price of $3.30 per share and gross proceeds of $114,456.

As of April 14, 2023, $5,810,544 in shares of our common stock remain eligible for sale under the ATM.

We may also offer securities 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.

There is no certainty that future equity or debt financing will be available or that it will be at acceptable terms and the outcome of these matters is unpredictable.

There is no certainty that future equity or debt financing will be available or that it will be at acceptable terms.

The outcome of these matters is unpredictable.

A lack of adequate funding may force us to reduce spending, curtail or suspend planned programs or possibly liquidate assets.

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The sale of additional equity may result in additional dilution to our stockholders.

Entering into additional licencing agreements, collaborations, partnerships, alliances marketing, distribution, or licensing arrangements with third parties to increase our capital resources is also possible.

If we do so we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favourable to us.

Entering into additional licensing agreements, collaborations, partnerships, alliances marketing, distribution, or licensing arrangements with third parties to increase our capital resources is also possible.

If we do so we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

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, 2022, the Company had cash on hand of approximately $4.5m to settle $281k in current liabilities.

The Company believes this and our access to an ATM offering are sufficient to fund our expected R&D and operating expenditures for twelve months following the date of filing this report.

We do not anticipate making any material capital expenditures in the fiscal 2023 as we believe our current facilities and equipment are sufficient for the forthcoming twelve months following the date of filing this report.

As of February 28, 2023, the Company had cash on hand of approximately $3.3m to settle $223k in current liabilities.

The Company believes this is sufficient to fund our expected R&D and operating expenditures for twelve months following the date of filing this report.

We anticipate making few if any material capital expenditures in fiscal 2023 as we believe our current facilities and equipment are sufficient for the forthcoming twelve months following the date of filing this report.

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Impact of COVID-19

To date, we have not experienced any material impact on our financial statements, impairments of any of our assets or any major business disruptions, including with our vendors.

We will continue to actively monitor the evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state, provincial, or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

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

Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial and Accounting Officer) to allow for timely decisions regarding required disclosure.

As of November 30, 2022, the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on the foregoing, our CEO and CFO concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of November 30, 2022.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial and Accounting Officer) to allow for timely decisions regarding required disclosure.

As of February 28, 2023, the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on the foregoing, our CEO and CFO concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of February 28, 2023.

Inherent limitations on Effectiveness of Controls

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Changes in Internal Control over Financial Reporting

During the quarter ended November 30, 2022, our controls and controls processes remained consistent with August 31, 2022.

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended November 30, 2022, that have materially or are reasonably likely to materially affect our internal controls over financial reporting.

During the quarter ended February 28, 2023, our controls and controls processes remained consistent with August 31, 2022.

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2023, that have materially or are reasonably likely to materially affect our internal controls over financial reporting.

Our control processes are designed to include remote workers.

The advent of the COVID-19 pandemic has not materially impacted our internal controls over financial reporting other than increasing requirements for social distancing and some additional remote working requirements for staff.

Change of Auditors

Davidson & Company LLP advised Lexaria Bioscience Corp.

that it would not stand for re-election as the Registrant’s Certifying Accountant (Auditor) for the fiscal year ended August 31, 2023.

Subsequent to the year ended August 31, 2022 the company appointed MaloneBailey LLP as our new Auditors.

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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 2. Management’s Discussion and Analysis