What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-11-28 compared with 2024-11-26 · 171 added, 151 removed, 455 unchanged (41% of the section changed)

7 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2025 and 2024, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

4 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

17 unchanged sentences

(Expressed in US Dollars)

Short-term investments

Marketable securities

5 unchanged sentences

Right of use assets

Property & equipment, net

Intellectual property, net

Property & equipment, net

Total Non-current Assets

LIABILITIES and STOCKHOLDERS' EQUITY

4 unchanged sentences

Total Current Liabilities

Lease liability, non-current

Lease liabilities - non-current

TOTAL LIABILITIES

36 unchanged sentences

$ ( 5,795,345 )

Other comprehensive income

Other comprehensive income (loss)

Foreign currency translation adjustment

7 unchanged sentences

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended August 31, 2025 and 2024

(Expressed in US Dollars)

Stockholders'

Balance August 31, 2023

$ ( 45,763,427 )

$ ( 364,040 )

Shares sold for cash

Shares issued from exercise of warrants

Shares issued from exercise of options

Stock-based compensation

Foreign currency translation adjustment

( 5,795,345 )

Non-controlling interest

Balance August 31, 2024

$ ( 51,558,772 )

$ ( 377,349 )

Shares sold for cash

Restricted stock award

Stock-based compensation

Foreign currency translation adjustment

( 11,901,841 )

Non-controlling interest

Balance August 31, 2025

$ ( 63,460,613 )

$ ( 386,942 )

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

12 unchanged sentences

Lease accretion

Change in operating assets and liabilities

Change in operating assets and liabilites:

Accounts receivable

8 unchanged sentences

Cash flows used in investing activities

Intellectual property

Short-term investments

$ ( 143,267 )

Additions to intellectual property

Purchase of equipment

2 unchanged sentences

$ ( 188,605 )

Cash flows from financing activities

Cash flows provided by financing activities

Proceeds from exercise of stock options

Proceeds from sale of common shares for cash

Proceeds from shares sold for cash

Proceeds from exercise of warrants

Net cash from financing activities

Net cash provided by 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

Remeasurement of operating lease right of use assets and liabilities

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

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended August 31, 2024 and 2023

(Expressed in US Dollars)

Comprehensive

(Loss) Income

Balance August 31, 2022

$ ( 39,098,528 )

$ ( 316,414 )

Shares sold for cash

Stock based compensation

( 6,664,899 )

Non-controlling interest

Balance August 31, 2023

$ ( 45,763,427 )

$ ( 364,040 )

Shares sold for cash

Shares issued from exercise of warrants

Shares issued from exercise of options

Stock based compensation

Foreign currency translation loss

( 5,795,345 )

Non-controlling interest

Balance August 31, 2024

$ ( 51,558,772 )

$ ( 377,349 )

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

LEXARIA BIOSCIENCE CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2024 and 2023

Nature of Business

1 unchanged sentence

(“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.

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 events.

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.

3 unchanged sentences

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.

During the year ended August 31, 2024, we raised an approximate aggregate $ 10.3 million in net proceeds from the sale of securities pursuant to our equity financings from October 3, 2023, February 14, 2024 and April 30, 2024 and from the exercise of warrants.

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 year ended August 31, 2025, we raised an approximate aggregate $ 6.0 million in net proceeds from the sale of securities pursuant to our registered direct offerings which closed in April 2025 and October 2024, as well as At the Market (ATM) offerings.

Subsequent to August 31, 2025, we raised an additional $ 3.5 million in net proceeds in a registered direct offering.

We may offer additional securities for sale during our fiscal year 2026 or thereafter in response to market conditions or other circumstances if we believe such a plan of financing is required to advance the Company’s business plans and is in the best interests of our stockholders.

Based on 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.

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.

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

Any of these actions could adversely and materially affect our business, cash flow, financial condition, results of operations, and potential prospects.

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

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.

Our ability to continue operations after our current cash resources are exhausted is dependent on our ability to obtain additional debt or equity financing or a strategic partnership, which cannot be guaranteed.

Cash requirements may vary materially from those now planned because of changes in our focus and direction of our research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments.

If adequate additional funds are not available when required, management may need to curtail its development efforts and planned operations to conserve cash.

Based on existing cash resources, management believes that current funding will not be sufficient to meet the Company’s financial obligations for a period of at least twelve months from the date of this report.

Accordingly, there is substantial doubt as to our ability to continue as a going concern within one year from the date of issuance of these financial statements.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

Significant Accounting Policies

10 unchanged sentences

The Company had no cash equivalents as of August 31, 2025 or August 31, 2024.

Short-term investments

Short-term investment balances consist of guaranteed investment certificates used to secure the Company’s credit cards.

The certificates had an original term of one year.

Marketable Securities

1 unchanged sentence

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.

There have been no purchases or sales of equity securities.

The Company recognized unrealized losses on its equity securities of $ 33,714 and $ 69,835 for the years ended August 31, 2025 and 2024, respectively.

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

17 unchanged sentences

Laboratory and computer equipment and office furniture are depreciated over periods ranging from 3 to 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.

46 unchanged sentences

Transactions executed in different currencies are translated at spot rates and resulting foreign exchange transaction gains and losses are charged to income.

Segment reporting

The Company has one reportable segment:

IP licensing.

The IP licensing segment generates revenue from customers by licensing its proprietary DehydraTECH technology.

The IP licensing segment’s accounting policies are the same as those described in this note.

The chief operating decision maker, our Chief Executive Officer, assesses performance of the IP Licensing segment and makes resource allocation decisions based on cash flows that are also reported on the Consolidated Statements of Cash Flows.

The measure of segment assets is reported on the consolidated balance sheet as consolidated total assets.

The measure of segment profit or loss is net loss as per the Consolidated Statements of Operations and Comprehensive Loss.

Loss per share

2 unchanged sentences

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

For the years ended August 31, 2025 and 2024, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result was anti-dilutive.

Stock Options

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method.

24 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 year ended August 31, 2024, two customers accounted for 99% of consolidated revenues, whereas for the year ended August 31,2023, four customers accounted for 95% of consolidated revenue.

In the year ended August 31, 2025, two customers accounted for 100 % of consolidated revenues, similar for the year ended August 31, 2024, whereby two customers accounted for 99 % of consolidated revenue.

At fiscal year-end 2025, we had $ 174,000 in license fees receivable, compared to $ 84,000 as of August 31, 2024.

11 unchanged sentences

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.

1 unchanged sentence

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.

The Company adopted ASU 2023-07 in the current year and determined that its impact on the accompanying consolidated financial statements is immaterial.

Accounting Pronouncements Not Yet Adopted

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.

28 unchanged sentences

The Asset Purchase Agreement for the sale of assets to Hill Inc.

included C$ 2 million note (the “Note”) receivable as partial payment of the agreement.

included CDN$2 million note (the “Note”) receivable as partial payment of the agreement.

The Note does not contain a fixed repayment schedule nor a maturity date.

1 unchanged sentence

Therefore, with any repayment being highly doubtful, management determined at that time and as of August 31, 2025 and 2024 that the value of the note to be notional and recorded the note at a zero value for accounting purposes.

During fiscal 2024, we received interest income on the note totalling $ 14,117 .

continues to operate and make ongoing interest payments to us in relation to this Note.

During fiscal 2025, we received interest income on the note totaling $ 11 .

Impairment of Long-Lived Assets

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

As such, during the year ended August 31, 2024, the Company recognized an impairment loss of $ 57,836 related to those abandoned applications.

As such, during the year ended August 31, 2025, the Company recognized an impairment loss of $ 33,540 related to those abandoned applications and an additional $ 213,824 related to a write-down of the patent portfolio to a carrying value equal to related discounted future cash flows.

Accounts and Other Receivables

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

Accounts receivable as of August 31, 2025 and August 31, 2024 consist of the following:

Territory license fees

16 unchanged sentences

As such, during the year ended August 31, 2025, the Company recognized an impairment loss of $ 33,540 related to those abandoned applications.

In addition, as of August 31, 2025, the Company determined that the carrying value of its patent portfolio exceeded related discounted future cash flows.

As such, we recognized an additional impairment loss of $ 213,824 .

The Company recognized $ 36,600 of amortization expense related to patents and licenses in the year ended August 31, 2025.

The following table summarizes expected future amortization of the Company’s patent portfolio as of August 31, 2025:

Years Ending December 31,

Fiscal Years Ending August 31,

Property & Equipment, net

Property and equipment, net consists of:

Saturday, August 31, 2024

August 31, 2025

Accumulated Amortization

11 unchanged sentences

$ ( 517,616 )

During the years ended August 31, 2024 and August 31, 2023, amortization of $ 0 and $ 4,651 was included in cost of goods sold.

Depreciation and amortization for the years ended August 31, 2025 and August 31, 2024 totaled $ 51,225 and $ 42,448 , respectively, of which $ 0 and $ 0 was included in cost of goods sold, respectively.

Accounts Payable and Accrued Liabilities

5 unchanged sentences

Vendors payable

Vacation payable

Balance Ending

1 unchanged sentence

Year Ended August 31,

Total Revenue

The Company recognized $ 696,000 and $ 457,990 in licensing revenue during the years ended August 31, 2025 and August 31, 2024, respectively.

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 $ 457,990 in licensing revenue during the year.

The Company recognized B2B product revenues of $ 5,388 that relate to sales of our intermediate products for use by B2B customers in their products.

During the years ended August 31, 2025 and August 31, 2024, 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.

The following table reconciles the income tax benefit at the U.S.

Federal statutory rate to income tax benefit at the Company’s effective tax rates as at August 31, 2024 and 2023:

Federal statutory rate to income tax benefit at the Company’s effective tax rates as of August 31, 2025 and 2024:

Loss before taxes

( 5,808,654 )

Expected income tax recovery

( 1,255,377 )

Non-deductible items

9 unchanged sentences

PPE and intangibles

Accrued vacation

Total deferred tax assets

1 unchanged sentence

Net Deferred tax assets

The Company has net operating loss carry-forwards of approximately $ 44 million which may be carried forward to apply against future year income tax for U.S.

The Company has net operating loss carryforwards of approximately $ 47 million which may be carried forward to apply against future year income tax for U.S.

tax purposes.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions in the Tax Cut and Jobs Act, modifications to the international tax framework, and restoration of favorable tax treatment for certain business provisions.

The Company is currently assessing the OBBBA’s impact on its consolidated financial statements, which is expected to be immaterial.

Common Shares and Warrants

Fiscal 2025 Activity

During the year ended August 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.

The Company entered into a Securities Purchase Agreement whereby on April 28, 2025, the Company issued 2,000,000 shares of common stock at a $ 1.00 per share in a registered direct offering.

The Company also agreed to compensate the placement agent through the issuance of warrants to purchase up to 70,000 shares of common stock.

Such warrants will expire five years from the issuance date and have an exercise price of $ 1.25 per share.

The net proceeds to the Company from the registered direct offering was $ 1.7 million, after deducting placement agent fees and other offering expenses paid by the Company.

As of August 31, 2024, 1,298,702 warrants had been exercised.

In addition, all 113,702 pre-funded warrants had been exercised for gross proceeds of $ 11 .

During the year ended August 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 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 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 .

Further, all 1,618,330 warrants had been exercised by August 31, 2024.

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 fiscal year ended August 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 ;

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 year ended August 31, 2024, 300,000 warrants expired.

In February 2025, the Company sold 6,585 shares of common stock through an At the Market (ATM) offering for net proceeds of $ 11,720 .

On September 19, 2025 the Company terminated the ATM and the associated share issuance costs of $ 94,000 will be charged to additional paid-in capital during the first quarter of fiscal year 2026.

On January 7, 2025, the Company issued 100,000 Restricted Stock Awards ('RSAs') with a fair value of $ 224,000 and having a vesting period of six months to its Strategic Executive Consultant.

The RSAs fully were vested as of August 31, 2025.

In October 2024, the Company sold 8,402 shares of common stock through an 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.

On October 16, 2024, the Company, pursuant to a Securities Purchase Agreement, 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 January 14, 2025, the date of shareholder approval for such warrant issuance.

The shares were 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 for a period of five years from the date of issuance shares at an exercise price of $3.825 per share .

Presented below is a continuity schedule for warrants:

Balance, August 31, 2023

Cancelled/expired

( 5,382,042 )

Balance, August 31, 2024

Cancelled/Expired

( 3,311,687 )

8 unchanged sentences

During the year ended August 31, 2024, the Company completed the following issuances of common shares and warrants:

34,652 shares were sold pursuant to an at-the-market offering ("ATM”) for gross proceeds of $ 114,456 .

Offering costs netted against proceeds amounted to $ 125,122 .

1,558,443 units were sold at a price of $ 2.31 per unit, with each unit consisting of one common share and one warrant exercisable to purchase an additional common share at $ 2.185 per share, for net proceeds of $ 3,000,000 .

The 1,558,443 warrants are exercisable for a period of five ( 5 ) years.

No warrants have been exercised and 7,500 warrants expired during the year ended August 31, 2023.

1,618,330 units were sold at a price of $ 0.97 per unit, with each unit consisting of one common share and one warrant exercisable to purchase an additional common share at $ 0.97 per share, for net proceeds of $ 1,250,000 .

The 1,618,330 warrants are exercisable for a period of five ( 5 ) years.

2,917,032 warrants were issued as part of a Warrant Exercise Agreement having a five ( 5 ) year exercise period at an exercise price of $ 4.75 .

5,382,042 warrants were exercised for gross proceeds of $ 6,103,601 and 300,000 warrants expired during the year ended August 31, 2024.

Stock Options

1 unchanged sentence

Stock options may be exercised for a maximum period of up to ten ( 10 ) years but to date all currently issued options must be exercised, as determined by our Board, by no later than five years from the date of grant.

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 of or preceding the date of grant.

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.

Vesting terms are set by our Board.

5 unchanged sentences

Contractual Life (years)

Of the 200,000 options granted on March 15, 2024, 150,000 were subsequently cancelled and 50,000 were fully vested.

Fiscal 2024 Activity

The Company granted the following stock options during the year ended August 31, 2024:

Weighted Average

Granted Quantity

Exercise Price

Contractual Life) 5

During the year ended August 31, 2023, 267,969 previously granted options with exercise prices ranging from $ 9.60 to $ 4.80 were repriced to $ 3.00 following shareholder approval obtained at the Company’s annual shareholder meeting held on May 9, 2023.

Contractual Life (years)

Of the 200,000 options granted on March 15, 2024, 150,000 were subsequently cancelled and 50,000 were fully vested.

The contractual life for these options was also reduced to 2 years.

A continuity schedule for stock options is presented below:

19 unchanged sentences

Stock-based compensation expense for the fiscal years ended August 31, 2025 and August 31, 2024 totaled $ 859,494 and $ 492,236 , respectively.

Of the current fiscal year expense, $ 453,119 relates to current year option awards, and $ 39,117 relates to the vesting of options awarded in previous fiscal years.

Of the current fiscal year expense, $ 595,119 relates to current year option awards and restricted stock awards, and $ 264,375 relates to the vesting of options awarded in previous fiscal years.

As of August 31, 2025, unrecognized non-cash stock-based compensation expense totaled $ 364,868 related to 162,092 unvested stock options with a weighted average exercise price of $ 3.47 .

2 unchanged sentences

Right of Use Assets - Operating Lease

Corporate offices and R&D lab space is leased in Kelowna, British Columbia, Canada which lease was renewed during fiscal 2023 until November 15, 2028.

Our Corporate offices and R&D lab space is leased in Kelowna, British Columbia, Canada.

The current lease expires on November 15, 2028.

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

18 unchanged sentences

Segment Information

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.

The Company has identified four reportable segments:

Intellectual Property Licensing, B2B Production, Research and Development and Corporate.

Licensing revenues are concentrated on three licensees.

Year Ended August 31, 2024

Cost of goods sold

Operating expenses

( 2,360,565 )

( 3,850,557 )

( 6,212,586 )

Other income/(expense)

$ ( 2,359,665 )

$ ( 3,906,081 )

$ ( 5,808,654 )

The Company has one reportable segment:

IP licensing.

The IP licensing segment generates revenue from customers by licensing its proprietary DehydraTECH technology.

The IP licensing segment’s accounting policies are the same as those described in the summary of significant accounting policies at Note 2.

The measure of segment assets is reported on the balance sheet as consolidated total assets.

The measure of segment profit or loss is net loss as per the Consolidated Statements of Operations and Comprehensive Loss.

The Company invested in additional intellectual property and purchases of equipment totaling $ 75,106 and $ 24,646 respectively, during the fiscal year ended August 31, 2025, and $ 145,591 and $ 43,014 , respectively, during the fiscal year ended August 31, 2024.

The following table details losses for the IP licensing segment, as well as reconciliations to consolidated net loss for the years ended August 31, 2025 and August 31, 2024.

Year Ended August 31,

Cost of goods sold

Operating expenses

( 3,666,721 )

( 2,708,623 )

$ ( 6,728,730 )

Other income/(expense)

$ ( 178,503 )

IP Licensing Segment

Licensing revenue

Research and Development

Wages & Salaries

Legal and professional

Accounting and audit

Advertising and promotions

Investor relations

Depreciation and amortization

Office and miscellaneous (a)

Impairment loss

Other income (loss)

Segment net loss

$ ( 11,905,427 )

$ ( 5,808,996 )

Reconciliation of profit and loss:

B2B cost of sales

B2B operating expenses

Consolidated net loss

$ ( 11,911,434 )

$ ( 5,808,654 )

(a) Office and miscellaneous expense includes office expense, insurance expense, foreign currency exchange gains and losses, bad debt, and other overhead expenses.

Subsequent Events

Subsequent to the fiscal year end, the Company engaged Mr.

Michael Shankman as its Chief Financial Officer to fill the vacancy created when Mr.

Cabatuan resigned from this position on July 15, 2024.

Pursuant to the Executive Management Agreement entered into between the Company and Mr.

Shankman, Mr.

Shankman will be compensated with a base annual salary of US$ 120,000 , subject to annual increases of 1.25 x the annual inflation rate as determined by the US Federal Reserve Board, an option grant for the issuance of up to 50,000 common shares vested over three years, and annual performance milestone bonuses of up to 35% during the first year, 40% during the second year and thereafter up to 50% of the base salary.

Shankman be terminated without cause, after an initial six months with the Company, he will be entitled to severance pay equal to two (2) months base salary, with such severance pay increasing by a month for each completed year of employment.

Shankman will also be entitled to medical and dental benefits equal in value to up to $2,000 per month and four (4) weeks of paid vacation .

Subsequent to the fiscal year end, on September 4, 2024, we entered into an engagement agreement with H.C.

Wainwright & Co.

LLC (“HCW”), pursuant to which we agreed to sell in a registered direct offering, 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 securities were issued on October 16, 2024, with the shares registered pursuant to a take down of the Company’s Form S-3 registration statement and the warrants and related warrant shares are required to be registered pursuant to a Form S-1 registration statement As part of the terms and conditions of the warrant issuance, the sole investor agreed to cancel the share purchase warrants that were issued to them in the April 30, 2024 financing.

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

HCW was paid 7 % of the gross proceeds and was also reimbursed $ 70,000 for its expenses and $ 15,950 in closing fees.

On October 1, 2024, the Company awarded an option grant to an employee for the purchase of up to 12,000 common shares at an exercise price of $ 3.17 per share.

In October 2024, the Company sold 8,402 shares of common stock through an At the Market (ATM) offering.

Net proceeds from these sales totaled $ 25,359 .

Effective September 19, 2025, the Company terminated its Capital on Demand Sales Agreement (the “ATM”) with JonesTrading Institutional Services LLC (the “Agent”).

The ATM was originally executed August 21, 2024.

The ATM provided that the Company may from time to time issue and sell up to $ 5,000,000 in aggregate principal amount of shares of the Company’s common stock through or to the Agent as the Company’s sales agent or principal.

As of the date of termination, the Company had sold an aggregate of 14,987 shares under the ATM for gross proceeds of $ 38,236 .

On September 26, 2025, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to sell in a registered direct offering 2,666,667 shares of common stock at a purchase price of $ 1.50 per share for gross and net proceeds of $ 4.0 million and $ 3.5 million, respectively.

Concurrently, the Company issued 2,666,667 share purchase warrants, entitling the holder thereof to purchase up to 2,666,667 shares of common stock at a price of $ 1.37 per share for a period of five years from the effective date of the registration statement registering the shares of common stock issuable upon exercise of the warrants.

The securities were issued September 29, 2025, with the shares registered pursuant to a take down of the Company’s Form S-3 registration statement and the warrants and related warrant shares are required to be registered pursuant to a Form S-1 registration statement.

We also issued H.C.

Wainwright, the exclusive placement agent for the offering, warrants to purchase up to 93,333 shares at an exercise price of $ 1.875 per share.

HCW was paid 7 % of the gross proceeds and was reimbursed $ 70,000 for its expenses and $ 15,950 in closing fees.

On November 21, 2025, Hill Incorporated (TSXV:HILL, “Hill”) made an assignment in bankruptcy pursuant to the Canadian Bankruptcy and Insolvency Act .

Pursuant to an Asset Purchase Agreement with Lexaria CanPharm ULC (“Lexaria CanPharm”), Hill holds the worldwide exclusive rights to use or sublicense DehydraTECH technology with cannabis products containing 0.3% or greater tetrahydrocannabinol .

As of August 31, 2025, the Company held a note receivable from Hill and 242,880 shares of its common stock at carrying values of $ 0 and $ 22,093 , respectively.

The Company is currently assessing the impact of the bankruptcy filing on its licensing arrangement with Hill.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data