Financial Performance - The company reported a net loss of $3,042,438 for the nine-month period ended May 31, 2019, compared to a net loss of $5,382,003 in the same period of 2018, reflecting an improvement of $2,339,565[253]. - Revenue for the nine-month period was $97,489, down from $336,933 in the previous year, indicating a decrease of $239,444[253]. - General and administrative expenses decreased to $3,131,983 from $5,684,088, a reduction of $2,552,105, primarily due to lower consulting expenses[255]. - For the three-month period ended May 31, 2019, the company reported a net loss of $1,187,936, an improvement from a net loss of $3,424,912 in the same period of 2018, showing a reduction of $2,236,976[257]. - Sales for the three-month period were $59,931, down from $140,340 in the previous year, a decrease of $80,409[257]. - The company incurred $394,091 in research and development expenditures during the period ending May 31, 2019, compared to $279,221 in 2018[234]. - The company's working capital increased to $2,475,306 as of May 31, 2019, due to a private placement and the exercise of options and warrants[263]. - Cash flows used in operating activities increased to $(2,268,946) for the nine months ended May 31, 2019, primarily due to higher legal expenses and employee hiring[264]. - The company raised a total of $2,318,812 from equity issuances during the period ended May 31, 2019[267]. Intellectual Property and Technology - The company has been granted a total of 11 patents within its first patent family, significantly strengthening its intellectual property claims in the US and Australia[106]. - The company has over 50 patent applications pending worldwide, reflecting its aggressive pursuit of patent protection for its DehydraTECH technology[97]. - The company aims to develop strategic partnerships with licensees for its patented technology, focusing on both up-front and staged licensing fees[101]. - Lexaria is focusing on expanding its portfolio of patent pending applications and technology licensing opportunities in the food and supplement sectors[130]. - Lexaria's patented DehydraTECH technology has shown a 499% increase in CBD permeability compared to baseline levels, indicating significant improvements in bioavailability[165]. - The company has filed for international patent protection under the Patent Cooperation Treaty, covering 148 countries[149]. - Lexaria has received multiple patents for its DehydraTECH technology, with the first patent granted in October 2016[148]. - The company has entered more than 10 formal letters of intent or definitive agreements and is negotiating more to strengthen its intellectual property portfolio[262]. Product Development and Launches - The company launched ChrgD+, a water-soluble, ready-mix hemp supplement powder, in collaboration with Cultivating Wellness Inc., targeting a wide distribution network[111]. - Lexaria has launched a line of premium hemp oil products, targeting a customer base that is expected to grow, with only 1% of the American population currently consuming hemp food products[143]. - Lexaria's TurboCBD™ demonstrated a total area under the curve (AUC) of 10,865 ± 6,322 for CBD levels in the bloodstream, compared to 7,115 ± 2,978 for the positive control formulation[118]. - Lexaria's TurboCBD™ capsules delivered 317% more CBD to blood at the 30-minute mark compared to the positive control formulation, with levels of 18.4 ng/mL versus 4.4 ng/mL[178]. - The initial release of the TurboCBD product was successful, although sales were limited by external payment processing changes[259]. Research and Development - The company is working on cannabinoid-related formulations and other bioactive compounds in its new R&D laboratory in Kelowna, expected to reduce costs and development timelines[112]. - The company plans to increase personnel over the next 12 months to enhance capacity for R&D, subject to regulatory approval[233]. - The company continues to explore new R&D programs to enhance its technology and expand product applications[236]. - Lexaria's technology could potentially enhance the absorption of fat-soluble vitamins, leading to lower dosages required compared to current pill forms[162]. Market and Industry Insights - The Organic Food sector in the USA was valued at $246 billion in 2014, while the Dietary Supplements market was worth $34.6 billion[144]. - The global pain management market was estimated at $22 billion in 2011, with NSAIDs accounting for $5.4 billion of that market[156]. - The global vitamin and supplement market is valued at $68 billion, with the U.S. being the largest single national market[160]. - The legal marijuana industry in the USA generated over $8 billion in revenue in 2016, with projections of $20 billion or more by 2020[218]. - The trend of consumer acceptance for hemp oil fortified foods and hemp seed products is expected to support higher potential sales in the future[259]. - The 2018 Farm Bill may positively impact the industry by lifting restrictions on advertising, marketing, and interstate commerce for hemp and CBD[226]. Strategic Partnerships and Agreements - The company has established four wholly-owned subsidiary companies to better reflect distinct customer bases and business applications[109]. - The company has a joint venture agreement with Enertopia Corp for a prospective medical marijuana business, holding a 49% net ownership interest[93]. - Altria Ventures Inc. will initially fund Lexaria Nicotine LLC with $1 million, with the potential for up to $12 million in additional funding through phased private financings[116]. - Lexaria entered a 10-year renewal licensing agreement with Nuka Enterprises, allowing semi-exclusive use of DehydraTECH technology across the US, with options to expand to Canada[205]. - A comprehensive agreement with Nuka Enterprises LLC allows for expansion into multiple states, utilizing DehydraTECH technology for CBD products until 2028[125]. - The company executed a contract with M&E Services Ltd. for consulting services at CAD$12,000 per month, with an 8% annual increase[230]. Operational Developments - The company has established a new head-office location in Kelowna, Canada, and is constructing a federally licensed laboratory for internal R&D purposes[227]. - The company is in the process of finalizing the online ordering portal for retail and channel distribution, expected to be operational in Q4 of fiscal 2019[259]. - Lexaria plans to hire three to six employees and has already hired three, with a fourth expected to join during the fiscal fourth quarter[216].
Lexaria Bioscience(LEXX) - 2019 Q3 - Quarterly Report