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Item 1. Financial Statements

2025-01-10 compared with 2024-07-12 · 159 added, 232 removed, 305 unchanged (56% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars except shares amount)

(Expressed in US Dollars except share amounts)

Marketable securities

11 unchanged sentences

Accounts payable and accrued liabilities

Deferred revenue

Lease liability, current

6 unchanged sentences

Common shares issued and outstanding:

15,810,205 and 8,091,650 at May 31, 2024, and August 31, 2023, respectively.

17,452,594 and 15,810,205 at November 30, 2024, and August 31, 2024, respectively

Additional paid-in capital

11 unchanged sentences

(Expressed in US Dollars except share amounts)

Three Months Ended

Nine Months Ended

Three Months Ended November 30,

Cost of goods sold

6 unchanged sentences

( 1,139,142 )

( 3,550,066 )

( 5,419,909 )

Other income (loss)

Interest income

Unrealized gain (loss) on marketable securities

Unrealized loss on marketable securities

Total other income (loss)

1 unchanged sentence

$ ( 1,185,038 )

$ ( 3,622,083 )

$ ( 5,463,510 )

Net loss attributable to non-controlling interest

2 unchanged sentences

$ ( 1,179,323 )

$ ( 3,610,555 )

$ ( 5,425,580 )

Other comprehensive income

3 unchanged sentences

$ ( 1,174,951 )

$ ( 3,632,421 )

$ ( 5,425,580 )

Basic and diluted loss per share

3 unchanged sentences

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended May 31, 2024 and 2023

(Expressed in US Dollars)

Cash flows used in operating activities

$ ( 3,622,083 )

$ ( 5,463,510 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation

Depreciation and amortization

Impairment loss

Noncash lease expense

Unrealized loss on marketable securities

Lease accretion

Change in operating assets and liabilites

Accounts receivable

Prepaid expenses and deposits

Accounts payable and accrued liabilities

Operating lease liability

Long-term receivables

Net cash used in operating activities

$ ( 3,067,344 )

$ ( 4,259,557 )

Cash flows used in investing activities

Additions in intellectual property

Purchase of equipment

Net cash used in investing activities

$ ( 119,018 )

$ ( 101,173 )

Cash flows from financing activities

Proceeds from shares sold for cash

Proceeds from exercise of stock options and warrants

Net cash from financing activities

Effect of exchange rate changes on cash

Net change in cash for the period

( 2,649,312 )

Cash at beginning of period

Cash at end of period

Supplemental information of cash flows:

Income taxes paid in cash

Remeasurement of operating lease right of use assets and liabilities

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Nine Months Ended May 31, 2024, and 2023

(Expressed in US Dollars except share amounts)

Comprehensive

For the Three Months Ended November 30, 2024 and 2023

(Expressed in US Dollars)

Non-controlling

Stockholders'

Income (Loss)

Balance August 31, 2024

2 unchanged sentences

Stock issued in equity offering

Stock issued from exercise of warrants

Foreign currency translation adjustment

6 unchanged sentences

$ ( 380,278 )

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 )

Stock issued from exercise of warrants

Stock issued from exercise of options

Foreign currency translation adjustment

Stock based compensation

( 1,781,693 )

Non-controlling interest

Balance May 31, 2024

( 49,373,982 )

Balance August 31, 2023

1 unchanged sentence

$ ( 364,040 )

Stock issued in equity offering

Stock issued in exercise of warrants

Foreign currency translation adjustment

Stock-based compensation

5 unchanged sentences

$ ( 369,755 )

Shares issued for services

( 1,298,131 )

Non-controlling interest

Balance February 28, 2023

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

Three Months Ended November 30,

Cash flows used in operating activities

$ ( 2,706,628 )

$ ( 1,185,038 )

At The Market financing

S-1 financing

Adjustments to reconcile net loss to

net cash used in operating activities:

Stock based compensation

( 2,371,505 )

Non-controlling interest

Balance May 31, 2023

Depreciation and amortization

Noncash lease expense

Unrealized loss on marketable securities

Lease accretion

Change in operating assets and liabilities

Accounts receivable

Prepaid expenses and deposits

Long-term receivables

Accounts payable and accrued liabilities

Lease payments

Deferred revenue

Net cash used in operating activities

$ ( 2,726,045 )

$ ( 1,181,653 )

Cash flows used in investing activities

Additions to intellectual property

Purchase of equipment

Net cash used in investing activities

Cash flows from/(used in) financing activities

Proceeds from shares sold for cash

Proceeds from exercise of warrants

Net cash from financing activities

Effect of exchange rate changes on cash

Net change in cash for the period

Cash at beginning of period

Cash at end of period

Supplemental information of cash flows:

Income taxes paid in cash

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

1 unchanged sentence

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2024

(Expressed in U.S.

Dollars Except Share Amounts)

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 DehydraTECH TM , our patented proprietary drug delivery technology.

(“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.

Our current focus is the investigation of the incorporation of our DehydraTECH drug delivery technology with GLP-1 and GIP drugs to enhance absorption and reduce adverse side effects.

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.

1 unchanged sentence

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

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 of this report.

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

Net losses attributable to shareholders were $ 3.6 million and $ 5.5 million for the nine-months ended May 31, 2024, and 2023, respectively.

As of May 31, 2024, we had an accumulated deficit of $ 49.4 million.

Net losses attributable to shareholders were $ 2.7 million and $ 1.2 million for the three-months ended November 30, 2024, and 2023, respectively.

As of November 30, 2024, we had an accumulated deficit of $ 54.3 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 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 nine-months ended May 31, 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 offering expenses payable by the Company.

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

Issued common shares pursuant to the exercise of the following warrants:

1,622,250 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 $ 1,541,137 ;

1,618,330 common shares pursuant to the exercise of warrants that were issued under our October 3, 2023, financing, at an exercise price of $ 0.97 per share for gross proceeds of $ 1,569,780 ;

729,058 common shares pursuant to the exercise of pre-funded warrants that were issued under our October 3, 2023, financing, at an exercise price of $ 0.0001 per share for gross proceeds of $ 73 dollars;

1,298,702 common shares pursuant to the exercise of warrants that were issued under our February 16, 2024, financing, at an exercise price of $ 2.185 per share for gross proceeds of $ 2,837,664 ;

113,702 common shares pursuant to the exercise of pre-funded warrants that were issued under our February 16, 2024, financing, at an exercise price of $ 0.0001 per share for gross proceeds of $ 11 dollars.

During the three months ended November 30, 2024, we raised $ 4.3 million in net proceeds from the sale of securities pursuant to our registered direct and At the Market offerings which closed in October, 2024.

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.

6 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 any substantial doubt in connection with the Company's ability to continue as a going concern.

Significant Accounting Policies

2 unchanged sentences

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

Lexaria CanPharm ULC, Lexaria CanPharm Holding Corp., PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp., Lexaria Nutraceutical Corp., and Lexaria Pharmaceutical Corp., and our 83.33 3% owned subsidiary Lexaria Nicotine LLC with the remaining 16.6 67% owned by Altria Ventures Inc.

an indirect wholly owned subsidiary of Altria Group, Inc.

Lexaria CanPharm ULC, Lexaria CanPharm Holding Corp., PoViva Corp., Lexaria Hemp Corp., Kelowna Management Services Corp., Lexaria Nutraceutical Corp., Lexaria (AU) Pty Ltd., 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.

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

7 unchanged sentences

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 May 31, 2024, or May 31, 2023.

The Company had no cash equivalents as of November 30, 2024, or August 31, 2024.

Marketable Securities

The Company’s marketable securities consist of investments in common stock.

Investments in equity securities are reported at fair value with changes in unrecognized gains or losses included in other income (loss) on the consolidated statements of operations.

Investments in equity securities are reported at fair value with changes in unrecognized gains or losses included in other income (loss) on the Consolidated Statements of Operations and Comprehensive Loss.

The Company accounts for its leases under ASC 842, Leases (“ASC 842”).

6 unchanged sentences

Operating lease expenses are recognized on a straight-line basis, unless the right-of-use asset has been impaired, over the reasonably certain lease term based on the total lease payments.

They are included in operating expenses in the consolidated statements of operations.

They are included in operating expenses in the Consolidated Statements of Operations and Comprehensive Loss.

For operating leases that reflect impairment, we will recognize the amortization of the right-of-use asset on a straight-line basis over the remaining lease term with rent expense still included in operating expenses in the consolidated statements of operations.

8 unchanged sentences

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

Certain production equipment is depreciated by units of production method.

Leasehold improvements are amortized over the term of the related leases, or the economic life of the improvements, whichever is shorter.

6 unchanged sentences

Revenue recognition

The Company recognizes revenue in accordance with ASC 606’s core principle by applying the following five steps:

Identify contracts with customers

Identify the performance obligations in the contracts

Determine the contract price

Allocate the contract price

Recognize revenue when/as performance obligations are satisfied

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 and recognize the related revenue.

Our revenues from licenses that grant exclusive rights to use our intellectual property, which we consider functional IP, are recognized at a point in time following the transfer and use of our patented infusion technology DehydraTECH.

Our licensees are also required to pay quarterly fixed non-refundable minimum performance fees which are recognized as revenue over the period to which they apply.

Usage fees from intellectual property

We recognize usage fees from B2B clients in the period in which the counterparty completes the manufacturing which incorporates DehydraTECH enabled APIs into the related product.

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

Non-refundable minimum fees are recognized as revenue over the period to which they apply.

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.

The Company may also earn sales-based or usage-based royalties from its licensing contracts.

The Company recognizes usage fees in the period when our licensees recognize sales of end-products that incorporate our licensed technology.

No sales-based usage fees were recognized for the three months ended November 30, 2024 and 2023.

Third Party Contracted Manufacturing

The Company recognizes revenue with respect to contract manufacturing arrangements when the related performance obligations have been satisfied (i.e., when it has completed the related manufacturing work) and in accordance with the five steps described in ASC 606.

Contract Research and Development

The Company recognizes revenue from contract research and development arrangements when the related performance obligations have been satisfied and in accordance with the five steps described in ASC 606.

The related performance obligation typically entails preparation of customer-specific formulations (i.e., DehydraTECH paired with the customer’s active ingredient) that the customer then uses in comparison testing relative to its existing product(s).

Revenue is recognized upon shipment of the formulation to the customer.

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.

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 raw material, inbound freight charges, warehousing costs, and applicable overhead expenses.

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 clinical research organizations, consultants, academic and non-profit institutions, contract manufacturing, and other expenses.

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.

Intellectual property expenses

1 unchanged sentence

Stock-based compensation

The Company accounts for its stock-based compensation awards whereby all stock-based grants are recognized as expenses in the consolidated statements of operations based on the fair value at grant date subject to vesting dates and amortized over the related vesting period.

The Company accounts for its stock-based compensation awards whereby all stock-based grants are recognized as expenses in the Consolidated Statements of Operations and Comprehensive Loss based on the fair value at grant date subject to vesting dates and amortized over the related vesting period.

The grant date fair value of each option award is estimated using the Black-Scholes option-pricing model.

The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates and expected dividend yields of the common stock.

Foreign currency translation

9 unchanged sentences

The calculation of loss per share uses the weighted average number of shares outstanding during the year.

Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as restricted stock and stock options, which would result in the issuance of incremental shares of common stock.

Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as restricted stock, stock options, and warrants, which would result in the issuance of incremental shares of common stock.

Diluted loss per share is equivalent to basic loss per share if the potential exercise of the equity-based financial instruments is anti-dilutive.

14 unchanged sentences

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 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 May 31, 2024.

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, 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 nine-months ended May 31, 2024, two customers accounted for 98 % of consolidated revenues.

In the nine-months ended May 31, 2023, four customers accounted for 88 % of consolidated revenues.

In the three-months ended November 30, 2024, two customers accounted for 100 % of consolidated revenues.

In the three-months ended November 30, 2023, two customers accounted for 96 % of consolidated revenues.

As of November 30, 2024, the Company had $ 89,491 in sales tax receivable, as compared to $ 70,477 as of August 31, 2024.

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

Commitments and contingencies

2 unchanged sentences

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 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.

Estimates and Judgments

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

These accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made.

Although we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used.

Changes in the accounting estimates used by the Company are reasonably likely to occur from time to time, which may have a material effect on the presentation of financial condition and results of operations.

Management reviews our estimates, judgments, and assumptions periodically and reflects the effects of any revisions in the period in which they are deemed to be necessary.

We believe that these estimates are reasonable.

However, actual results could differ from these estimates.

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

Recent Accounting Guidance

Recently Adopted Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

This Accounting Standards Update represents a significant change in the accounting for credit losses model by requiring immediate recognition of management’s estimates of current expected credit losses (CECL).

Under the prior model, losses were recognized only as they were incurred.

The Company has determined that it has met the criteria of a smaller reporting company ("SRC") as of November 15, 2019.

As such, ASU 2019-10, Financial Instruments-Credit Losses, Derivatives and Hedging, and Leases:

Effective Dates amended the effective date for the Company to be for reporting periods beginning after December 15, 2022.

The Company adopted ASU 2016-13 effective September 1, 2023, and determined that its impact on the accompanying consolidated financial statements is immaterial.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)) – Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02-Codification Improvements-Amendments to Remove References to the Concepts Statements, that contains amendments to the Codification that remove references to various FASB Concepts Statements.

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The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

Estimates and Judgments

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.

Although we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used.

Management reviews our estimates, judgments, and assumptions periodically and reflects the effects of any revisions in the period in which they are deemed to be necessary.

We believe that these estimates are reasonable.

However, actual results could differ from these estimates.

Accounts and Other Receivables

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

Amounts Receivable

Accounts receivable as of November 30, 2024 and August 31, 2024 consist of the following:

Territory license fees

Long term receivable

Total Receivables

Prepaid Expenses and Other Current Assets

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

Licence, filing fees, dues

Advertising and conferences

Legal and accounting fees

Office and insurance

Prepaid expenses consist of the following as of November 30, 2024 and August 31, 2024:

Advertising & Conferences

Research and Development

Legal & Accounting Fees

License, Filing Fees, Dues

Office & Insurance

Capital Financing

Total Prepaid Expenses and Other Current Assets

Intellectual Property, net

2 unchanged sentences

Balance – ending

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

As such, during the nine-months ended May 31, 2024, the Company recognized an impairment loss of $ 57,836 related to those abandoned applications.

The Company recognized $ 24,929 of amortization expense related to patents and licenses in the nine-months ended May 31, 2024.

The Company evaluated its patent portfolio to determine whether certain pending applications had been abandoned or will not be pursued.

During the three-months ended November 30, 2024, the Company did not recognize an impairment loss related to those applications.

The Company recognized $ 24,462 of amortization expense related to patents and licenses in the three months ended November 30, 2024 as compared to $ 8,274 for the three months ended November 30, 2023.

The following table summarizes expected future amortization of the Company’s patent portfolio as of November 30, 2024:

Years Ending December 31,

Property & Equipment, net

Property and equipment, net consists of:

November 30, 2024

Period Amortization

13 unchanged sentences

$ ( 517,616 )

Depreciation and amortization for the three months ended November 30, 2024 and the year ended August 31, 2024 totaled $ 8,734 and $ 42,448 , respectively, of which $ 0 and $ 0 was included in cost of goods sold, respectively.

Accounts Payable and Accrued Liabilities

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

Accounts payable and accrued liabilities as of November 30, 2024 and August 31, 2024 consist of the following:

Accounts Payable

Trade payable

Vendors payable

Sales tax payable

A breakdown of our revenues by type for the nine-months ended May 31, 2024, and May 31, 2023, are as follows:

Nine-Months Ended May 31

During the nine-month period ended May 31, 2024, and 2023, the Company recognized B2B product revenues of $ 5,388 and $ 44,167 , 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 $ 373,990 and $ 104,935 in licensing revenue in the nine-months ended May 31, 2024, and 2023, respectively.

For the nine-months ended May 31, 2024, the Company did not recognize a provision or benefit for income taxes as it has incurred net losses.

Accrued Liabilities

Vendors payable

Balance Ending

A breakdown of our revenues by type for the three-months ended November 30, 2024, and November 30, 2023, are as follows:

Three-Months Ended November 30

During the three-month period ended November 30, 2024, and 2023, the Company recognized B2B product revenues of $ 9,923 and $ 5,388 , 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 non-refundable minimum performance fees.

The Company recognized $ 174,000 and $ 144,990 in licensing revenue in the three-months ended November 30, 2024, and 2023, respectively.

For the three-months ended November 30, 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.

Issuances of Common Shares and Warrants

During the nine-months ended May 31, 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.

During the nine-months ended May 31, 2024, the Company also 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.

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

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 offering expenses payable by the Company.

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

On April 30 2024, the Company entered into a Warrant Exercise Agreement with an existing accredited investor (the “Investor”) to exercise in full outstanding Common Stock Purchase Warrants (the “Exercise”) to purchase up to an aggregate of 2,917,032 shares of the Company’s common stock (the “Existing Warrant”) for gross proceeds of $ 4,407,444 .

Immediately upon full exercise of the Existing Warrant, the Investor received a new unregistered Common Stock Purchase Warrant to purchase up to an aggregate of 2,917,032 shares of the Company’s common stock (the “New Warrant”).

The New Warrant was issued to the Investor for consideration of $ 0.125 per share for additional gross proceeds of $ 364,629 .

In addition, 102,097 warrants with an exercise price of $ 5.9375 were issued as part of a tail commission.

Placement agent fees and other offering expenses in the amount of $ 209,796 were netted against the proceeds.

During the nine-months ended May 31, 2024, the Company had warrant exercises resulting in the following share issuances:

1,622,250 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 $ 1,541,137 ;

1,618,330 common shares pursuant to the exercise of warrants that were issued under our October 3, 2023, financing, at an exercise price of $ 0.97 per share for gross proceeds of $ 1,569,780 ;

1,298,702 common shares pursuant to the exercise of warrants that were issued under our February 16, 2024, financing, at an exercise price of $ 2.185 per share for gross proceeds of $ 2,837,664 ;

A continuity schedule for warrants for the nine-months ended May 31, 2024, is presented below:

During the three-months ended November 30, 2024, the Company completed the following issuances of common shares and warrants:

On October 16, 2024, the Company entered into a Securities Purchase Agreement whereby we issued 1,633,987 shares of common stock at a purchase price of $ 3.06 per share for gross and net proceeds of $ 5.0 million and $ 4.5 million, respectively.

Concurrently, the Company issued, by way of a private placement transaction, 4,551,019 share purchase warrants, entitling the holder thereof to purchase up to 4,551,019 shares of common stock at a price of $3.06 per share for a period of five years from the date of shareholder approval for such warrant issuance.

The shares registered pursuant to a take down of the Company’s Form S-3 registration statement and the warrants and related warrant shares were registered pursuant to a Form S-3 registration statement As part of the terms and conditions of the warrant issuance, the sole investor agreed to cancel the 2,917,032 share purchase warrants bearing an exercise price of $ 4.75 that were issued to them in the April 30, 2024 financing.

We also issued the placement agent warrants to purchase up to 57,190 shares at an exercise price of $3.825 per share .

In October 2024, the Company sold 8,402 shares of common stock through an At the Market (ATM) offering for gross proceeds of $ 26,146 .

Share issuance costs related to the ATM offering of $ 144,812 were charged to additional paid in capital.

A continuity schedule for warrants for the three-months ended November 30, 2024, is presented below:

Balance, August 31, 2024

Cancelled/Expired

( 2,977,830 )

Balance, May 31, 2024

A summary of warrants outstanding as of May 31, 2024, is presented below:

Balance, November 31, 2024

A summary of warrants outstanding as of November 30, 2024, is presented below:

Number of Warrants

1 unchanged sentence

Weighted Average Remaining Contractual Life ~in years~

The share purchase and placement agent warrants issued on October 16, 2024 are exercisable on or after the related stockholder approval date.

Because they were not exercisable as of November 30, 2024, they are excluded from the continuity table and summary of warrants outstanding above.

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 which were affected 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.

The Company established an Equity Incentive Plan whereby our Board, pursuant to shareholder approved amendments, may grant up to 1,745,259 stock options to directors, officers, employees, and consultants with such number being increased to up to 10% of the issued share capital at the end of each calendar year, at the discretion of the board, pursuant to an evergreen formula .

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.

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.

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 attempts to ensure 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.

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

A continuity schedule for stock options is presented below:

4 unchanged sentences

Cancelled/expired

Balance May 31, 2024 (outstanding)

Balance May 31, 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.

On March 2, 2024, the Company granted 200,000 options to its new Chief Financial Officer with an exercise price of $ 2.93 and a term of 5 years, subject to the following vesting provisions:

50,000 vested on March 15, 2024, 50,000 will vest on March 15, 2025, 4,166 will vest monthly until March 15, 2027 at which time the balance of 4,182 options will vest.

On April 26, 2024, the Company granted 151,500 options to its officers, employees and directors with an exercise price of $ 2.36 and a term of 5 years.

The fair value of stock options granted in the nine-months ended May 31, 2024, were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

Balance November 30, 2024 (outstanding)

Balance November 30, 2024 (exercisable)

On October 1, 2024, the Company granted 62,000 options to its employees with an exercise price of $ 3.17 and a term of 5 years.

The options granted vest as follows:

4,000 at grant date, 20,000 on February 28, 2025, and 38,000 over a period of two years .

On November 27, 2024, the Company granted 20,000 fully vested options to its Scientific Advisory Board members with an exercise price of $ 2.10 and a term of 5 years.

The fair value of stock options granted in the three-months ended November 30, 2024, were estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions:

November 30, 2024

Expected volatility

Risk-free interest rate

4.24 % - 5.03

Expected life

1 unchanged sentence

Estimated fair value per option

$ 1.11 – 1.57

Stock-based compensation expense for the nine-month period ended May 31, 2024, and 2023, was $ 395,726 and $ 160,748 , respectively.

As of May 31, 2024, the total unrecognized non-cash compensation costs are $ 302,474 related to 150,000 non-vested stock options with a $ 2.93 weighted average price.

Stock-based compensation expense for the three-month periods ended November 30, 2024, and 2023, was $ 99,415 and $ 53,953 , respectively.

As of November 30, 2024, the total unrecognized non-cash compensation costs are $ 627,783 related to 265,000 non-vested stock options with a $ 3.74 weighted average exercise price.

These costs are expected to be recognized over a weighted average period of 1.97 years.

4 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, 2024

August 31, 2024

Right of use assets - operating leases

Remeasurement related to lease extension

Total lease assets

Remeasurement related to lease extension

Lease payments

5 unchanged sentences

Discount rate

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 May 31, 2024:

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, 2024:

Total lease payments

4 unchanged sentences

The Company’s operations involve the development and usage, including licensing, of DehydraTECH.

Lexaria is centrally managed and its chief operating decision makers, being the President and the CEO, use the consolidated and other financial information, supplemented by revenue information by category of business-to-business product production and technology licensing to make operational decisions and to assess the performance of the Company.

Lexaria is centrally managed and its chief operating decision makers, the President and the CEO, use the consolidated and other financial information, supplemented by revenue information by category of business-to-business product production and technology licensing to make operational decisions and to assess the performance of the Company.

The Company has identified four reportable segments:

1 unchanged sentence

Licensing revenues are significantly concentrated on three licensees.

Nine Months Ended May 31, 2024

Three Months Ended November 30, 2024

Consolidated Total

3 unchanged sentences

( 2,871,910 )

( 3,925,522 )

Other Income(Expense)

3 unchanged sentences

$ ( 2,706,628 )

Nine Months Ended May 31, 2023

Three Months Ended November 30, 2023

Consolidated Total

2 unchanged sentences

( 1,285,597 )

( 2,123,337 )

( 5,583,876 )

Other Income(Expense)

3 unchanged sentences

$ ( 1,185,038 )

$ ( 5,463,510 )

Subsequent Events

Effective December 9, 2024, the Company issued 10,000 fully vested options with an exercise price of $ 2.42 to a Scientific Advisory Board member.

Effective January 7, 2025, the Company issued 100,000 fully vested Restricted Stock Awards (“RSAs”) with a fair value of $224,000 and having a six (6) month Restricted Period, as that term is defined in the Company’s incentive equity plan, to Christopher Bunka .

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