lxrp_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission file number

LEXARIA BIOSCIENCE CORP.

(Exact name of registrant as specified in its charter)

Nevada		20-2000871
State or other jurisdiction of incorporation or organization		(I.R.S. Employer IdentifiCAtion No.)

#100 – 740 McCurdy Road, Kelowna BC Canada		V1X 2P7
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone number, including area code: 1.250.765.6424

Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001	LEXX	NASDAQ
Warrants	LEXXW	NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

5,950,998 common shares as of July 13, 2022

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Controls and Procedures	29

PART II—OTHER INFORMATION		31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Exhibits	31

Page 2 of 33

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

LEXARIA BIOSCIENCE CORP.
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. Dollars)
	May 31,			August 31,
	2022			2021
ASSETS	(Unaudited)			(Audited)
Current
Cash	$	7,051,083		$	10,917,797
Marketable securities		288,032			833,841
Accounts receivable		154,868			342,401
Inventory		40,183			29,648
Prepaid expenses and deposit		757,308			319,253
Total Current Assets		8,291,474			12,442,940

Non-current assets, net
Lease right of use		62,363			91,041
Intellectual property		440,675			364,623
Property & equipment		343,431			368,213
Total Non-current Assets		846,469			823,877
TOTAL ASSETS	$	9,137,943		$	13,266,817

LIABILITIES
Current
Accounts payable and accrued liabilities	$	157,095		$	105,946
Loan payable		7,906			7,926
Lease payable		41,825			39,404
Total Current Liabilities		206,826			153,276

Long Term
Lease payable		18,339			49,989
Total Long Term Liabilities		18,339			49,989
TOTAL LIABILITIES		225,165			203,265

STOCKHOLDERS' EQUITY
Share Capital
Authorized:
220,000,000 common voting shares with a par value of $0.001 per share Issued and outstanding: 5,950,998 common shares at May 31, 2022 and 5,726,699 common shares at August 31, 2021		5,951			5,727
Additional paid-in capital		46,808,608			45,089,114
Deficit		(37,631,063	)		(31,829,204	)
Equity attributable to shareholders of the Company		9,183,496			13,265,637
Non-controlling Interest		(270,718	)		(202,085	)
Total Stockholders' Equity		8,912,778			13,063,552
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,137,943		$	13,266,817

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

Page 3 of 33

Table of Contents

LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in U.S. Dollars, except number of shares)

Three Months Ended

Nine Months Ended

May 31,

2022

2021

2022

2021

(Unaudited)

Revenue

99,717

204,055

144,247

691,717

Cost of goods sold

18,635

59,989

30,592

155,037

Gross profit

81,082

144,066

113,655

536,680

Expenses

Research and development

752,095

454,443

1,486,487

823,102

General and administrative

1,747,325

2,256,175

4,497,660

4,097,765

Total operating expenses

2,499,420

2,710,618

5,984,147

4,920,867

Loss from operations

(2,418,338

)

(2,566,552

)

(5,870,492

)

(4,384,187

)

Gain on disposal of assets

1,522,704

Discontinued operations

(22,000

)

Net and comprehensive loss for the period

(2,418,338

)

(2,566,552

)

(5,870,492

)

(2,883,483

)

Net and comprehensive loss attributable to:

Common shareholders

(2,382,925

)

(2,556,997

)

(5,801,859

)

(2,848,914

)

Non-controlling interest

(35,413

)

(9,555

)

(68,633

)

(34,569

)

Basic and diluted loss per share

Continuing operations

(0.41

)

(0.50

)

(1.00

)

(0.70

)

Discontinued operations

(0.01

)

(0.41

)

(0.50

)

(1.00

)

(0.71

)

Weighted average number of common shares outstanding

- Basic and diluted

5,950,998

5,104,332

5,863,086

4,056,755

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

Page 4 of 33

Table of Contents

LEXARIA BIOSCIENCE CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)

	Nine Months Ended
	May 31,
	2022			2021
	(Unaudited)
Cash flows used in operating activities
Net loss and comprehensive loss	$	(5,870,492	)	$	(2,861,483	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		519,718			410,007
Depreciation and amortization		77,986			83,788
Inventory write-off		-			2,482
Bad debt expense		-			37,000
Non-cash right of use lease expense		28,678			26,665
Gain on disposal of assets		-			(1,522,704	)
Unrealized loss on marketable securities		823,916			86,810
Shares issued for services		600,000			-
Warrants issued for services		-			785,895
Lease accretion		4,166			6,179
Change in working capital
Accounts receivable		(90,574	)		(1,106	)
Inventory		(9,196	)		71,976
Prepaid expenses and deposits		161,945			11,656
Accounts payable and accrued liabilities		56,352			86,981
Due to related parties		(5,223	)		(57,380	)
Deferred revenue		-			(44,255	)
Net cash used in operating activities	$	(3,702,724	)	$	(2,877,489	)

Cash flows used in investing activities
Disposal (acquisition) of assets		(49,188	)		273,375
Intellectual property		(81,407	)		(79,493	)
Net cash (used in) provided by investing activities	$	(130,595	)	$	193,882

Cash flows from financing activities
Repayment of loan payable		-			(23,163	)
Lease payments		(33,395	)		(32,962	)
Proceeds from issuance of equity		-			9,471,495
Net cash provided by (used in) financing Activities	$	(33,395	)	$	9,415,370

Net cash provided by discontinued operations	$	-		$	83,000

Net change in cash for the period		(3,866,714	)		6,814,763
Cash at beginning of period		10,917,797			1,293,749
Cash at end of period	$	7,051,083		$	8,108,512

Supplemental information of cash flows:
Income taxes paid in cash	$	-		$	3,450
Non-cash consideration on asset disposal	$	-		$	1,171,599
Non-cash shares for services included in prepaid expenses	$	600,000		$	-

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

Page 5 of 33

Table of Contents

LEXARIA BIOSCIENCE CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Expressed in U.S. Dollars, except number of shares)
					(Unaudited)

					ADDITIONAL								TOTAL
	SHARE CAPITAL				PAID-IN								STOCKHOLDERS'
	SHARES		AMOUNT		CAPITAL		DEFICIT			NCI			EQUITY
			$		$		$			$			$
Balance August 2020		3,001,476		3,001		30,324,398		(27,802,198	)		(42,943	)		2,482,258
Stock based compensation		-		-		48,887		-			-			48,887
Net loss		-		-		-		(696,028	)		-			(696,028	)
Non-controlling interest		-		-		-		-			(14,093	)		(14,093	)
Balance November 30, 2020		3,001,476		3,001		30,373,285		(28,498,226	)		(57,036	)		1,821,024
Stock based compensation		-		-		17,154		-			-			17,154
Brokered placement		2,102,856		2,104		9,469,393		-			-			9,471,497
Net Income		-		-		-		404,111			-			404,111
Non-controlling interest		-		-		-		-			(10,921	)		(10,921	)
Balance February 28, 2021		5,104,332		5,105		39,859,832		(28,094,115	)		(67,957	)		11,702,865
Stock based compensation		-		-		343,966		-			-			343,966
Warrants issued for services		-		-		785,895		-			-			785,895
Net loss		-		-		-		(2,556,997	)		-			(2,556,997	)
Non-controlling interest		-		-		-		-			(9,555	)		(9,555	)
Balance May 31, 2021		5,104,332		5,105		40,989,693		(30,651,112	)		(77,512	)		10,266,174
Exercise of warrants		610,189		610		4,014,433		-			-			4,015,043
Shares issued for services		12,178		12		84,988		-			-			85,000
Net loss		-		-		-		(1,178,092	)		-			(1,178,092	)
Non-controlling interest		-		-		-		-			(124,573	)		(124,573	)
Balance August 31, 2021		5,726,699		5,727		45,089,114		(31,829,204	)		(202,085	)		13,063,552
Stock based compensation		-		-		408,544		-			-			408,544
Net loss		-		-		-		(1,993,157	)		-			(1,993,157	)
Non-controlling interest		-		-		-		-			(10,325	)		(10,325	)
Balance November 30, 2021		5,726,699		5,727		45,497,658		(33,822,361	)		(212,410	)		11,468,614
Shares issued for services		224,299		224		1,199,776		-			-			1,200,000
Net loss		-		-		-		(1,425,777	)		-			(1,425,777	)
Non-controlling interest		-		-		-		-			(22,895	)		(22,895	)
Balance February 28, 2022		5,950,998		5,951		46,697,434		(35,248,138	)		(235,305	)		11,219,942
Stock based compensation		-		-		111,174		-			-

SEC Form 10-Q filed by Lexaria Bioscience Corp.