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Item 1. Financial Statements

2024-04-09 compared with 2024-01-12 · 156 added, 118 removed, 343 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars)

(Expressed in US Dollars except share amounts)

Marketable securities

6 unchanged sentences

Intellectual property, net

Property & equipment, net

Property and equipment, net

Total Non-current Assets

8 unchanged sentences

Share Capital

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

10,311,641 and 8,091,650 at 11/30/23 and 8/31/23, respectively.

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

Common shares issued and outstanding:

12,387,673 and 8,091,650 at February 29, 2024 and August 31, 2023, respectively

Additional paid-in capital

2 unchanged sentences

( 45,763,427 )

Accumulated other comprehensive income

Accumulated other comprehensive loss

Equity attributable to shareholders of Lexaria

2 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

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

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in US Dollars except share amounts) (Unaudited)

(Expressed in US Dollars except share amounts)

Three Months Ended

Six Months Ended

Cost of goods sold

6 unchanged sentences

( 1,807,147 )

( 3,019,044 )

Other income (loss)

Interest income

Unrealized loss on marketable securities

Interest income (expense)

Unrealized gain (loss) on marketable securities

Total other income (loss)

Net loss for the period

$ ( 652,733 )

$ ( 1,310,638 )

$ ( 1,837,771 )

$ ( 3,079,944 )

Net loss attributable to non-controlling interest

2 unchanged sentences

$ ( 1,298,131 )

Other comprehensive income

$ ( 1,828,862 )

$ ( 3,054,075 )

Other comprehensive loss

Foreign currency translation adjustment

Total comprehensive loss

$ ( 674,537 )

$ ( 1,298,131 )

$ ( 1,849,488 )

$ ( 3,054,075 )

Basic and diluted loss per share

1 unchanged sentence

- Basic and diluted

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

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended February 29, 2024 and February 28, 2023

(Expressed in US Dollars)

Three Months Ended

Cash flows used in operating activities

4 unchanged sentences

Depreciation and amortization

Impairment loss

Noncash lease expense

5 unchanged sentences

Accounts payable and accrued liabilities

Lease Payments

Long-term receivables

Operating lease liability

Deferred revenue

Net cash used in operating activities

2 unchanged sentences

Cash flows used in investing activities

Intellectual property

Additions in intellectual property

Purchase of equipment

Net cash used in investing activities

Cash flows from/(used in) financing activities

Cash flows from financing activities

Proceeds from shares sold for cash

Proceeds from exercise of warrants

Net cash from/(used in) financing activities

Net cash from financing activities

Effect of exchange rate changes on cash

3 unchanged sentences

Cash at end of period

Supplemental information of cash flows:

Income taxes paid in cash

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

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three Months Ended November 30, 2023 and 2022

(Expressed in US Dollars)

Non-controlling

For the Six Months Ended February 29, 2024, and February 28, 2023

(Expressed in US Dollars except share amounts)

Comprehensive

Income (Loss)

Balance August 31, 2023

11 unchanged sentences

$ ( 369,755 )

Stock issued in equity offering

Stock issued from exercise of warrants

Foreign currency translation adjustment

Non-controlling interest

Balance February 29, 2024

$ ( 47,592,289 )

$ ( 372,949 )

Balance August 31, 2022

8 unchanged sentences

$ ( 329,776 )

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

Shares issued for services

( 1,298,131 )

Non-controlling interest

Balance February 28, 2023

$ ( 42,152,603 )

$ ( 342,283 )

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

LEXARIA BIOSCIENCE CORP.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2023

February 29, 2024

(Expressed in U.S.

Dollars Except Share Amounts)

Nature of Business

5 unchanged sentences

Liquidity and Going Concern

The Company’s consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“US GAAP”) applicable to a going concern, which assumes the Company will have sufficient funds to meet its financial obligations for a period of at least 12 months from the date this report.

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

Net losses attributable to shareholders were $ 1.2 million and $ 1.8 million for the quarters ended November 30, 2023 and 2022, respectively.

As of November 30, 2023, we had an accumulated deficit of $ 46.9 million.

Net losses attributable to shareholders were $ 1.8 million and $ 3.1 million for the six months ended February 29, 2024, and February 28, 2023, respectively.

As of February 29, 2024, we had an accumulated deficit of $ 47.6 million.

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

During the quarter ended November 30, 2023, the Company entered into a Securities Purchase Agreement whereby on October 3, 2023, the Company issued, to a single healthcare-focused institutional investor, 889,272 shares of common stock and 729,058 pre-funded warrants in a registered direct offering.

In a concurrent private placement, the Company also sold to the investor, warrants to purchase up to 1,618,330 shares of common stock.

Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the stage and complexity of our research and development (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 and negative net cash flows raise substantial doubt as to the Company’s ability to continue as a going concern.

During the six months ended February 29, 2024, the Company has completed the following:

Entered into Securities Purchase Agreements whereby on February 16, 2024, the Company issued 1,444,741 shares of common stock and 113,702 pre-funded warrants in a registered direct offering.

The Company also sold to investors, warrants to purchase up to 1,558,443 shares of common stock.

The combined effective offering price for each share of common stock and accompanying warrant was $ 2.31 .

The warrants will expire five years from the issuance date, and have an exercise price of $ 2.185 per share.

The Company also agreed to partially compensate the placement agent through the issuance of warrants to purchase up to 54,546 shares of common stock.

The warrants will expire five years from the issuance date, and have an exercise price of $ 2.8875 per share.

The net proceeds to the Company from the registered direct offering was $ 3.0 million, after deducting placement agent fees and other offering expenses paid by the Company.

Entered into a Securities Purchase Agreement whereby on October 3, 2023, the Company issued, to a single healthcare-focused institutional investor, 889,272 shares of common stock and 729,058 pre-funded warrants in a registered direct offering.

In a concurrent private placement, the Company also agreed to issue and sell to the investor, warrants to purchase up to 1,618,330 shares of common stock.

The combined effective offering price for each share of common stock (or pre-funded warrant in lieu thereof) and accompanying warrant was $ 0.97 (to note the pre-funded warrants were issued at a price of $ 0.9699 and have an exercise price of $ 0.0001 ).

The warrants will become exercisable six months from issuance, expire five and a half years from the issuance date, and have an exercise price of $0.97 per share.

The net proceeds to the Company from the registered direct offering and concurrent private placement totaled $ 1.25 million, after deducting placement agent fees and other estimated offering expenses payable by the Company.

To date all of the pre-funded warrants have been exercised, resulting in an issuance by the Company of an aggregate 729,058 common shares for gross proceeds of approx.

During the quarter ended November 30, 2023, the Company also issued an aggregate 601,661 common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for gross proceeds of $ 571,578 .

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.

The net proceeds to the Company from the registered direct offering and concurrent private placement totaled $ 1.25 million, after deducting placement agent fees and other offering expenses payable by the Company.

To date all of the pre-funded warrants have been exercised, resulting in an issuance by the Company of an aggregate 729,058 common shares for gross proceeds of $ 73 .

Issued an aggregate of 1,119,250 in common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for the gross proceeds of $ 1,063,475 .

We may 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.

5 unchanged sentences

Based on existing cash resources, management believes that current funding will be sufficient to meet the Company’s financial obligations for a period of at least twelve months from the date of this report.

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.

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

Significant Accounting Policies

Basis of presentation and consolidation

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States (“US GAAP”) and pursuant to the rules and regulations of the SEC.

All amounts, unless otherwise stated, are in U.S.

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

Lexaria Pharmaceutical Corp., Lexaria Hemp Corp., Lexaria CanPharm ULC, Lexaria Nutraceutical Corp., Poviva Corp., Lexaria CanPharm Holding Corp., and Kelowna Management Services Corp.

The Company owns 83.3 % of Lexaria Nicotine LLC and the remaining 16.7 % is owned by Altria Ventures Inc.

The significant accounting policies of the Company are consistent with those of our audited financial statements on Form 10-K for the year ended August 31, 2023.

Basis of Consolidation

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., Lexaria Nutraceutical Corp., and Lexaria Pharmaceutical Corp., and our 83.333% owned subsidiary Lexaria Nicotine LLC with the remaining 16.667% 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 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 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, 2023.

Cash and Cash Equivalents

Cash and cash equivalents include cash-on-hand and demand deposits with financial institutions and other short-term investments with maturities of less than three months when acquired and readily convertible to known cash amounts.

The Company had no cash equivalents as of November 30, 2023 or November 30, 2022.

The Company had no cash equivalents as of February 29, 2024, or February 28, 2023.

Marketable Securities

17 unchanged sentences

When patent applications are filed, the directly related capitalized costs are amortized on a straight-line basis over an estimated economic life of 20 years.

Equipment is stated at cost less accumulated depreciation and impairment and depreciated using the straight-line method over the useful lives of the various asset classes.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and impairment and depreciated using the straight-line method over the useful lives of the various asset classes.

Laboratory and computer equipment and office furniture are depreciated over 3 - 10 years.

20 unchanged sentences

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.

Page 10 of 34

Research and Development

Research and development costs are expensed as incurred.

These expenditures are comprised of both in-house research programs and through third-party contracts including consultants, academic and non-profit institutions, contract manufacturing, and other expenses.

Page 10 of 34

These expenditures are comprised of both in-house research programs and through third-party contracts including clinical research organizations, consultants, academic and non-profit institutions, contract manufacturing, and other expenses.

Intellectual Property Expenses

28 unchanged sentences

Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

The Company’s financial instruments consist primarily of cash, marketable securities, accounts receivable and payable, accrued liabilities and loan payable.

The Company’s financial instruments consist primarily of cash, marketable securities, accounts receivable and payable as well as accrued liabilities.

The carrying amounts of instruments approximate their fair values due to their short maturities or quoted market prices.

1 unchanged sentence

The foreign currency exchange risk is the financial risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates.

Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk as the impact of rate changes for USD/CAD dollars is not expected to be material.

The following table provides a summary of financial instruments that are measured at fair value on a recurring basis as of November 30, 2023.

Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk as the impact of rate changes for USD or CAD dollars is not expected to be material.

The following table provides a summary of financial instruments that are measured at fair value on a recurring basis as of February 29, 2024.

Fair Value Measurement Using

7 unchanged sentences

The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institution, that the credit risk with regard to these deposits is not significant.

In the three months ended November 30, 2023, two customers accounted for 96 % (2022 – two customers accounted for 95 %) of consolidated revenues.

As of November 30, 2023, the Company had $ 90,925 (2022 - $ 48,598 ) in sales tax receivable.

The Company considers its credit risk to be low for such receivables.

Page 12 of 34

In the six months ended February 29, 2024, two customers accounted for 97 % of consolidated revenues.

In the six months ended February 29, 2023, two customers accounted for 93 % of consolidated revenues.

Commitments and Contingencies

The Company policy is to record accruals for any such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

The Company’s policy is to record accruals for any such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

In the event that estimates or assumptions prove to differ from actual results, adjustments are made in subsequent periods to reflect more current information.

The Company, from time to time, may be subject to legal claims and proceedings related to matters arising in the ordinary course of business.

Management has no knowledge of any such claim against the Company with, at minimum, a reasonable possibility that a material loss may be incurred.

Management has no knowledge of any such material claim against the Company with, at minimum, a reasonable possibility that a material loss may be incurred.

Reclassifications

Certain amounts in the prior period have been reclassified to conform with current period presentation.

Page 12 of 34

Estimates and Judgments

7 unchanged sentences

However, actual results could differ from these estimates.

Page 13 of 34

Recent Accounting Guidance

11 unchanged sentences

Accounts and Other Receivables

Accounts receivable at November 30, 2023 and August 31, 2023 consist of the following:

Accounts receivable at February 29, 2024 and August 31, 2023 consist of the following:

Amounts Receivable

3 unchanged sentences

Prepaid Expenses and Other Current Assets

Prepaid expenses consist of the following at November 30, 2023 and August 31, 2023:

Advertising & Conferences

Legal & Accounting Fees

Prepaid expenses consist of the following at February 29, 2024 and August 31, 2023:

February 29 ,

Advertising and conferences

Legal and accounting fees

License, filing fees, dues

Office & Insurance

Office and insurance

Capital financing

Intellectual Property, net

Page 15 of 34

A continuity schedule for capitalized patents is presented below:

1 unchanged sentence

Balance – ending

At November 30, 2023 the Company has capitalized a total of $ 494,377 of patents.

Included in the capitalized costs is $ 480,762 of costs associated with patents and licenses that have been filed.

Also included in the capitalized costs is $ 13,615 of costs associated with provisional patents and pending applications which have not yet been filed.

The Company evaluated its patent portfolio and determined that no pending applications have been abandoned or will not be pursued during the three months ended November 30, 2023.

As such, no impairment loss has been recognized for the period.

The Company recognized $ 8,274 of amortization expense related to patents and licenses in the three-months ended November 30, 2023 (2022 - $ 54,938 ).

The Company evaluated its patent portfolio and determined that certain pending applications had been abandoned or will not be pursued.

As such, during the six months ended February 29, 2024, the Company recognized an impairment loss of $ 23,507 related to those abandoned applications.

The Company recognized $ 16,881 of amortization expense related to patents and licenses in the six-months ended February 29, 2024.

Page 14 of 34

Property & Equipment, net

November 30, 2023

Period Amortization

Accumulated Amortization

Thursday, February 29, 2024

Leasehold improvements

4 unchanged sentences

August 31, 2023

Period Amortization

Accumulated Amortization

Leasehold improvements

3 unchanged sentences

$ ( 475,168 )

During the three-month period ended November 30, 2023, amortization of $ 0 was included in cost of goods sold.

Page 16 of 34

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at November 30, 2023 and August 31, 2023 consist of the following:

Accounts payable and accrued liabilities at February 29, 2024 and August 31, 2023 consist of the following:

Accounts Payable

Trades payable

Trade payable

Sales tax payable

A breakdown of our revenues by type for the three-months ended November 30, 2023, and 2022 are as follows:

Three Months Ended November 30,

During the three-month period ended November 30, 2023, the Company recognized B2B product revenues of $ 5,388 (three months ended November 30, 2022 - $ 29,100 ) that relate to sales of our intermediate products for use by B2B customers in their products.

A breakdown of our revenues by type for the six-months ended February 29, 2024, and February 28, 2023, are as follows:

Six Months Ended February

During the six-month period ended February 29, 2024, and February 23, 2023, the Company recognized B2B product revenues of $ 5,388 and $ 30,300 , respectively, that relate to sales of our intermediate products for use by B2B customers in their products.

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

The Company recognized $ 144,990 (three months ended November 30, 2022 - $ 63,435 ) in licensing revenue in the same period.

For the three months ended November 30, 2023, the Company did not recognize a provision or benefit for income taxes as it has incurred net losses.

In addition, the net deferred tax assets generated from operating losses are fully offset by a valuation allowance as the Company believes it is more likely than not that the benefit will not be realized.

The Company recognized $ 289,990 and $ 80,310 in licensing revenue in the six months ended February 29, 2024, and February 28, 2023, respectively.

Page 15 of 34

For the six months ended February 29, 2024, the Company did not recognize a provision or benefit for income taxes as it has incurred net losses.

In addition, the net deferred tax assets are fully offset by a valuation allowance as the Company believes it is more likely than not that the benefit will not be realized.

Common Shares and Warrants

During the quarter ended November 30, 2023, the Company completed the following issuances of common shares and warrants:

During the six months ended February 29, 2024, the Company entered into Securities Purchase Agreements whereby on February 16, 2024, the Company issued 1,444,741 shares of common stock and 113,702 pre-funded warrants in a registered direct offering.

The Company also sold to investors, warrants to purchase up to 1,558,443 shares of common stock.

The combined effective offering price for each share of common stock and accompanying warrant was $ 2.31 .

The warrants will expire five years from the issuance date, and have an exercise price of $ 2.185 per share.

The Company also agreed to partially compensate the placement agent through the issuance of warrants to purchase up to 54,546 shares of common stock.

Such warrants will expire five years from the issuance date, and have an exercise price of $ 2.8875 per share.

The net proceeds to the Company from the registered direct offering was $ 3.0 million, after deducting placement agent fees and other offering expenses paid by the Company.

On October 3, 2023, the Company entered into a securities purchase agreement with a single healthcare-focused institutional investor to purchase 889,272 shares of common stock and 729,058 pre-funded warrants in a registered direct offering.

2 unchanged sentences

The warrants will become exercisable six months from issuance, expire five and a half years from the issuance date, and have an exercise price of $ 0.97 per share.

The net proceeds to the Company from the registered direct offering and concurrent private placement were $ 1.25 million, after deducting placement agent fees and other estimated offering expenses payable by the Company.

To date all of the pre-funded warrants have been exercised, resulting in an issuance by the Company of an aggregate 729,058 common shares for gross proceeds of approx.

The Company issued an aggregate 601,661 common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for gross proceeds of $ 571,578 of which $ 33,250 was being held in Lexaria’s trust account with the warrant agent at November 30, 2023.

A continuity schedule for warrants for the three months ended November 30, 2023, is presented below:

Number of Warrants

Weighted Average Exercise Price $

The net proceeds to the Company from the registered direct offering and concurrent private placement were $ 1.25 million, after deducting placement agent fees and other offering expenses payable by the Company.

To date all of the pre-funded warrants have been exercised, resulting in an issuance by the Company of an aggregate 729,058 common shares for gross proceeds of $ 73 .

During the six months ended February 29, 2024, the Company issued an aggregate 1,119,250 common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for gross proceeds of $ 1,063,475 of which $ 32,110 was being held in the Company’s trust account with the warrant agent at February 29, 2024.

Page 16 of 34

A continuity schedule for warrants for the six months ended February 29, 2024, is presented below:

Balance, August 31, 2023

( 1,962,010 )

Balance, November 30, 2023

A summary of warrants outstanding as of November 30, 2023, is presented below:

Balance, February 29, 2024

A summary of warrants outstanding as of February 29, 2024, is presented below:

Number of Warrants

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (years)

Page 18 of 34

Weighted Average

Exercise Price

Weighted Average

Remaining Contractual

Stock Options

The Company has established an Equity Incentive Plan which was most recently amended by the Company’s shareholders on May 9, 2023.

Pursuant to the amendments, the Equity Incentive Plan now has an evergreen formula, whereby on January 1 each year commencing January 1, 2024, the number of shares issuable pursuant to the Equity Incentive Plan may be increased to a number equal to up to 10% of the issued share capital on December 31 of the previous year .

The Company is currently in the process of preparing its S-8 Registration Statement to register an additional 527,111 common shares issuable pursuant to the Equity Incentive Plan, for an aggregate 1,037,544 common shares issuable under the Equity Incentive Plan.

Pursuant to the amendments which were effected on January 18, 2024 when the Company filed a Form S-8 Registration Statement, the Equity Incentive Plan now has an evergreen formula, whereby on January 1 each year commencing January 1, 2024, the number of shares issuable pursuant to the Equity Incentive Plan may be increased to a number equal to up to 10% of the issued share capital on December 31 of the previous year.

The Company has registered an additional 527,111 common shares issuable pursuant to the Equity Incentive Plan, for an aggregate 1,037,544 common shares issuable under the Equity Incentive Plan.

Stock options currently 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 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.

Other than the issuance of options as an incentive for engagement, the Company has historically issued options to all of the independent directors, as a group and to its employees and consultants, as a group.

As a result, option issuances are typically no more than two to three times per year.

While the Company does not have a formal policy regulating option issuances, the Company ensures that such option issuances do not occur when material information has not been disclosed to the public and no less than two weeks prior to any quarterly or annual financial statement filing.

Page 17 of 34

A continuity schedule for stock options is presented below:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

Remaining Contractual

Balance August 31, 2022

2 unchanged sentences

Cancelled/expired

Balance November 30, 2023 (outstanding)

Balance November 30, 2023 (exercisable)

Balance February 29, 2024 (outstanding)

Balance February 29, 2024 (exercisable)

On October 26, 2023, the Company granted 85,000 options to its officers and employees with an exercise price of $ 1.15 and a term of 5 years.

Page 19 of 34

The fair value of stock options granted in the three-months ended November 30, 2023, were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

November 30, 2023

No options were issued to the Company’s officers and employees during the quarter ended February 29, 2024.

The fair value of stock options granted in the six months ended February 29, 2024, were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

Febr uary 29, 2024

Expected volatility

3 unchanged sentences

Estimated fair value per option

Stock-based compensation expense for the three-month periods ended November 30, 2023, and November 30, 2022, totaled $ 53,953 and $ 68,776 , respectively.

The expense for the three months ended November 30, 2023, relates entirely to options awarded during the quarter.

As of November 30, 2023, the total unrecognized non-cash compensation costs are $ 39,117 related to 11,750 non-vested stock options with a $ 3.27 weighted average price.

Stock-based compensation expense for the six-month period ended February 29, 2024, and February 28, 2023, was $ 53,953 and $ 79,302 , respectively.

On October 26,2023, the Company granted 85,000 options to its officers and employees with an exercise price of $ 1.15 and a term of 5 years.

As of February 29, 2024, the total unrecognized non-cash compensation costs are $ 39,117 related to 11,750 non-vested stock options with a $ 3.27 weighted average price.

These costs are expected to be recognized over a weighted average period of 0.07 years.

All non-vested options are attributable to employees.

Page 18 of 34

Commitments, Significant Contracts and Contingencies

3 unchanged sentences

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

November 30, 2023

August 31, 2023

Right of use assets - operating leases

9 unchanged sentences

Discount rate

Page 20 of 34

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, 2023:

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 29, 2024:

Total lease payments

9 unchanged sentences

Licensing revenues are significantly concentrated on three licensees.

Three Months Ended November 30, 2023

Consolidated Total

Six Months Ended February 29, 2024

Cost of goods sold

1 unchanged sentence

( 1,400,223 )

$ ( 2,222,192 )

Other Income(Expense)

2 unchanged sentences

$ ( 1,961,360 )

Three Months Ended November 30, 2022

Consolidated Total

Six Months Ended February 28, 2023

Cost of goods sold

1 unchanged sentence

( 1,525,667 )

( 1,363,596 )

$ ( 3,118,051 )

Other Income(Expense)

4 unchanged sentences

Subsequent Events

Subsequent to the quarter ended November 30, 2023, the Company issued an aggregate 123,800 common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for gross proceeds of $ 117,610 of which $57,000 is currently being held in Lexaria’s trust account with the warrant agent.

Subsequent to the six months ended February 29, 2024, the Company issued an aggregate 498,000 common shares pursuant to the exercise of warrants that were issued under our May 11, 2023, financing, at an exercise price of $ 0.95 per share for gross proceeds of $ 473,100 .

On March 14, 2024, the Company appointed Nelson Cabatuan as its Chief Financial Officer and issued an aggregate of 200,000 stock options having an exercise price of $ 2.93 with vesting over a three-year period.

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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