Lexaria Bioscience Corp. 10-K

Item 8. Financial Statements and Supplementary Data 32 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Lexaria Bioscience Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lexaria Bioscience Corp. and its subsidiaries (collectively, the “Company”) as of August 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). 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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. 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. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ MaloneBailey, LLP www.malonebailey.com We have served as the Company’s auditor since 2022. Houston, Texas November 26, 2025 F-1 Table of Contents LEXARIA BIOSCIENCE CORP. CONSOLIDATED BALANCE SHEETS (Expressed in US Dollars) August 31, August 31, 2025 2024 ASSETS Current Cash $ 1,802,123 $ 6,499,885 Short-term investments 143,267 - Marketable securities 22,093 55,807 Accounts receivable 368,358 154,477 Prepaid expenses and other current assets 1,132,504 1,187,817 Total Current Assets 3,468,345 7,897,986 Non-current assets, net Long-term receivables 64,013 63,575 Right of use assets 106,816 134,843 Intellectual property, net 307,818 516,676 Property & equipment, net 228,129 254,709 Total Non-current Assets 706,776 969,803 TOTAL ASSETS $ 4,175,121 $ 8,867,789 LIABILITIES and STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 1,463,046 $ 1,066,409 Deferred revenue - 4,963 Lease liability, current 30,417 28,047 Total Current Liabilities 1,493,463 1,099,419 Lease liabilities - non-current 78,903 109,319 TOTAL LIABILITIES $ 1,572,366 $ 1,208,738 Stockholders' Equity Share Capital Authorized: 220,000,000 common voting shares with a par value of $ 0.001 per share Common shares issued and outstanding: 19,559,179 and 15,810,205 at August 31, 2025 and August 31, 2024, respectively $ 19,559 $ 15,810 Additional paid-in capital 66,501,086 59,599,178 Accumulated Deficit ( 63,460,613 ) ( 51,558,772 ) Accumulated other comprehensive loss ( 70,335 ) ( 19,816 ) Equity attributable to shareholders of Lexaria 2,989,697 8,036,400 Non-controlling Interest ( 386,942 ) ( 377,349 ) Total Stockholders' Equity 2,602,755 7,659,051 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,175,121 $ 8,867,789 The accompanying notes are an integral part of these consolidated financial statements. F-2 Table of Contents LEXARIA BIOSCIENCE CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in US Dollars except share amounts) Year Ended August 31, 2025 2024 Revenue $ 705,923 $ 464,278 Cost of goods sold 2,720 4,822 Gross profit 703,203 459,456 Operating expenses Research and development 8,238,757 2,360,565 General and administrative 4,345,183 3,852,021 Total operating expenses 12,583,940 6,212,586 Loss from operations ( 11,880,737 ) ( 5,753,130 ) Other income (loss) Interest income 3,017 14,311 Unrealized loss on marketable securities ( 33,714 ) ( 69,835 ) Total other income (loss) ( 30,697 ) ( 55,524 ) Net loss $ ( 11,911,434 ) $ ( 5,808,654 ) Less: Net loss attributable to non-controlling interest ( 9,593 ) ( 13,309 ) Net loss attributable to Lexaria shareholders $ ( 11,901,841 ) $ ( 5,795,345 ) Other comprehensive income (loss) Foreign currency translation adjustment ( 50,519 ) ( 19,816 ) Total comprehensive loss $ ( 11,952,360 ) $ ( 5,815,161 ) Basic and diluted loss per share $ ( 0.66 ) $ ( 0.47 ) Weighted average number of common shares outstanding - Basic and diluted 17,998,715 12,383,974 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents LEXARIA BIOSCIENCE CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended August 31, 2025 and 2024 (Expressed in US Dollars) Additional Non- Common Stock Paid-in controlling Stockholders' Shares Amount Capital Deficit AOCI Interest Equity Balance August 31, 2023 8,091,650 $ 8,091 $ 48,799,454 $ ( 45,763,427 ) $ - $ ( 364,040 ) $ 2,680,078 Shares sold for cash 2,334,013 2,334 4,206,397 - - - 4,208,731 Shares issued from exercise of warrants 5,382,042 5,382 6,098,219 - - - 6,103,601 Shares issued from exercise of options 2,500 3 2,872 - - - 2,875 Stock-based compensation - - 492,236 - - - 492,236 Foreign currency translation adjustment - - - - ( 19,816 ) - ( 19,816 ) Net loss - - - ( 5,795,345 ) - - ( 5,795,345 ) Non-controlling interest - - - - - ( 13,309 ) ( 13,309 ) Balance August 31, 2024 15,810,205 $ 15,810 $ 59,599,178 $ ( 51,558,772 ) $ ( 19,816 ) $ ( 377,349 ) $ 7,659,051 Shares sold for cash 3,648,974 3,649 6,042,514 - - - 6,046,163 Restricted stock award 100,000 100 223,900 - - - 224,000 Stock-based compensation - - 635,494 - - - 635,494 Foreign currency translation adjustment - - - - ( 50,519 ) - ( 50,519 ) Net loss - - - ( 11,901,841 ) - - ( 11,901,841 ) Non-controlling interest - - - - - ( 9,593 ) ( 9,593 ) Balance August 31, 2025 19,559,179 $ 19,559 $ 66,501,086 $ ( 63,460,613 ) $ ( 70,335 ) $ ( 386,942 ) $ 2,602,755 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents LEXARIA BIOSCIENCE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in US Dollars) Year Ended August 31, 2025 2024 Cash flows used in operating activities Net loss $ ( 11,911,434 ) $ ( 5,808,654 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 859,494 492,236 Depreciation and amortization 87,825 76,153 Impairment loss 247,364 57,836 Bad debt expense - 7,760 Noncash lease expense 28,027 32,603 Unrealized loss on marketable securities 33,714 69,835 Lease accretion 9,047 6,672 Change in operating assets and liabilites: Accounts receivable ( 213,881 ) ( 35,551 ) Prepaid expenses and deposits 55,313 ( 641,034 ) Long-term receivables ( 438 ) ( 15,016 ) Accounts payable and accrued liabilities 396,637 826,468 Operating lease liability ( 37,093 ) ( 33,273 ) Deferred revenue ( 4,962 ) 4,962 Net cash used in operating activities $ ( 10,450,387 ) $ ( 4,959,003 ) Cash flows used in investing activities Short-term investments $ ( 143,267 ) $ - Additions to intellectual property ( 75,106 ) ( 145,591 ) Purchase of equipment ( 24,646 ) ( 43,014 ) Net cash used in investing activities $ ( 243,019 ) $ ( 188,605 ) Cash flows provided by financing activities Proceeds from exercise of stock options $ - $ 2,875 Proceeds from shares sold for cash 6,046,163 4,208,731 Proceeds from exercise of warrants - 6,103,601 Net cash provided by financing activities $ 6,046,163 $ 10,315,207 Effect of exchange rate changes on cash $ ( 50,519 ) $ ( 19,816 ) Net change in cash for the period ( 4,697,762 ) 5,147,783 Cash at beginning of period 6,499,885 1,352,102 Cash at end of period $ 1,802,123 $ 6,499,885 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents 1. Nature of Business Lexaria Bioscience Corp. (“Lexaria”, “we”, “our” or the “Company”) is a biotechnology company pursuing the enhancement of the bioavailability of a diverse and broad range of active pharmaceutical ingredients (“API”) using our proprietary DehydraTECH drug delivery technology. 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. We derive income from our third party contracted manufacturing of B2B DehydraTECH enhanced products made to customer specifications that are sold online and in-store in the US and Canada. 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. The losses attributable to shareholders were $ 11.9 million and $ 5.8 million, for the years ended August 31, 2025 and 2024, respectively. As of August 31, 2025, we had an accumulated deficit of $ 63.5 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 into which we may enter. 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. 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. F-6 Table of Contents 2. 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. dollars. 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., Lexaria (AU) Pty Ltd 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. (an indirect wholly owned subsidiary of Altria Group, Inc.). All significant intercompany balances and transactions have been eliminated upon consolidation. 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 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 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 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. Leases The Company accounts for its leases under ASC 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability. We determined the initial classification and measurement of our right-of-use assets and lease liabilities at the lease commencement date and thereafter if modified. The lease term includes any renewal options and termination options that we are reasonably certain to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, we use our incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that we would pay to borrow on a collateralized basis, an amount equal to the lease payments for a similar term and in a similar economic environment. 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 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 and Comprehensive Loss. For all leases, rent payments that are based on a fixed index or rate at the lease commencement date are included in the measurement of lease assets and lease liabilities at the lease commencement date. F-7 Table of Contents We have elected the practical expedient to not separate lease and non-lease components. Our non-lease components are primarily related to property taxes and maintenance, which vary based on future outcomes, and thus differences to original estimates are recognized in rent expense when incurred. Intellectual property Capitalized intellectual property costs include those incurred with respect to both pending and granted patents filed in the United States. 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. 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 periods ranging from 3 to 10 years. Leasehold improvements are amortized over the term of the related leases, or the economic life of the improvements, whichever is shorter. Impairment of long-lived assets Long-lived assets, including equipment and intangible assets, namely the Company’s patents, are assessed for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to profit or loss. Intangible assets with indefinite lives are tested for impairment annually and in interim periods if certain events occur indicating that the carrying value of the intangible assets may be impaired. Revenue recognition The Company recognizes revenue in accordance with ASC 606’s core principle by applying the following five steps: 1. Identify contracts with customers 2. Identify the performance obligations in the contracts 3. Determine the contract price 4. Allocate the contract price 5. Recognize revenue when/as performance obligations are satisfied Licensing revenue from intellectual property 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 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 years ended August 31, 2025 and 2024. F-8 Table of Contents 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 the 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. 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. Intellectual property expenses Non-capitalizable costs associated with intellectual property-related matters are expensed as incurred and included in general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Loss. 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 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 term of the option, risk-free interest rates and expected dividend yields of the common stock. Foreign currency translation The Company’s reporting currency is the U.S. dollar. The Company has foreign operations whose functional currency is the local currency. Assets and liabilities are translated into U.S. dollars, the reporting currency, at the exchange rate on the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average rates of exchange prevailing during the reporting period. Foreign currency translation adjustments resulting from this process are reported as an element of other comprehensive income (loss) on the consolidated statements of operations and comprehensive loss. 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. F-9 Table of Contents Loss per share 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, 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. 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. August 31, 2025 2024 Stock Options 1,484,435 944,936 Warrants 7,298,171 5,931,649 Totals 8,782,606 6,876,585 Income taxes 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. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse. A valuation allowance is established to reduce deferred tax assets to an amount whose realization is more likely than not. Fair Value Measurements When measuring fair value, the Company seeks to maximize the use of observable inputs and minimize the use of unobservable inputs. This establishes a fair value hierarchy based on the level of independent objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Inputs are prioritized into three levels used to measure fair value: · Level 1 - Quoted prices in active markets for identical assets or liabilities; · Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and · 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, and accrued liabilities. The carrying amounts of instruments approximate their fair values due to their short maturities or quoted market prices. The Company’s headquarters and operations are located in Canada which results in exposure to market risks from fluctuations in foreign currency rates. 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 August 31, 2025. Carrying Fair Value Measurement Using Value Level 1 Level 2 Level 3 Total Marketable Securities $ 22,093 $ 22,093 $ - $ - $ 22,093 F-10 Table of Contents The following table provides a summary of financial instruments that are measured at fair value on a recurring basis as of August 31, 2024. Carrying Fair Value Measurement Using Value Level 1 Level 2 Level 3 Total Marketable Securities $ 55,807 $ 55,807 $ - $ - $ 55,807 Credit risk and customer concentration The Company places its cash with a high credit quality financial institution. Periodically, the Company may carry cash balances at such financial institution in excess of the federally insured limit of $ 250,000 . 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, 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. The Company recognized bad debt expense of $ 0 and $ 7,760 for the years ended August 31, 2025 and August 31, 2024, respectively. As of August 31, 2025, the Company had $ 194,358 in sales tax receivable, compared to $ 70,477 as of August 31, 2024. The Company considers its credit risk to be low for such receivables. Commitments and contingencies The Company’s policy is to record accruals for any 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. Reclassifications Certain amounts in the prior period have been reclassified to conform with current period presentation. 3. Recent Accounting Guidance Recently Adopted Pronouncements 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 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. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted. Early application of the amendments in this ASU is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures. F-11 Table of Contents 4. 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. Significant accounting estimates and assumptions are used for, but not limited to: The Valuation of Deferred Tax Assets Judgment is required in determining whether deferred tax assets are recognized on the balance sheet. The recognition of deferred tax assets requires management to assess the likelihood that the Company will generate taxable income in future periods to utilize the deferred tax assets. Due to the Company’s history of losses, valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Value of Stock Options and Warrants The Company provides compensation benefits to its employees, officers, directors, and consultants, through a stock option plan. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility assumptions used in the model are based on the historical volatility of the Company’s share price. The Company uses historical data to estimate the period of option exercises for use in the valuation model. The risk-free interest rate for the expected term of the option is based on the yields of government bonds. Changes in these assumptions, especially the share price volatility and the expected term determination, could have a material impact on the Company’s profit and loss for the years presented. All estimates used in the model are based on historical data, which may not be representative of future results. Disposals of Assets - Value of Note Receivable The Asset Purchase Agreement for the sale of assets to Hill Inc. 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. The repayment of the Note is based on the purchaser repaying the outstanding value of the Note and interest from the future revenues generated from an untested market with no existing revenue streams. 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 2025, we received interest income on the note totaling $ 11 . F-12 Table of Contents 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, 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. 5. Accounts and Other Receivables Accounts receivable as of August 31, 2025 and August 31, 2024 consist of the following: August 31, August 31, 2025 2024 Territory license fees $ 174,000 $ 84,000 Sales tax 194,358 70,477 Long term receivable 64,013 63,575 Total Receivables $ 432,371 $ 218,052 6. Prepaid Expenses and Other Current Assets Prepaid expenses consist of the following at August 31, 2025 and August 31, 2024: August 31, August 31, 2025 2024 Advertising & Conferences $ 1,572 $ 204,894 Research and Development 669,791 673,126 Consulting 37,409 - Legal & Accounting Fees 37,340 45,600 License, Filing Fees, Dues 27,563 22,925 Office & Insurance 239,829 122,245 Capital Financing 119,000 119,027 Total Prepaid Expenses and Other Current Assets $ 1,132,504 $ 1,187,817 7. Intellectual Property, net A continuity schedule for capitalized patents is presented below: August 31, August 31, 2025 2024 Balance – beginning $ 516,676 $ 462,625 Additions 75,106 145,591 Impairment ( 247,364 ) ( 57,836 ) Amortization ( 36,600 ) ( 33,704 ) Balance – ending $ 307,818 $ 516,676 The Company evaluated its patent portfolio and determined that certain pending applications had been abandoned or will not be pursued. 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. F-13 Table of Contents The following table summarizes expected future amortization of the Company’s patent portfolio as of August 31, 2025: Fiscal Years Ending August 31, 2026 $ 15,391 2027 15,391 2028 15,391 2029 15,391 2030 15,390 Thereafter 230,864 Total $ 307,818 8. Property & Equipment, net Property and equipment, net consists of: August 31, 2025 Cost Period Amortization Additions Accumulated Amortization Net Balance Leasehold improvements $ 259,981 $ - $ - $ ( 259,981 ) $ - Computers 70,781 ( 1,705 ) - ( 70,781 ) - Furniture fixtures equipment 31,126 - - ( 31,126 ) - Lab equipment 410,438 ( 49,520 ) 24,646 ( 206,955 ) 228,129 Total $ 772,326 $ ( 51,225 ) $ 24,646 $ ( 568,843 ) $ 228,129 August 31, 2024 Cost Period Amortization Additions Accumulated Amortization Net Balance Leasehold improvements $ 259,981 $ ( 11,258 ) $ - $ ( 259,981 ) $ - Computers 70,781 ( 2,920 ) - ( 69,076 ) 1,705 Furniture fixtures equipment 31,126 ( 1,870 ) - ( 31,126 ) - Lab equipment 367,423 ( 26,400 ) 43,014 ( 157,433 ) 253,004 Total $ 729,311 $ ( 42,448 ) $ 43,014 $ ( 517,616 ) $ 254,709 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. 9. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consist of the following as of August 31, 2025 and August 31, 2024: August 31, August 31, 2025 2024 Accounts Payable Vendors payable $ 569,754 $ 379,882 Sales tax payable 21,506 8,528 Accrued Liabilities Vendors payable 795,290 677,999 Vacation payable 76,496 - Balance Ending $ 1,463,046 $ 1,066,409 F-14 Table of Contents 10. Revenues Revenues for the years ended August 31, 2025 and 2024 consist of the following: Year Ended August 31, 2025 2024 IP Licensing $ 696,000 $ 457,990 B2B 9,923 5,388 Other - 900 Total $ 705,923 $ 464,278 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. 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. 11. Income Taxes 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 of August 31, 2025 and 2024: August 31 2025 August 31 2024 $ $ Loss before taxes ( 11,911,434 ) ( 5,808,654 ) Expected income tax recovery ( 2,947,139 ) ( 1,255,377 ) Non-deductible items ( 1,400,185 ) ( 532 ) Change in estimates 1,666,152 119,349 Effect of changes in foreign and long-term tax rates - - Change in valuation allowance 2,681,172 1,138,779 Total income taxes - 2,219 Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax assets at August 31, 2025 and 2024 are comprised of the following: August 31 2025 August 31 2024 $ $ Non-capital losses 10,187,630 8,738,277 Marketable securities 349,121 ( 14,051 ) Stock based compensation 934,641 754,147 R&D 1,943,235 1,348,082 PPE and intangibles ( 6,392 ) ( 95,179 ) Accrued vacation 4,213 - Total deferred tax assets 13,412,448 10,731,276 Valuation Allowance ( 13,412,448 ) ( 10,731,276 ) Net Deferred tax assets - - 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. F-15 Table of Contents 12. Common Shares and Warrants Fiscal 2025 Activity 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. 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: Number of Warrants Weighted Average Exercise Price Balance, August 31, 2023 4,520,483 $ 4.71 Issued 7,093,208 2.76 Expired ( 300,000 ) 7.67 Exercised ( 5,382,042 ) 1.11 Balance, August 31, 2024 5,931,649 $ 5.50 Issued 4,678,209 3.04 Cancelled/Expired ( 3,311,687 ) 5.90 Balance, August 31, 2025 7,298,171 $ 3.75 Presented below is a summary of warrants outstanding as of August 31, 2025: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years 1,719,828 $ 6.58 0.38 483,750 0.95 2.70 314,287 2.31 3.47 102,097 5.94 3.47 4,551,019 3.06 4.38 57,190 3.83 4.38 70,000 1.25 4.65 7,298,171 $ 3.75 3.27 F-16 Table of Contents Fiscal 2024 Activity During the year ended August 31, 2024, the Company completed the following issuances of common shares and warrants: 1. 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. 2. 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. 3. 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 . 4. 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. 13. Stock Options 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 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 date of grant. Vesting terms are set by our Board. The estimated fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Fiscal 2025 Activity The Company granted the following stock options during the year ended August 31, 2025: Grant Date Granted Quantity Exercise Price Contractual Life (years) 10/01/2024 62,000 $ 3.17 5 11/27/2024 20,000 2.10 5 12/09/2024 10,000 2.42 5 01/13/2025 50,000 2.07 5 05/15/2025 444,500 1.04 5 Total 586,500 $ 1.41 5 F-17 Table of Contents Fiscal 2024 Activity The Company granted the following stock options during the year ended August 31, 2024: Grant Date Granted Quantity Exercise Price Contractual Life (years) 10/26/2023 85,000 $ 1.15 5 3/15/2024 200,000 2.93 5 4/26/2024 151,500 2.36 5 7/26/2024 48,000 3.39 5 7/26/2024 12,000 3.39 2 8/31/2024 200,000 3.92 5 Total 696,500 $ 2.91 4.95 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: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Balance August 31, 2023 446,936 $ 3.32 3.25 $ 3,600 Cancelled/expired ( 196,000 ) 2.94 - Exercised ( 2,500 ) 1.15 - Granted 696,500 2.91 - Balance August 31, 2024 944,936 $ 3.11 3.64 $ 971,959 Cancelled/expired ( 47,001 ) 7.78 - Granted 586,500 1.41 - Balance August 31, 2025 (Outstanding) 1,484,435 $ 2.29 3.49 $ 206 Balance August 31, 2025 (Exercisable) 1,322,343 $ 2.14 3.42 $ 206 The intrinsic value of stock option awards that vested during the fiscal year represents the value of the Company’s closing stock price on the last trading day of the fiscal year in excess of the exercise price multiplied by the number of vested options. The fair value of options awarded during the fiscal years ended August 31, 2025 and August 31, 2024 totaled $ 482,045 and $ 1,267,732 , respectively. The fair value of options granted was estimated as of the date of the grant by using the Black-Scholes option pricing model with the following assumptions: August 31, 2025 August 31, 2024 Expected Volatility 94 %- 98 % 92 %- 98 % Risk Free interest rate 3.57 %- 4.18 % 3.77 %- 5.03 % Expected life 2.5 years 2.5 - 4.0 years Dividend Yield 0.00 % 0.00 % Estimated fair value per option $ 0.62 -$ 1.72 $ 0.63 -$ 2.57 F-18 Table of Contents 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, $ 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 . This expense is expected to be recognized over a weighted average period of 1.30 years. 14. Commitments, Significant Contracts and Contingencies Right of Use Assets - Operating Lease 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. August 31, 2025 August 31, 2024 Right of use assets - operating leases $ 134,843 $ 167,446 Remeasurement related to lease extension - - Amortization ( 28,027 ) ( 32,603 ) Total lease assets $ 106,816 $ 134,843 Liabilities: 137,366 163,967 Remeasurement related to lease extension - - Lease payments ( 37,094 ) ( 33,273 ) Interest accretion 9,047 6,672 Total lease liabilities $ 109,319 $ 137,366 Operating lease cost $ 106,816 $ 134,843 Operating cash flows for lease $ ( 37,094 ) $ ( 33,273 ) Remaining lease term 3.21 Years 4.21 Years Discount rate 7.25 % 7.25 % Pursuant to the terms of the Company’s lease agreements in effect at August 31, 2025, the following table summarizes the Company’s maturities of operating lease liabilities: Fiscal Year Amount 2026 $ 37,345 2027 38,642 2028 38,900 2029 8,105 Thereafter - Total lease payments 122,992 Less: imputed interest ( 13,672 ) Present value of operating lease liabilities 109,320 Less: current obligations under leases ( 30,417 ) Total $ 78,903 F-19 Table of Contents 15. Segment Information 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 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 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, IP Licensing Segment 2025 2024 Licensing revenue $ 696,000 $ 457,990 less: Research and Development 8,238,757 2,360,565 Consulting 564,618 1,029,140 Wages & Salaries 1,706,410 791,831 Legal and professional 435,537 595,258 Accounting and audit 197,312 216,808 Advertising and promotions 408,367 632,597 Investor relations - 79,900 Depreciation and amortization 87,825 76,153 Office and miscellaneous (a) 628,089 332,990 Travel 56,451 38,384 Impairment loss 247,364 57,836 Other income (loss) ( 30,697 ) ( 55,524 ) Segment net loss $ ( 11,905,427 ) $ ( 5,808,996 ) Reconciliation of profit and loss: B2B revenue 9,923 6,288 B2B cost of sales 2,720 4,822 B2B operating expenses 13,210 1,124 Consolidated net loss $ ( 11,911,434 ) $ ( 5,808,654 ) F-20 Table of Contents (a) Office and miscellaneous expense includes office expense, insurance expense, foreign currency exchange gains and losses, bad debt, and other overhead expenses. 16. Subsequent Events 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. F-21 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.