LEXX US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

This discussion and analysis contain forward-looking statements that involve not only risks and uncertainties but also changes in condition, significance, value and other factors as described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Our actual results of operations, performance, financial position and business prospects and opportunities for this fiscal year and the periods that follow could differ materially from those expressed in or implied by forward-looking statements. This discussion and analysis should be read in conjunction with our consolidated financial statements and the accompanying notes related thereto that appear in this Report.

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The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided to enhance the readers understanding of our results of operations and financial condition for the year ended August 31, 2025, and in comparison, to the year ended August 31, 2024.

Executive Summary

Lexaria’s DehydraTECH patented technology improves the delivery of bioactive compounds while promoting healthy ingestion methods, lowers overall dosing, and is highly effective in active molecule delivery available in a range of formats from oral ingestible to oral buccal/sublingual products. DehydraTECH substantially improves the rapidity and quantity of API transport to the blood plasma using the body’s natural process for distributing fatty acids via the oral route. This technology extends across many categories beyond the primary pharmaceutical focus of the Company from foods and beverages to cosmetic products and nutraceuticals.

Lexaria is advancing several R&D activities in both preclinical and planned future clinical programs. Our primary focus during the fiscal year was on our continued investigations of DehydraTECH-enhanced GLP-1 and GIP drugs. These investigations included the completion of an extensive 12 arm animal study to investigate DehydraTECH enhanced semaglutide (both pure API and formulated Rybelsus®), DehydraTECH enhanced liraglutide, and DehydraTECH enhanced CBD for weight loss and two human pilot studies, with one testing DehydraTECH-tirzepatide and the other testing DehydraTECH-liraglutide. In addition, Lexaria completed its last patient visit for its 12-week chronic human clinical trial study of diabetic patients comparing DehydraTECH-cannabidiol (“CBD”), DehydraTECH-semaglutide, DehydraTECH-CBD combined with DehydraTECH-semaglutide and DehydraTECH-tirzepatide against a Rybelsus® control. The study data for the preparation of the report for this 12-week chronic human clinical trial is currently being analyzed.

In addition, we have continued to progress forward with addressing comments provided by the FDA on our IND application for the conduct of our Phase 1(b) clinical study investigation of DehydraTECH-CBD for the reduction of hypertension. We will need to raise sufficient funding or enter into a collaboration to be in a position to proceed with this study.

The Company continues to engage in small R&D projects and B2B formulation for third parties who are evaluating our technology for use in their product.

We were granted a total of six new patents during fiscal 2025 including our first Australian patent in our Family #24 for treatment of epilepsy, our first Japanese patent in our Family #20 for sublingual delivery of nicotine and our first patent granted in our Family #27 for Compositions and Methods for Treating Diabetes, making it another successful year for the acquisition of new intellectual property.

Financial condition and operating performance

The data generated from our past and ongoing R&D programs continues to support confirmatory results and is contributing greatly to our understanding of the workings of DehydraTECH. These findings encourage the pursuit of lucrative commercial applications in the pharmaceutical sector. We continue to devote an increasing proportion of our resources toward pharmaceutical applications with the continuation of our programs directed at the enhancement of GLP-1 and GIP drugs.

During the year ended August 31, 2025, we completed two human pilot studies and our Australian clinical trial investigating DehydraTECH infused GLP-1, GIP and CBD formulations. These programs, having been funded by the proceeds of Lexaria’s combined 2024 and 2025 financing activities of approximately $16 million, supported our significant advancements in the fields of diabetes, weight loss, heart disease and hypertension.

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We consider the advancement of our applied R&D studies to be a vital step towards our goal of establishing commercial relationships with industry partners who can utilize DehydraTECH within existing or new product lines. Conducting additional in vitro and in vivo studies which test the absorption of some, or all of the molecules named within our patents and patent applications further substantiates the effectiveness of DehydraTECH. Successful tests are expected to increase awareness and acceptance of DehydraTECH as a meaningful method used to deliver some or all of the named molecules more effectively than delivery methods currently available. Absorption tests are an important element leading to higher rates of acceptance and the implementation of our technology licensing initiatives. Our R&D results serve to de-risk the potential API products that could conceivably develop into clinical trials and ultimately new drugs.

Our pursuit of opportunities within the GLP-1/GIP drug, cannabinoid, nicotine and other bioactive molecular markets in the US and internationally continue unabated. We believe there are meaningful competitive advantages in manufacturers adopting DehydraTECH in their products, including its demonstrated higher absorption levels, its ability to infuse smaller quantities of active molecules in their products and the benefit of its predictable drug delivery times. Implementing our technology could lead to smaller dosing and decreased manufacturing costs while masking unwanted flavor and smell of the active molecules. We are anticipating these efforts will lead to increased licensing revenue through licensing partnerships. We are pursuing technology licensing opportunities as a method of generating profitable revenue streams over long periods of time. We have not yet, however, been able to secure a large client utilizing our technology in large quantities of products.

With 56 patents granted to date of which 22 are granted in the US, Lexaria believes that it has a robust patent portfolio but continues to seek additional protection for its intellectual property globally. The successful granting of additional patents could lead to material increases in shareholder value through the ability to generate meaningful license revenues from our increased intellectual property portfolio.

Lexaria has concluded that our existing cash, combined with inflows expected from executed license agreements, will not be sufficient to meet our operational requirements for the twelve months following the release of these audited financial statements. Accordingly, there is substantial doubt as to our ability to continue as a going concern for at least one year following the date of the consolidated financial statements included in this report. The Company continues to explore equity financing arrangements and strategic corporate business partnerships for many of its specific drug investigations after sufficient data has been generated. These efforts, if successful, could generate any combination of up-front milestone and/or royalty payments to the Company.

Results of Operations for our Year Ended August 31, 2025

Our net loss from operations increased by $6,102,780 to $11,911,434 for the year ended August 31, 2025 from $5,808,654 for the year ended August 31, 2024. The changes between these periods for the respective items are summarized as follows:

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Lexaria’s business operations include technology licensing agreements where corporate licensees implement DehydraTECH under license within our contracted facilities under royalty agreements. This includes specific B2B pre-processed DehydraTECH CBD-powders manufactured at a Lexaria contracted GMP-certified food facility for clients to integrate into their final product formats. Fees are derived from a combination of manufacturing charges, royalties and trademark fees.

Year Ended August 31,

Total Revenue for fiscal year 2025 increased by $241,645, or 52%, to $705,923 from $464,278 in fiscal year 2024. The primary source of revenue for the Company relates to the licensing of our technology to others. Licensing revenue grew by $238,010, or 52%, to $696,000 in fiscal year 2025 as compared to $457,990 in fiscal year 2024. This increase was attributable to minimum fees from our license agreement with Premier which expired on August 31, 2025. Revenue from our B2B processing of intermediary CBD products increased by $4,535 during fiscal year 2025, while other revenues decreased by $900 during the same period. These year-over-year changes reflect the Company’s emphasis during the year on licensing DehydraTECH to new and existing industry participants to enable enhanced performance of their developmental and commercial stage products.

Due to the expiration of our license agreement with Premier and assuming we do not enter into any additional licensing agreements, the Company expects to see a decrease in its revenue from technology licensing of DehydraTECH processed hemp-based CBD and other consumer products in fiscal 2026. The anticipated expansion of our intellectual property portfolio and conducting supportive R&D may jointly contribute to strengthening revenue prospects as we continue to explore new applications for our technology.

Research and Development

Research and development (“R&D”) costs are expensed as incurred and account for a significant portion of our operational expenses. During the fiscal year ended August 31, 2025, funding constraints limited our ability to direct resources to studies other than those pertaining to weight loss and diabetes. R&D expenditures for fiscal year 2025 increased by $5,878,192, or 249%, to $8,238,757 from $2,360,565 for fiscal year 2024. The increase in year-over-year R&D expenditures was driven by the commencement and completion of the last patient last visit for our Australian Phase 1b, 12-week chronic study investigating DehydraTECH-semaglutide, DehydraTECH-CBD, a combination thereof and DehydraTECH-tirzepatide against a Rybelsus® control. Lexaria released interim 8-week results from its Australian study evidencing that the DehydraTECH-semaglutide and DehydraTECH-tirzepatide arms produced fewer adverse events (“AEs”) and, in particular, fewer gastrointestinal (“GI”) AEs than the Rybelsus® control arm. As the manufacturers of GLP-1 and GIP drugs have consistently noted, GI AEs as an area of major concern. Lexaria is extremely pleased with these initial results.

We will continue to invest in our R&D programs for the foreseeable future, although we expect these expenses to decrease in 2026 compared to 2025, unless we are successful in completing corporate financing activities. Currently, our primary clinical research areas of interests are focused on the investigation of DehydraTECH-powered GLP-1/GIP drugs for the treatment of diabetes and weight loss as well as CBD for the reduction of hypertension.

Of significant note, Lexaria submitted our preliminary pre-meeting application for an Investigational New Drug (“IND”) to the FDA with plans to develop a cannabidiol-based drug formulation, DehydraTECH-CBD for hypertension. We received a written response following our pre-IND meeting in August 2022 where the agency has agreed with the Company’s plans to pursue a faster 505(b)(2) new drug application regulatory pathway for the program. The 505(b)(2) pathway permits a faster commercial approval than the traditional 505(b)(1) NDA pathway. The FDA has agreed with the Company’s proposed clinical protocol for DehydraTECH-CBD, which, as currently designed, would target 120 patients with hypertension. The regulator has also decided that there is no need to conduct additional non-clinical studies before the start of the IND program. Lexaria has been working with its third-party regulatory affairs consultant to respond to certain requests of the FDA and submitted its amended protocol during the first calendar quarter of 2025.

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Preclinical and clinical development is inherently unpredictable as is regulatory approval and commercialization, therefore we are unable to estimate with certainty the ultimate costs we will incur for multi-year programs, and the timelines required in our continued development and commercialization efforts. We will require significant additional funding to complete any IND planned studies. Any successful development and completion of clinical trials as well as regulatory approval and commercialization are uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict. Lexaria and our commercial partners will continue to explore multiple R&D programs directed toward further evaluation, development, and commercialization of our DehydraTECH technology.

General and Administrative

General and administrative expenses consist primarily of consulting fees, executive and employee salaries and stock-based compensation expense (non-cash). Also included are costs for advertising and marketing, investor relations, corporate facilities, insurance premiums, legal fees related to corporate matters, fees for auditing, and tax filings.

General and administrative expenses for fiscal year 2025 increased by $493,162, or 13%, to $4,345,183 from $3,852,021 for fiscal year 2024. The increase during fiscal 2025 relates primarily to higher wages and salaries, foreign exchange losses, patent-related impairment losses, and insurance premiums ($914,579, $192,518, $189,528, and $127,254, respectively) partially offset by lower consulting fees, advertising and promotion expenses, legal and professional fees, and investor relations expense ($464,524, $224,230, $159,721, and $79,900, respectively). The increase in wages and salaries relates primarily to stock-based compensation expense (non-cash), which increased to $859,494 during the year ended August 31, 2025 from $492,236 for the year ended August 31, 2024 due to increased stock options vesting during the year.

The decrease in consulting fees for the year ended August 31, 2025 relates primarily to reduced payments to our former Chief Executive Officer, who resigned effective August 31, 2024, but is maintaining his position as Chairman of the Board and as a Strategic Executive Consultant.

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 $247,364 related to those abandoned applications, as compared to $57,836 for the year ended August 31, 2024.

Other Income/(Loss)

Other Income/(Loss) for fiscal year 2025 decreased by $24,827, or 45%, to a loss of $30,697 from a loss of $55,524 for fiscal year 2024. The decrease relates primarily to lower unrealized losses on marketable securities ($33,714 for the year ended August 31, 2025, compared to $69,835 during fiscal year 2024). This is attributable to continuing decreases in the fair value of the Company’s investment in Hill Inc. common shares. We remain confident that the loss may be temporary in nature as Hill Inc. continues to make inroads into the US hemp markets with DehydraTECH enabled products produced and sold by their licensees.

Liquidity and Capital Resources

Since Lexaria’s entrance into the bioscience sector, it has accumulated net losses of $63.5 million, of which approximately $11.9 million and $5.8 million were incurred, respectively, in the past two fiscal years. We expect to continue to incur significant operational expenses and net losses in the upcoming 12 months and beyond. 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 related expenditures, the receipt of additional payments related to the out-licensing of our technology, if any, and the receipt of payments under any current or future collaborations we may enter.

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As the Company continues with our IND application process and progresses into the clinical development of our initial product candidate, the need for substantial capital resources increases. The Company intends to form industry partnerships for later stage clinical development, which in any event is expected to be a multi-year process. Our existing cash is not sufficient to complete the full development, testing and commercialization of an FDA-approved product candidate. Accordingly, we will be required to obtain significant further funding or reach industry partnerships to achieve this business objective and/or delay or modify the program in accordance with the financial resources available.

Sources of Liquidity

During the year ended August 31, 2025, the Company has completed the following:

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.

We may also offer securities in response to market conditions or other circumstances if we believe such a plan of financing is required to advance the Company’s business plans. 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.

The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern. As of August 31, 2025, the Company had cash on hand of approximately $1.8 million to settle $1.5 million in current liabilities. The Company does not believe this is sufficient to fund our expected R&D and operating expenditures for the twelve-month period following the filing date of this report. We do not anticipate making any material capital expenditures in fiscal 2026, other than those currently budgeted for our R&D programs, as we believe our current facilities and equipment are sufficient for the forthcoming twelve months following the filing date of this report. Our ability to continue as a going concern will depend on our ability to obtain additional equity, effect a collaborative or strategic partnership, reduce or contain expenditures, and, ultimately, to generate revenue. Based on these factors, management determined that there is substantial doubt as to our ability to continue as a going concern.

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Working Capital August 31, August 31,

The Company’s working capital balance decreased by approximately $4.8 million due primarily to the net impact of cash used in operating activities and cash generated from financing activities during the year ended August 31, 2025.

Cash Flows August 31, August 31,

Cash flows used in investing activities (243,019 ) (188,605 )

Effect of exchange rate changes on cash (50,518 ) (19,816 )

Operating Activities

Net cash used in operating activities was approximately $10.5 million for the year ended August 31, 2025, compared with $5.0 million during the same period in 2024. The increase in net cash used in operating activities during the year ended August 31, 2025 relates primarily to an increase in our net loss ($6.1 million).

Investing Activities

Net cash used in investing activities is attributable to purchases of short-term investments, combined with acquisitions of intellectual property and equipment. During the fiscal year, six additional patents were granted.

Financing Activities

Net cash provided by financing activities reflects net proceeds from the sale of common shares for cash. Net proceeds from the October 16, 2024 and April 28, 2025 financing transactions and At the Market offerings totaled approximately $6.0 million.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with US GAAP. These accounting principles require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses during the periods reported. Based on information available to management at the time, these estimates, judgments and assumptions are considered reasonable. We believe that understanding the basis and nature of the estimates, judgments and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

A critical accounting estimate is an accounting estimate for which a) the nature of the estimate is material due to the related level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and b) the impact of the estimate on the Company’s financial position or operating performance is material. We did not identify any such estimates in our Annual Report on Form 10-K for the year ended August 31, 2025.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a “Smaller Reporting Company”, this Item and the related disclosure is not required.

Item 8. Financial Statements and Supplementary Data

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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

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LEXARIA BIOSCIENCE CORP.

CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars)

August 31, August 31,

ASSETS

Current

Short-term investments 143,267 -

Non-current assets, net

LIABILITIES and STOCKHOLDERS' EQUITY

Current Liabilities

Deferred revenue - 4,963

Stockholders' Equity

Share Capital

Common shares issued and outstanding:

Accumulated other comprehensive loss (70,335 ) (19,816 )

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

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LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in US Dollars except share amounts)

Year Ended August 31,

Operating expenses

Other income (loss)

Unrealized loss on marketable securities (33,714 ) (69,835 )

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 )

Basic and diluted loss per share $ (0.66 ) $ (0.47 )

Weighted average number of common shares outstanding

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

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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

Foreign currency translation adjustment - - - - (19,816 ) - (19,816 )

Non-controlling interest - - - - - (13,309 ) (13,309 )

Foreign currency translation adjustment - - - - (50,519 ) - (50,519 )

Non-controlling interest - - - - - (9,593 ) (9,593 )

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

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LEXARIA BIOSCIENCE CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

Year Ended August 31,

Cash flows used in operating activities

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

Bad debt expense - 7,760

Unrealized loss on marketable securities 33,714 69,835

Change in operating assets and liabilites:

Cash flows used in investing activities

Short-term investments $ (143,267 ) $ -

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 exercise of warrants - 6,103,601

Effect of exchange rate changes on cash $ (50,519 ) $ (19,816 )

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

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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.

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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.

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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.

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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.

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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.

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;

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

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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

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.

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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.

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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,

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,

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,

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.

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

Fiscal Years Ending August 31,

8. Property & Equipment, net

Property and equipment, net consists of:

Furniture fixtures equipment 31,126 - - (31,126 ) -

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 liabilitiesconsist of the following as of August 31, 2025 and August 31, 2024:

August 31, August 31,

Accounts Payable

Accrued Liabilities

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10. Revenues

Revenues for the years ended August 31, 2025 and 2024 consist of the following:

Year Ended August 31,

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:

$ $

Effect of changes in foreign and long-term tax rates - -

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:

$ $

Accrued vacation 4,213 -

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.

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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 ofWarrants WeightedAverageExercisePrice

Presented below is a summary of warrants outstanding as of August 31, 2025:

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Fiscal 2024 Activity

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

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)

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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)

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:

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:

Expected life 2.5 years 2.5-4.0 years

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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.

Remeasurement related to lease extension - -

Remeasurement related to lease extension - -

Operating cash flows for lease $ (37,094 ) $ (33,273 )

Remaining lease term 3.21 Years 4.21 Years

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

Thereafter -

Less: imputed interest (13,672 )

Present value of operating lease liabilities 109,320

Less: current obligations under leases (30,417 )

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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,

less:

Investor relations - 79,900

Reconciliation of profit and loss:

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(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.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms. This information is accumulated and communicated to our management, including our Chief Executive Officer (currently our Principal Executive Officer) and our Chief Financial Officer (currently our Principal Financial and Accounting Officer) to allow for timely decisions regarding required disclosure.

As of August 31, 2025, the end of our fiscal year covered by this report, we carried out an evaluation under the supervision and with the participation of our CEO and CFO of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, it was concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Management has assessed the effectiveness of our internal control over financial reporting as of August 31, 2025. In making this assessment, management used the criteria set forth in the report entitled “Internal Control — Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Management has concluded that as of August 31, 2025, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP. Our management reviewed the results of their assessment with our Board.

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Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting has inherent limitations which include but are not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. It is a process which involves human diligence and compliance and may be subject to lapses in judgment and breakdowns resulting from human failures. It can be circumvented by collusion or improper management override. Internal control over financial reporting may not prevent or detect misstatements on a timely basis. These inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, these risks. Systems determined to be effective can provide only reasonable assurances with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

The fundamental controls and control processes remained consistent with prior years during the year ended August 31, 2025. While the Company has experienced turnover with its CFO position during the past two fiscal years, these changes have not resulted in any changes in our internal controls over financial reporting that occurred during the year ended August 31, 2025, that have materially or are reasonably likely to materially affect our internal controls over financial reporting.

Item 9B. Other Information

Rule 10b5-1 Trading Arrangement

Our Insider Trading Policy provides that our insiders, employees and consultants may enter into trading plans to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. During the three months ended August 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

All directors of our Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our Company are appointed by our Board and hold office until their death, resignation, or removal from office. Our directors and executive officers are as follows:

Name Position Held with our Company Age Date First Elected Or Appointed

Richard Christopher Chief Executive Officer and Director 56 Aug. 31, 2024

John Docherty President, Chief Scientific Officer and Director 55 Apr. 15, 2015

Michael Shankman Chief Financial Officer 65 Oct. 1, 2024

Christopher Bunka Director & Chairman 64 Oct. 26, 2006

Nicholas Baxter Director 71 Jul. 8, 2011

Business Experience

The following is a brief account of the business and education experience of each current director and executive officer during the past five years, indicating each person’s principal occupation during the period.

Mr. Richard Christopher – Chief Executive Officer

Mr. Christopher joined the Company as Chief Executive Officer on August 31, 2024 and was elected to the Board on January 14, 2025. He has extensive experience with pharmaceutical and medical device companies. He was the Chief Financial Officer of InVivo Therapeutics Holdings Corp. (“InVivo”) from 2019 to 2024. InVivo was a pioneering biomaterials and biotechnology company with a focus on the treatment of spinal cord injuries. Its goal was to develop and commercialize groundbreaking technologies and treatments for spinal cord injury (SCI). At the core of InVivo’s technology portfolio was the Neuro-Spinal ScaffoldTM a novel and proprietary biomaterial that is implanted into the epicenter of the injury to modulate the healing environment and serve as a support for neuroregeneration. As the Neuro-Spinal Scaffold failed to advance through clinical trials, InVivo delisted from the Nasdaq Stock Market around March 20, 2024.

Mr. Christopher was the Chief Financial Officer of iCAD, Inc. from December 2016 through January 2019. iCAD, Inc. is a Nasdaq-listed company with a focus on therapies and solutions for the early identification and treatment of cancer, where he held both financial and operational responsibilities. Prior to iCAD, Inc., Mr. Christopher was Chief Financial Officer from March 2014 through December 2016 and Chief Operating Officer from October 2015 through December 2016 of Caliber Imaging & Diagnostics, Inc., a medical technology company focused on cancer detection imaging solutions, with primary applications in dermatology. Prior to Caliber and starting in 2000, Mr. Christopher held various positions of increasing responsibility at DUSA Pharmaceuticals, Inc., a Nasdaq-listed dermatology company focused on the treatment of precancerous skin lesions, where he ultimately served as Chief Financial Officer from January 2005 through its acquisition and integration into Sun Pharmaceuticals Industries Ltd in April 2013.

Mr. Christopher holds a Master of Science in Accounting from Suffolk University and a Bachelor of Science in Finance from Bentley University.

Mr. John Docherty – President, Chief Scientific Officer and Director

Mr. Docherty has served as the Company’s President of Lexaria since April 15, 2015, a director since April 29, 2016, and assumed the title of Chief Scientific Officer on February 13, 2025. Prior to Lexaria Mr. Docherty was former President and Chief Operating Officer of Helix BioPharma Corp. (TSX: HBP), where he led the company’s pharmaceutical development programs for its plant and recombinantly derived therapeutic protein product candidates.

Mr. Docherty is a senior operations and management executive with over 20 years’ experience in the pharmaceutical and biopharmaceutical sectors. He has worked with large multinational companies and emerging, private and publicly held start-ups. At Helix, Mr. Docherty was instrumental in the areas of investor/stakeholder relations, capital raising, capital markets development, strategic partnering, regulatory authority interactions and media relations. He also served as a management member of its board of directors. Previously, Mr. Docherty was President and a board member of PharmaDerm Laboratories Ltd., a Canadian drug delivery company that developed unique microencapsulation formulation technologies for use with a range of active compounds.

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Mr. Docherty also held positions with companies such as Astra Pharma Inc., Nu-Pharm Inc. and PricewaterhouseCoopers’ former global pharmaceutical industry consulting practice. He is a named inventor on issued and pending patents and he has a M.Sc. in pharmacology and a B.Sc. in Toxicology from the University of Toronto. He has served as a director of Lexaria since April 29, 2016.

Mr. Michael Shankman –Chief Financial Officer

Mr. Shankman joined the Company as Chief Financial Officer on October 1, 2024. Mr. Shankman was previously engaged by the Company as an outsourced CFO via NowCFO from June 2023 to February 2024. He is a Certified Public Accountant holding an MBA, Finance from California State University who previously worked with NOW CFO from 2021 to 2024. During his time with NOW CFO, Mr. Shankman provided outsourced CFO and Controller services gaining extensive experience and familiarity with both public and private companies in a wide variety of industry fields. Prior to his engagement with NOW CFO, Mr. Shankman worked for The Arcticom Group, being a $160M provider of refrigeration and HVAC design, installation, maintenance and repair services to national grocery chains, as its Corporate Controller from 2020-2021. And from 2019 to 2020 Mr. Shankman was the Controller for Change.Org a $35M public benefit corporation.

Mr. Christopher Bunka – Chairman, Director and former Chief Executive Officer

Mr. Bunka has been Chairman of the Board since 2006. He is a former executive of the Company, having served as chief executive officer from 2006 to August 31, 2024. Mr. Bunka was primarily responsible for the corporate pivot from older business activities to bioscience and specifically to the Company’s current research and development of DehydraTECH with GLP-1 and GIP drugs. Mr. Bunka is a serial entrepreneur and has been involved in several private and public companies since the late 1980’s. He was well known for more than a decade as a part-time business commentator in print and radio, as well as an author. He has extensive experience in the capital markets, corporate governance, project acquisition and corporate finance. He is a named inventor on several of Lexaria’s pending patents.

Since 1988, Mr. Bunka has been the CEO of CAB Financial Services Ltd., a private holding company located in Kelowna, BC, Canada. He is a venture capitalist and corporate consultant.

Mr. Nicholas Baxter - Director

Mr. Baxter has served as a member of the Company’s board of directors since 2009. Mr. Baxter received a Bachelor of Science (Honours) from the University of Liverpool in 1975 and has worked on oil & gas projects in many areas of the world. Since the 1980’s, he has worked with companies in the public markets both in the U.K. and in Canada. Mr. Baxter also serves on the board of directors of Jericho Energy Ventures Inc., a TSX Venture Exchange listed company and brings extensive real-world experience as a board member.

Mr. Ted McKechnie – Director

Mr. McKechnie has served as a member of the Company’s board of directors since September 2016. He is a well-recognized thought leader in the Canadian food industry. In the past, Mr. McKechnie was president of Maple Leaf Foods, an owner and senior executive at Humpty Dumpty Snack Foods and a senior leader at Pepsi Co. After a distinguished career as an executive and marketer specializing in food manufacturing, he now focuses on moving the Canadian food sector into the future. Aside from being the chairman of Food Starter’s board, Mr. McKechnie is also the Chairman/CEO of The Davies Group and William Davies Consulting Inc. He is also a chairman of the board for Advanced Technology For Food Manufacturing, and serves on the Board Of Governors for St Jerome’s University. Mr. McKechnie was awarded Philip Morris Chairman’s Award for “recognition of extraordinary contributions having a significant and lasting impact on the Corporation”.

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Mr. Al Reese Jr. - Director

Mr. Reese has served as a member of the Company’s board of directors since January 2021. He has over 40 years’ experience in public and private businesses including as CFO of a formerly Nasdaq-listed energy company where he arranged finance transactions totaling over $10 billion dollars during his 20-year tenure. He has directed over 50 acquisitions and financings from as small as a few hundred thousand dollars to multibillion dollar transactions in both the domestic and international arenas. Mr. Reese was a Director and Chairman of the Audit Committee of a community bank in Texas for ten years until such time as it was acquired by a larger banking group in 2018. He currently serves as an Independent Director and Chairman of the Audit Committee for a privately held insurance company headquartered in The Woodlands, Texas. In October 2024, Mr. Reese became an Independent Director, member of the Executive Committee and Chairman of the Audit Committee for a newly chartered community bank in Texas. Mr. Reese is also President and Chairman of a family charitable 501(c)-3 foundation and Interim Chairman of a charitable 501(c)-3 entity that focus on Bible literacy.

Mr. Reese is a Certified Public Accountant (1974) and received his Bachelor of Business Administration degree from Texas A&M University in 1971, and his MBA from University of Houston in 1977. He has extensive experience at a senior level in financial services, finance transactions, investor relations, and more.

Bal Bhullar – Director

Ms. Bal Bhullar brings over 20 years of executive experience in diversified business, investor relations, investment banking, financial modelling, financial & risk management, internal controls and ERP and has acted as CFO and Director of ElectraMeccanica Vehicles Corp. NASDAQ:SOLO, CFO of ReCar (ReBuild Manufacturing), President of BC Risk Management Association, contractual CFO of Foremost Lithium NASDAQ:FMST and CEO/Founder/Director of KISMET Nutrients/American e-Commerce Solutions LLC. Ms. Bhullar is currently the CFO and Director of Damon Inc. OTCID:DMNIF and CEO/Founder/Director of BKB Management Ltd.

Ms. Bhullar has proven expertise with increasing market capitalization, raising capital, overseeing corporate governance, SOX, ESG, diversity and regulatory compliance, financial & strategic planning, as well as successfully completing initial public offerings, reverse mergers, business expansions, start-up operations, program development and product development.

Ms. Bhullar is a Chartered Professional Accountant, Certified General Accountant, a CRM designation from Simon Fraser University and a diploma in Financial Management from British Columbia Institute of Technology.

Family Relationships

There are no family relationships among any of our officers or directors.

Involvement in Certain Legal Proceedings

Other than as noted below, none of our directors, executive officers, promoters, or control persons has been involved in any of the following events during the past five years:

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ii. Engaging in any type of business practice; or

i. Any Federal or State securities or commodities law or regulation; or

Mr. Richard Christopher, the CEO and a director of Lexaria, was formerly the Chief Financial Officer of InVivo Therapeutics Corporation (“InVivo”). Following a failed clinical trial, InVivo filed for relief under chapter 11 of the bankruptcy code in the state of Delaware on February 1, 2024. On June 21, 2024, the court entered a Confirmation Order confirming the Plan. The Effective Date of the Plan occurred on July 12, 2024. On November 18, 2025, the court ordered that the motion to authorize the Liquidation Trust to make distributions to the holders of equity security interests was granted.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

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During the fiscal year ended August 31, 2025, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all other filings applicable to our officers, directors, and beneficial owners of greater than 10% percent were complied with within the required time frames.

Code of Ethics

We adopted a Code of Ethics applicable to our senior financial officers and certain other finance executives, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our Form SB-2 filed on September 20, 2007. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

Board and Committee Meetings

Our Board held nine formal meetings during the year ended August 31, 2025. All proceedings of the Board taken at a formal meeting were evidenced by way of minutes taken at such meetings. All other matters approved by our Board outside of any formal meeting were evidenced by resolutions consented to by all the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

Nomination Process

As of August 31, 2025, the Company had an active Governance and Nominating Committee. If stakeholders wish to recommend candidates for our Board, they may do so by sending communications to the Governance and Nominating Committee at the address on the cover of this annual report.

Audit and Finance Committee and Audit Committee Financial Expert

The audit and finance committee are governed by the audit and finance committee charter as adopted on December 8, 2020. The committee is composed of Mr. Albert Reese, Jr., Ms. Bal Bhullar, and Mr. Nicholas Baxter and the members held four formal meetings during the year ended August 31, 2025. Mr. Reese, a CPA, qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. A copy of the Audit & Finance Committee charter can be downloaded from the Company’s website under our Investors/Governance/Governance Documents tab.

Our management is responsible for preparing our financial statements and our independent registered public accounting firm is responsible for auditing those financial statements. Our audit and finance committee consults with management and our independent registered public accounting firm and may initiate inquiries into various aspects of our financial affairs. They are responsible for retaining, evaluating and for the engagement of our independent registered public accounting firm and for the approval of professional services provided by them. However, it is not the duty of our audit and finance committee to determine that our financial statements are complete and accurate and in accordance with generally accepted accounting principles.

Compensation Committee

Our Compensation Committee was created on July 2, 2020, the members of which are Mr. Nicholas Baxter and Mr. Ted McKechnie, with all directors being “independent” pursuant to Nasdaq independence standards. The Compensation Committee operates under a written charter and its purpose is to review, consider, research, and recommend compensation for the Company’s executive management, taking into consideration milestones achieved, the compensation issued by companies of similar size and the overall financial health of the Company. The committee is also responsible for reviewing and approving employment and benefits agreements and any executive compensation information incorporated into the Company’s periodic reports. The Compensation Committee held nine formal meetings during the fiscal year. A copy of the compensation committee charter can be downloaded from the Company’s website under our Investors/Governance/Governance Documents tab.

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Governance and Nominating Committee

The Governance and Nominating Committee operate pursuant to a charter created on December 8, 2020. The current members of the committee are Ms. Bal Bhullar, Mr. Albert Reese Jr. and Mr. Ted McKechnie, all being independent directors of the Company. The committee’s purpose is to assist our Board in fulfilling its responsibilities by: (i) being satisfied that corporate governance guidelines are adopted, applied and disclosed including director qualification standards, responsibilities and access to management and independent advisors, director compensation, orientation and continuing education, and annual performance evaluation of the board; (ii) identifying individuals qualified to become new board members and recommending to the board the nominees for each annual meeting of shareholders of the Corporation; and (iii) such other matters delegated to the committee by the board. The Governance and Nominating Committee held one (1) formal meeting during the fiscal year. A copy of the Governance & Nominating Committee charter can be downloaded from the Company’s website under our Investors/Governance/Governance Documents tab.

Our Board plays a critical role in guiding the strategic direction and overseeing the management of our business. We seek to attract and retain highly qualified directors who have sufficient time to engage in the activities of our Board and to understand and enhance their knowledge of our industry and business plans. In evaluating the suitability of individual candidates, the Governance and Nominating Committee and our Board may take into account many factors, including: relevant education, experience and expertise; knowledge of the Company and the issues it faces; whether the candidate will strengthen the Board and remedy any perceived deficiencies in the specific criteria; moral and ethical character; diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience; and any other relevant qualifications, attributes or skills. The core competencies of directors should address accounting or finance experience, market familiarity, business or management experience, industry knowledge, customer-based experience or perspective, crisis response, leadership, and/or strategic planning.

Our Board and Governance and Nominating Committee evaluate each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.

Insider Trading Arrangements and Policies

The Company has adopted an insider trading policy governing the purchase, sale, and/or other disposition of its securities by its directors, officers, employees and independent contractors that the Company believes is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the exchange listing standards applicable to the Company.

Directors, executive officers, employees and other related persons may not buy, sell or engage in other transactions in the Company’s shares while aware of material non-public information; buy or sell securities of other companies while aware of material non-public information about those companies that they became aware of as a result of business dealings between the Company and those companies; or disclose material non-public information to any unauthorized persons outside of the Company. The policy also restricts trading and other transactions for a limited group of Company employees (including executives and directors) to defined window periods that follow the Company’s quarterly earnings releases and restricts trading and other transactions following announcement of a share repurchase program.

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Item 11. Executive Compensation

The particulars of the compensation paid to the following persons:

(a) our principal executive officer;

collectively referred to as the named executive officers of our Company, are set out in the following summary compensation table. There is no disclosure provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

Chief Financial Officer 2024 - - - - - - - -

Nelson Cabatuan (5) 2025 - - - - - -

Consulting and Employment Agreements

Other than as set out in this annual report on Form 10-K we have not entered into any employment or consulting agreements with any of our current officers or directors.

Mr. Richard Christopher, CEO

The Company entered into an at-will executive employment agreement with Mr. Richard Christopher for the provision of Chief Executive Officer services for US$420,000 per year, effective August 31, 2024, with an annual increase of 5% on January 1, 2025 and January 1, 2026 and thereafter at the sole discretion of the Company and in accordance with the Company’s standard payroll practices. A performance bonus equal to 50% of the annual compensation may be payable upon the completion of certain performance criteria as determined by our Board. Participation in the Company’s stock option plan is also included with an initial option issuance for the purchase of 200,000 common shares with an exercise price of $3.92, being granted for a five (5) year term with vesting periods ending in December 2026. An annual professional development allowance of US$40,000 is also available to Mr. Christopher. Mr. Christopher also receives medical and dental benefit reimbursement of US$2,400 per month.

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Upon the occurrence of a change of control (“COC”), Mr. Christopher will be entitled to a lump payment of twelve (12) months’ pay if such COC occurs within the first year of engagement, thirteen (13) months’ pay if such COC occurs within the second year of engagement and fourteen (14) months’ pay if such COC occurs within the third or subsequent year of engagement. The agreement specifies that should Mr. Christopher’s engagement be terminated without just cause by the Company or for good reason by Mr. Christopher, the Company would pay Mr. Christopher any accrued wages, payable bonus and twelve (12) months’ pay.

Mr. Chris Bunka, Former CEO

The Company secured a 3-year term renewable management contract with Mr. Bunka effective January 1, 2022, with a base compensation of C$29,706 per month with an annual increase of 1.25 times the annual Canadian inflation rate. A performance bonus of up to 50% of 12 times the monthly fee may be payable upon the completion of certain performance criteria as determined by our Board. Participation in the Company’s stock option plan is also included.

The contract entitled Mr. Bunka to compensation of 2% of the consideration of the total value of any subsidiary sold and upon a change of control is entitled to twenty-six (26) times the monthly fee, excluding certain circumstances. The termination clause required fifteen (15) months written notice plus one additional months’ written notice for each completed year of service for terminating the contract without cause. Payment may be made in lieu of and if so, the Company would be liable for a termination payment of fifteen (15) times the monthly fee plus one additional month’s payment for each completed year of service of up to a maximum payment of twenty-four (24) times the monthly fee.

On August 31, 2024 the management contract with Mr. Bunka was terminated by the Company in order to proceed with the engagement of the new CEO, Mr. Richard Christopher. Pursuant to the terms of his contract and a review conducted by the Compensation Committee, Mr. Bunka received a severance payment of US$442,167, and received his pro rata portion of his performance milestone bonus. Mr. Bunka and the Company entered into a consulting agreement whereby Mr. Bunka provides Strategic Executive Advising services. Mr. Bunka will continue as a director of the Company and as the Chairman of the board and will be compensated for his services as such in the same manner as the independent board members.

Mr. John Docherty, President & CSO

The Company entered into a 4-year term renewable executive employment agreement with Mr. John Docherty for a management contract for C$512,000 per year, effective January 1, 2025, with an annual increase of 5% on January 1, 2026 and January 1, 2027 and thereafter at the sole discretion of the Company and in accordance with the Company’s standard payroll practices. A performance bonus equal to 50% of the annual compensation may be payable upon the completion of certain performance criteria as determined by our Board. Participation in the Company’s stock option plan is also included. An annual professional development allowance of C$55,000 is also available to Mr. Docherty.

The contract for the services includes entitlement to compensation of 2% of the consideration received by the Company from the sale of any subsidiary. Upon the occurrence of a change of control, Mr. Docherty will be entitled to a lump payment of twenty-four (24) months’ pay. The contract specifies that Mr. Docherty must provide the Company with sixty (60) days written notice to terminate his employment. The agreement specifies that should Mr. Docherty’s engagement be terminated without just cause by the Company or for good reason by Mr. Docherty, the Company would pay Mr. Docherty any accrued wages, payable bonus and fifteen months’ salary (in lieu of written notice) with such amount being increased by one additional month’s salary for each additional year employed up to a maximum of twenty-four (24) months.

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Mr. Michael Shankman, Current CFO

The Company entered into an employment agreement with Mr. Shankman 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 subject to vesting provisions ending August 31, 2026, 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. Should Mr. Shankman be terminated without cause, after an initial six (6) 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. Mr. Shankman received medical and dental benefits equal in value to up to $2,000 per month until his 65th birthday and receives four (4) weeks of paid vacation.

Mr. Nelson Cabatuan, Former CFO

The Company entered into an employment agreement with Mr. Cabatuan with a base annual salary of US$198,000, an option grant for the issuance of up to 200,000 common shares vested over three years and certain other bonus payments that were not realized due to Mr. Cabatuan’s resignation as Chief Financial Officer. Upon his resignation, Mr. Cabatuan’s unvested options (150,000) were returned to the Company’s Equity Incentive Plan and he only received accrued wages. As Mr. Cabatuan has continued with the Company as its Strategic Investment Advisor his vested options (50,000) remain valid and active.

Grants of Plan-Based Awards Table

During the year ended August 31, 2025, Lexaria issued the following plan-based awards to our named executive officers:

Compensation Securities

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Outstanding Equity Awards at Fiscal Year End

The particulars of unexercised options, stock that has not vested and equity incentive plan awards for our named executive officers are set out in the following table:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

OPTION AWARDS STOCK AWARDS

Option Exercises

No options were exercised by any named executive officer during the year ended August 31, 2025.

Compensation of Directors

As of the fiscal year ending August 31, 2025, five of our directors are compensated for their services. In their capacity as non-employee directors each receives $40,000 per year paid quarterly in advance. Directors are also paid $5,000 for their services on the Audit and Finance, Compensation, and the Governance and Nominating Committees and $5,000 for acting as chair of such committees or of the board.

The five non-employee directors were granted an aggregate of 55,000 stock options with a calculated fair value of $34,107 and is included in consulting expense during the fiscal year 2025.

In establishing the compensation of the directors, the Company engaged a third party consultant to conduct a peer company review of the compensation issued to companies of similar size, industry and stage of development.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our Board or a committee thereof.

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Indebtedness of Directors, Senior Officers, Executive Officers, and Other Management

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is, or was during fiscal 2025, an officer or employee of the Company or any of its subsidiaries or was formerly an officer of the Company or any of its subsidiaries. No member of the Compensation Committee is, or was during fiscal 2025, an executive officer of another company whose board of directors has a comparable committee on which one of the Company’s executive officers serves.

Compensation Committee Report

Our Compensation Committee has reviewed and discussed the Executive Compensation for the year ended August 31, 2025, with management. Based on the reviews and discussions our Compensation Committee recommended to our Board that the Executive Compensation discussed above be included in this annual report on Form 10-K.

Actions to Recover Erroneously Awarded Compensation

At no time during the last fiscal year was the Company required to prepare an accounting restatement that required recovery of an erroneously awarded compensation pursuant to our Clawback Policy as incorporated by reference as Exhibit 97.1 to this Form 10-K.

Policies and Practices related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information (“MNPI”)

The Company has a strict policy of not issuing options or allowing its insiders to conduct stock trades at times, subject to any allowable trades that might occur pursuant to a 10b5-1 Trading Plan, where MNPI is known or a material transaction is anticipated to occur. Each insider and employee of the Company is required to read and sign the Company’s Insider Trading and Black Out Period Policy as incorporated by reference as Exhibit 19.1, which prescribes certain set periods that prohibit insider trading. Other than as established for black-out periods associated with our quarterly and annual financial statement filings, our executive management will also issue notices of black-out trading periods if they are aware of material transactions which they anticipate closing.

Despite diligent efforts to prevent such grant of equity awards close in time to the release of MNPI, there are times when a material transaction may unexpectedly close with a faster timeline than expected which may result in an inadvertent issuance of stock options near or close to the disclosure of MNPI.

During the fiscal year ended August 31, 2025, the Company did not grant any equity awards that were close in time to the release of MNPI.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our directors and executive officers as a group, as of November 25, 2025. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Directors and Executive Officers as a Group 1,958,682 8.39 %

Executive Officers and Directors Individually

Richard Christopher(2)Chief Executive Officer and Director 415,000 (10) 1.48 %

John Docherty(3)President, CSO and Director 370,285 1.64 %

Michael Shankman(4)Chief Financial Officer 100,000 (10) * %

Christopher Bunka(5)Chairman & Director 840,289 3.75 %

Nicholas Baxter(6)Independent Director 74,000 * %

Ted McKechnie(7)Independent Director 81,191 * %

Albert Reese Jr.(8)Independent Director 53,917 * %

Bal Bhullar(9)Independent Director 24,000 * %

5% Owners

* denotes a holding of less than 1%

Notes:

(9) Includes 11,000 options exercisable at $1.04.

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Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the table above does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on August 31, 2025. As of November 25, 2025, there were 22,225,846 shares of our common stock issued and outstanding.

Equity Compensation Plan Information

We have no long-term incentive plans other than the equity incentive plan described below.

Equity Incentive Plan

Securities authorized for issuance under equity compensation plans

(a) (b) (c)

Equity compensation plans not approved by shareholders Nil Nil Nil

All future option issuances shall be made under the Equity Incentive Plan. Our Board may amend, suspend, or terminate this Plan or any portion thereof subject to the approval of any requisite regulatory authority. No such amendment, suspension or termination shall alter or impair any outstanding unexercised stock options or any rights without the consent of such Participant. If this Plan is suspended or terminated, the provisions of this Plan and any administrative guidelines, rules and regulations relating to this Plan shall continue in effect for the duration of such time as any stock option remains outstanding.

The Equity Incentive Plan, as approved by the Company’s shareholders, includes an evergreen formula whereby on January 1 of each calendar year the number of shares issuable pursuant to the Equity Incentive Plan may be increased, at the discretion of the Board, to 10% of the issued share capital as at December 31 of the preceding year without any further approvals required.

Convertible Securities

Pursuant to our Equity Incentive Plan, during the year ended August 31, 2025, we granted 100,000 restricted stock awards and stock options to directors, officers, employees, and consultants that enable the option holders to purchase up to 586,500 common shares of the Company. Options were granted at quantities and prices of: 62,000 at $3.17, 20,000 at $2.10, 10,000 at $2.42, 50,000 at $2.07 and 444,500 at $1.04 and have five-year exercise periods. The 100,000 restricted stock awards and 586,500 options that were granted and exercisable as of August 31, 2025, had a fair value of $629,212 using the Black Scholes valuation method and the non-cash expense was included in wages and salaries on the Company’s Consolidated Statements of Operations and Comprehensive Loss.

Changes in Control

We are unaware of any contract or other arrangement which may at a subsequent date result in a change in control of our Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence

No director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the beginning of our fiscal year ended August 31, 2025, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.

Director Independence

Lexaria directors are Messrs. Richard Christopher, Christopher Bunka, John Docherty, Nicholas Baxter, Ted McKechnie and Al Reese Jr. and Ms. Bal Bhullar. We have determined that Messrs. Baxter, McKechnie and Reese and Ms. Bhullar are “independent directors” as defined in Nasdaq Marketplace Rule 4200(a)(15).

Our audit and finance committee consists of our Messrs. Reese and Baxter and Ms. Bhullar, Mr. Reese qualifying as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

From inception to present date, we believe that the members of our audit committee and our Board have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.

Our Compensation Committee consists of the following independent directors: Messrs. McKechnie and Baxter. During fiscal year ended August 31, 2025, the Compensation Committee held nine meetings to determine bonus compensation payable to the named executive officers in connection with the successful completion of certain performance milestones.

Our appointed Governance and Nominating Committee consists of the following independent directors: Ms. Bhullar, Mr. Reese Jr. and Mr. McKechnie. During the fiscal year ended August 31, 2025, the Governance and Nominating Committee held one formal meeting.

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Item 14. Principal Accountant Fees and Services

The aggregate fees billed for the most recently completed fiscal year ended August 31, 2025, and for fiscal year ended August 31, 2024 for professional services rendered by the principal accountants were as follows:

Year Ended

$ $

Audit fees consist of fees billed for professional services rendered for the audits of our financial statements on Form 10-K and the reviews of our interim financial statements included in quarterly reports filed on Form 10-Q.

Audit related fees consist of fees billed for assurance and related services by the Company’s principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements, which are not included in the Audit Fees described above.

Tax fees were billed for professional services including assistance with tax compliance, preparation of tax returns, and tax consultation.

Pre-Approval Policy

Our Audit and Finance committee pre-approve all services provided by our independent auditors according to the Audit and Finance Committee’s Charter as set out in Exhibit “A” in the Company’s Schedule 14A Definitive Proxy Statement filed with the SEC on April 13, 2022. All of the above audit services and fees were reviewed and approved by the committee.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

a) Financial Statements

1) Report of Independent Registered Public Accounting Firm (PCAOB ID 206)

b) Exhibits

ExhibitNumber Description

(3) Articles of Incorporation and Bylaws

(4) Instruments Defining the Rights of Security Holders, including Indentures

(10) Material Contracts

10.11 Engagement Agreement with H.C. Wainwright & Co. LLC dated August 12, 2025

(19) Insider Trading Policies and Procedures

(21) Subsidiaries

(23) Consents of Experts and Counsel

23.1 Consent of MaloneBailey LLP, Chartered Professional Accountants

(32) Section 1350 Certifications

(97) Policy Relating to Recovery of Erroneously Awarded Compensation

(101)** Interactive Data Files

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

Item 16. Form 10-K Summary

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LEXARIA BIOSCIENCE CORP.

By: /s/ Richard Christopher

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Richard Christopher

By: /s/ Michael Shankman

By: /s/ John Docherty

John DochertyPresident, CSO & DirectorDate: November 26, 2025

By: /s/ Christopher Bunka

Christopher BunkaDirector & ChairmanDate: November 26, 2025

By: /s/ William Edward (Ted) McKechnie

Ted McKechnieDirectorDate: November 26, 2025

By: /s/ Nicholas Baxter

Nicholas BaxterDirectorDate: November 26, 2025

By: /s/ Albert Reese Jr.

Albert Reese Jr. DirectorDate: November 26, 2025

By: /s/ Bal Bhullar

Bal BhullarDirectorDate: November 26, 2025