<SEC-DOCUMENT>0001062993-18-001559.txt : 20180409
<SEC-HEADER>0001062993-18-001559.hdr.sgml : 20180409
<ACCEPTANCE-DATETIME>20180409165541
ACCESSION NUMBER:		0001062993-18-001559
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		9
FILED AS OF DATE:		20180409
DATE AS OF CHANGE:		20180409

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Lexaria Bioscience Corp.
		CENTRAL INDEX KEY:			0001348362
		STANDARD INDUSTRIAL CLASSIFICATION:	METAL MINING [1000]
		IRS NUMBER:				202000871
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-222451
		FILM NUMBER:		18746134

	BUSINESS ADDRESS:	
		STREET 1:		156 VALLEYVIEW ROAD
		CITY:			KELOWNA
		STATE:			A1
		ZIP:			V1X 3M4
		BUSINESS PHONE:		250-765-6424

	MAIL ADDRESS:	
		STREET 1:		156 VALLEYVIEW ROAD
		CITY:			KELOWNA
		STATE:			A1
		ZIP:			V1X 3M4

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LEXARIA CORP.
		DATE OF NAME CHANGE:	20080229

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Lexaria Corp.
		DATE OF NAME CHANGE:	20051229
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>forms424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>
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   <TITLE>Lexaria Bioscience Corp.: Form 424B3 - Filed by newsfilecorp.com</TITLE>
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<P align=center><B>LEXARIA BIOSCIENCE CORP. </B><BR><B>156 Valleyview Road,
Kelowna, British Columbia, Canada V1X 3M4 </B></P>
<P align=center><B>NOTICE OF ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
</B><BR><B>TO BE HELD ON JUNE 13<sup>th</sup>, 2018 </B><BR></P>
<P align=justify>Dear Stockholder: </P>
<P align=justify>Our annual and special meeting of stockholders will be held at
the office of our law firm, Macdonald Tuskey, located at Suite 409 &#150; 221 West
Esplanade, North Vancouver, British Columbia V7M 3J3, Canada, at 11:00 a.m.,
local time, on Wednesday, June 13<sup>th</sup>, 2018 for the following purposes: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>Our corporate jurisdiction will be changed from the State
      of Nevada to the Province of British Columbia, Canada by means of a
      process called a &#147;conversion&#148; and a &#147;continuation&#148;;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>To elect Chris Bunka, John Docherty, Nicholas Baxter and
      Ted McKechnie as the directors of our company;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>To ratify the continued appointment of Davidson &amp;
      Company LLP, Chartered Accountants, as our independent registered public
      accounting firm for the fiscal year ending August 31, 2018; and</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD>
      <P align=justify>To transact such other business as may properly come
      before the annual and special meeting or any adjournment
  thereof.</P></TD></TR></TABLE>
<P align=justify>These items of business are more fully described in the
accompanying proxy statement/prospectus.</P>
<P align=justify>Our board of directors has fixed the close of business on
  <b>April 27,
  2018
  </b> as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the annual and special meeting or any
adjournment thereof. Only the stockholders of record on the record date are
entitled to vote at the annual and special meeting. </P>
<P align=justify>Appraisal rights are available to the stockholders of record
for their shares of our common stock under Chapter 92A.300 &#150; 92A.500 (inclusive)
of the <I>Nevada Revised Statutes</I>, a copy of which is attached as Schedule
&#147;B&#148; to the accompanying proxy statement/prospectus. See &#147;Appraisal Rights&#148;
beginning on page 25 of the accompanying proxy statement/prospectus for a
discussion of appraisal rights and how to exercise them. </P>
<P align=justify><B>Whether or not you plan on attending the annual and special
meeting, we ask that you vote by proxy by following the instructions provided in
the enclosed proxy card as promptly as possible. If your shares are held of
record by a broker, bank, or other nominee, please follow the voting
instructions sent to you by your broker, bank, or other nominee in order to vote
your shares.</B></P>
<P align=justify><B>Even if you have voted by proxy, you may still vote in
person if you attend the annual and special meeting. Please note, however, that
if your shares are held of record by a broker, bank, or other nominee and you
wish to vote at the annual and special meeting, you must obtain a valid proxy
issued in your name from that record holder. </B></P>
<P align=justify><B>Sincerely,</B> </P>
<P align=justify><B>By Order of the Board of Directors</B> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Chris Bunka </TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Chief Executive Officer and Chairman of the Board
      of Directors </TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>April 9,
      2018 </TD>
  <TD align=left width="50%" >&nbsp;</TD></TR></TABLE>
<p align="center">i</p>
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<P align=center><b>CHANGE OF CORPORATE JURISDICTION PROPOSED &ndash; YOUR VOTE IS IMPORTANT</b></P>
<P align=center><b> LEXARIA BIOSCIENCE CORP.  <br>
156 Valleyview Road, Kelowna, British Columbia, Canada V1X 3M4 </b></P>
<P align=justify>Dear Stockholder: </P>
<P align=justify>You are cordially invited to attend an annual and special
meeting of stockholders to be held at the office of our law firm, Macdonald
Tuskey, located at Suite 409 &#150; 221 West Esplanade, North Vancouver, British
Columbia V7M 3J3, Canada, at 11:00 a.m., local time, on <b>Wednesday, June 13th,
2018</b> for the following purposes: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>To approve the plan of conversion, a copy of which is
      attached as Schedule &#147;A&#148; to this proxy statement/prospectus, whereby our
      corporate jurisdiction will be changed from the State of Nevada to the
      Province of British Columbia, Canada by means of a process called a
      &#147;conversion&#148; and a &#147;continuation&#148;;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>To elect Chris Bunka, John Docherty, Nicholas Baxter and
      Ted McKechnie as the directors of our company;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>To ratify the continued appointment of Davidson &amp;
      Company LLP, Chartered Accountants, as our independent registered public
      accounting firm for the fiscal year ending August 31, 2018; and</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD>
      <P align=justify>To transact such other business as may properly come
      before the annual and special meeting or any adjournment
  thereof.</P></TD></TR></TABLE>
<P align=justify>Following the completion of the continuation, we anticipate
that our common shares will continue to be quoted on the OTC Markets OTCQX  under
a new symbol, &#147;LXRPF&#148;. We also anticipate that our common shares will continue
to be listed on the Canadian Securities Exchange under our current symbol &#147;LXX&#148;.</P>
<P align=justify><B>See the &#147;Risk Factors&#148; beginning on page 10 of this proxy
statement/prospectus for a discussion of certain risks that you should consider
as stockholders of our company in regards to the continuation, and the ownership
of shares of our common stock. </B></P>
<P align=justify><B>Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this proxy statement/prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.</B></P>
<P align=justify>This proxy statement/prospectus  is first being sent or given to our stockholders on or about May 16,
  2018 </P>
<P align=center>ii</P>
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<P align=justify><B>This proxy statement/prospectus incorporates important
business and financial information about our company that is not included in or
delivered with this document. This information is available without charge to
our stockholders upon written or oral request. Requests should be made to our
company at the following address.</B></P>
<P align=center><B>LEXARIA BIOSCIENCE CORP. </B><BR><B>Attention: President
</B><BR><B>156 Valleyview Road, Kelowna, British Columbia, Canada V1X 3M4
</B><BR><B>Telephone: (250) 765-6424 </B></P>
<P align=center><B>To obtain timely delivery, you must request the information
no later than May 30, 2018. </B></P>
<P align=center>1</P>
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<P align=center><B>TABLE OF CONTENTS</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left bgColor=#eeeeee><B>PROXY STATEMENT/PROSPECTUS
      SUMMARY</B> </TD>
    <TD noWrap align=right width="10%" bgColor=#eeeeee><B>5</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Our Business </TD>
    <TD noWrap align=right width="10%">5</TD>
  </TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Summary of Financial Data </TD>
    <TD noWrap align=right width="10%" bgColor=#eeeeee>5</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Proposal 1 &#150; The
      Continuation </TD>
    <TD align=right width="10%">5</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;Reasons for the Change of Our Corporate
      Jurisdiction </TD>
    <TD align=right width="10%" bgColor=#eeeeee>6</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Regulatory Approvals </TD>
    <TD align=right width="10%">6 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;Appraisal Rights </TD>
    <TD align=right width="10%" bgColor=#eeeeee>6</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Certain Tax Consequences for Stockholders </TD>
    <TD align=right width="10%">7</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;Our Authorized Capital after the Change of Our
      Corporate Jurisdiction </TD>
    <TD align=right width="10%" bgColor=#eeeeee>8 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounting Treatment of the Change of Our Corporate
      Jurisdiction </TD>
    <TD align=right width="10%">8</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;How the Change of Our Corporate Jurisdiction
      will Affect Your Rights as a Stockholder </TD>
    <TD align=right width="10%" bgColor=#eeeeee>8</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Exchange of Share Certificates </TD>
    <TD align=right width="10%">8</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;Reporting Obligations under Securities Laws </TD>
    <TD align=right width="10%" bgColor=#eeeeee>8 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Quotation on the OTCQX  and Listing on the Canadian Securities
      Exchange </TD>
    <TD align=right width="10%">9 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Proposal
      2 &#150; Election of Directors </TD>
    <TD align=right width="10%" bgColor=#eeeeee>9</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Proposal 3 - Ratification
      of the Continued Appointment of the Independent Registered Public
      Accounting Firm</TD>
    <TD align=right width="10%">9</TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>RISK FACTORS</B> </TD>
    <TD align=right width="10%"><B>9</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Risks
      Relating to the Continuation </TD>
    <TD align=right width="10%" bgColor=#eeeeee>9 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Risks Associated With Our
      Business </TD>
    <TD align=right width="10%">11 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Risks
      Associated with Our Company </TD>
    <TD align=right width="10%" bgColor=#eeeeee>15 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Risks Associated with Our
      Common Stock </TD>
    <TD align=right width="10%">17</TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>FORWARD-LOOKING STATEMENTS</B> </TD>
    <TD align=right width="10%"><B>18</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>QUESTIONS AND ANSWERS ABOUT THE ANNUAL AND SPECIAL
      MEETING OF</B> <B>STOCKHOLDERS</B> </TD>
    <TD align=right width="10%"><B>19</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Why am I
      receiving these materials? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What is included in these
      materials? </TD>
    <TD align=right width="10%">19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What
      items will be voted at the annual and special meeting? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What do I need to do now?
    </TD>
    <TD align=right width="10%">19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Who can
      vote at the annual and special meeting? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;How many votes do I have?
    </TD>
    <TD align=right width="10%">19</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;How do I
      vote my shares? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>19 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What is the difference
      between a stockholder of record and a &#147;street name&#148; holder? </TD>
    <TD align=right width="10%">20</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What does
      it mean if I receive more than one proxy card? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>20</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What vote is required for
      the election of directors or for the approval of a proposal? </TD>
    <TD align=right width="10%">20 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;How are
      votes counted? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>20</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What happens if I do not
      make specific voting choices? </TD>
    <TD align=right width="10%">21</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;What is
      the quorum requirement? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>21 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;How does the board of
      directors recommend that I vote? </TD>
    <TD align=right width="10%">21</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Can I
      change my vote after submitting my proxy? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>21</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;How can I attend the
      annual and special meeting? </TD>
    <TD align=right width="10%">21</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Who pays
      the cost of proxy preparation and solicitation? </TD>
    <TD align=right width="10%" bgColor=#eeeeee>22</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><B>PROPOSAL 1 &#150; THE CONTINUATION</B> </TD>
    <TD align=right width="10%" bgColor=#eeeeee><B>22</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;General Overview of the
      Continuation </TD>
    <TD align=right width="10%">22</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Certain
      Terms of the Plan of Conversion </TD>
    <TD align=right width="10%" bgColor=#eeeeee>23</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Appraisal Rights </TD>
    <TD align=right width="10%">24 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Reasons
      for the Continuation </TD>
    <TD align=right width="10%" bgColor=#eeeeee>25</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Corporate Law
      Requirements </TD>
    <TD align=right width="10%">25</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Exchange
      of Share Certificates </TD>
    <TD align=right width="10%" bgColor=#eeeeee>26 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Description of Our
      Securities after the Continuation </TD>
    <TD align=right width="10%">26</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Material
      Differences of the Rights of Our Stockholders After the Change of Our
      Corporate Jurisdiction </TD>
    <TD align=right width="10%" bgColor=#eeeeee>27</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounting Treatment of
      the Change of Our Corporate Jurisdiction </TD>
    <TD align=right width="10%">32</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Certain
      United States Federal Income Tax Consequences of the Change of Our
      Corporate Jurisdiction </TD>
    <TD align=right width="10%" bgColor=#eeeeee>32</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Certain Canadian Federal
      Income Tax Consequences of the Change of Our Corporate Jurisdiction </TD>
    <TD align=right width="10%">36</TD>
  </TR></TABLE>
<p align="center">2</p>
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noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Reporting Obligations under Securities Laws </TD>
    <TD noWrap align=right width="10%" bgColor=#eeeeee >39</TD>
  </TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Quotation on the
      OTCQX  and Listing on the Canadian Securities Exchange </TD>
    <TD noWrap align=right width="10%" >40</TD>
  </TR>
  <TR>
    <TD noWrap bgColor=#eeeeee>&nbsp; </TD>
    <TD noWrap width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>PROPOSAL 2 &#150; ELECTION OF DIRECTORS</B> </TD>
    <TD align=right width="10%" ><B>40</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>PROPOSAL 3 &#150; RATIFICATION OF THE CONTINUED APPOINTMENT
      OF THE INDEPENDENT</B> <B>REGISTERED PUBLIC ACCOUNTING FIRM</B> </TD>
    <TD align=right width="10%" ><B>40</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>EXPERTS AND COUNSEL</B> </TD>
    <TD align=right width="10%" ><B>41</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>INTEREST OF NAMED EXPERTS AND COUNSEL</B> </TD>
    <TD align=right width="10%" ><B>41</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>DESCRIPTION OF BUSINESS</B> </TD>
    <TD align=right width="10%" ><B>41</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Corporate
      History </TD>
    <TD align=right width="10%" bgColor=#eeeeee >41</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Subsidiaries </TD>
    <TD align=right width="10%" >42 </TD>
  </TR>
  <TR vAlign=top>

    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Our
      Business </TD>
    <TD align=right width="10%" bgColor=#eeeeee >42</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Patents and Trademarks</TD>
    <TD align=right width="10%" >51</TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>DESCRIPTION OF PROPERTY</B> </TD>
    <TD align=right width="10%" ><B>52</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Principal
      Offices </TD>
    <TD align=right width="10%" bgColor=#eeeeee >52</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><B>LEGAL PROCEEDINGS</B> </TD>
    <TD align=right width="10%" bgColor=#eeeeee ><B>52</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><B>MARKET PRICE OF AND DIVIDENDS ON OUR
      COMMON EQUITY AND RELATED</B> <B>STOCKHOLDER MATTERS</B> </TD>
    <TD align=right width="10%" bgColor=#eeeeee ><B>53</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Market for Securities </TD>
    <TD align=right width="10%" >53 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Holders
      of Our Common Stock </TD>
    <TD align=right width="10%" bgColor=#eeeeee >53</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Dividends </TD>
    <TD align=right width="10%" >53</TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>FINANCIAL STATEMENTS</B> </TD>
    <TD align=right width="10%" ><B>54</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF</B> <B>OPERATIONS</B> </TD>
    <TD align=right width="10%" ><B>119</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Plan of
      Operations </TD>
    <TD align=right width="10%" bgColor=#eeeeee >119</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Results of Operations &#150;
      Three Months Ended November 30, 2017 </TD>
    <TD align=right width="10%" >122</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Results
      of Operations &#150; Years Ended August  31, 2017 and May 31, 2016 </TD>
    <TD align=right width="10%" bgColor=#eeeeee
      >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Liquidity and Financial
      Condition </TD>
    <TD align=right width="10%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Contractual Obligations </TD>
    <TD align=right width="10%" bgColor=#eeeeee >126</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Going Concern </TD>
    <TD align=right width="10%" >126</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Internal
      and External Sources of Liquidity </TD>
    <TD align=right width="10%" bgColor=#eeeeee
      >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Critical Accounting
      Policies </TD>
    <TD align=right width="10%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;New
      Accounting Pronouncements </TD>
    <TD align=right width="10%" bgColor=#eeeeee
      >&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><B>DIRECTORS AND EXECUTIVE OFFICERS AND
      CORPORATE GOVERNANCE</B> </TD>
    <TD align=right width="10%" bgColor=#eeeeee ><B>128</B></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Directors and Executive
      Officers </TD>
    <TD align=right width="10%" >128</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Family
      Relationships </TD>
    <TD align=right width="10%" bgColor=#eeeeee >130</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Involvement in Certain
      Legal Proceedings </TD>
    <TD align=right width="10%" >130</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Corporate
      Governance </TD>
    <TD align=right width="10%" bgColor=#eeeeee >131</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Section 16(a) Beneficial
      Ownership Compliance </TD>
    <TD align=right width="10%" >133</TD>
  </TR>
  <TR>
    <TD bgColor=#eeeeee>&nbsp; </TD>
    <TD width="10%" bgColor=#eeeeee >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>EXECUTIVE COMPENSATION</B> </TD>
    <TD align=right width="10%" ><B>133</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Summary
      Compensation </TD>
    <TD align=right width="10%" bgColor=#eeeeee >134</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Grants of Plan-Based
      Awards Table </TD>
    <TD align=right width="10%" >134 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Outstanding Equity Awards at Fiscal Year End </TD>
    <TD align=right width="10%" bgColor=#eeeeee >137</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Option Exercises </TD>
    <TD align=right width="10%" >137</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Compensation of Directors </TD>
    <TD align=right width="10%" bgColor=#eeeeee >138</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Pension, Retirement or
      Similar Benefit Plans </TD>
    <TD align=right width="10%" >138</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Indebtedness of Directors, Senior Officers, Executive Officers and
      Other Management </TD>
    <TD align=right width="10%" bgColor=#eeeeee >138</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Compensation Committee
      Interlocks and Insider Participation </TD>
    <TD align=right width="10%" >138</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Compensation Committee Report </TD>
    <TD align=right width="10%" bgColor=#eeeeee >138</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><B>TRANSACTIONS WITH RELATED PERSONS,
      PROMOTERS AND CERTAIN CONTROL</B> <B>PERSONS</B> </TD>
    <TD align=right width="10%" bgColor=#eeeeee ><B>138</B>  </TD>
  </TR></TABLE>
<p align="center">3</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT</B> </TD>
    <TD align=right width="10%"><B>138</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>FEES PAID TO OUR INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM</B> </TD>
    <TD align=right width="10%"><B>140</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Audit
      fees </TD>
    <TD align=right width="10%" bgColor=#eeeeee>140</TD>
  </TR>
  <TR vAlign=top>
    <TD
      align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Policy on
      Pre-Approval by Audit Committee of Services Performed by Independent
      Registered Public Accounting Firm </TD>
    <TD align=right width="10%">140</TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=left width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED
      UPON</B> </TD>
    <TD align=right width="10%"><B>140</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>&#147;HOUSEHOLDING&#148; OF PROXY MATERIALS</B> </TD>
    <TD align=right width="10%"><B>140</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>STOCKHOLDER PROPOSALS</B> </TD>
    <TD align=right width="10%"><B>141</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>WHERE YOU CAN FIND MORE INFORMATION</B> </TD>
    <TD align=right width="10%"><B>141</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>OTHER MATTERS</B> </TD>
    <TD align=right width="10%"><B>141</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>SCHEDULE &#147;A&#148; PLAN OF CONVERSION</B> </TD>
    <TD align=right width="10%"><B>143</B> </TD>
  </TR>
  <TR>
    <TD align=left  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=right width="10%"  bgColor=#eeeeee>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>SCHEDULE &#147;B&#148; NEVADA REVISED STATUTES</B> </TD>
    <TD align=right width="10%"><B>171</B> </TD>
  </TR></TABLE>
<P align=center>_________________________________<B> </B></P>
<P align=justify>In this proxy statement/prospectus, unless otherwise specified,
the terms &#147;we&#148;, &#147;us&#148;, &#147;our&#148; and &#147;Lexaria&#148; mean Lexaria Bioscience Corp., a
Nevada corporation whose shares you currently own. The term &#147;you&#148; means you, the
reader and a stockholder of our company. The term &#147;Lexaria BC&#148; means Lexaria
Bioscience Corp., a British Columbia corporation whose shares you are expected
to own after we change the corporate jurisdiction of our company from the State
of Nevada to the Province of British Columbia.<B> </B></P>
<P align=justify>All references to currency in this proxy statement/prospectus
are in United States dollars unless otherwise stated and all financial
statements are prepared in accordance with United States generally accepted
accounting principles. Unless otherwise stated, conversion of Canadian dollars
to United States dollars has been calculated at an exchange rate of CDN$1 equals
US$0.75. </P>
<P align=justify>Please read this proxy statement/prospectus carefully. You
should rely only on the information contained in this proxy
statement/prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information provided by
this proxy statement/prospectus is accurate as of any date other than the date
on the front cover of this proxy statement/prospectus.</P>
<P align=center>4</P>
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<P align=center><B>PROXY STATEMENT/PROSPECTUS SUMMARY </B></P>
<P align=justify>This section highlights selected information in this proxy
statement/prospectus. The summary may not contain all of the information
important to you. To understand the proposals to be voted upon at the annual and
special meeting, you should read this entire document carefully, including the
schedules to this proxy statement/prospectus. See also &#147;Where You Can Find More
Information.&#148; The plan of conversion, a copy of which is attached as Schedule
&#147;A&#148; to this proxy statement/prospectus, contains the terms and conditions of the
continuation, including the proposed articles of Lexaria BC. </P>
<P align=justify><B>Our Business </B></P>
<P align=justify>We were incorporated in the State of Nevada on December 9,
2004. We were an exploration and development oil and gas company engaged in the
exploration for and development of petroleum and natural gas in North America
from the date of incorporation until 2014. During 2014 we submitted an
application to enter the legal medical marijuana business in Canada (since
retracted), acquired certain biotechnology-related intellectual property, and
also launched a hemp oil-based food supplement company in the USA. We maintain
our registered agent's office and our U.S. business office at Nevada Agency and
Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501. Our US
telephone number is (755) 322-0626. The address of our principal executive
office is 156 Valleyview Rd., Kelowna, BC, Canada, V1X 3M4. </P>
<P align=justify>Our common stock is quoted on the OTCQX  under the symbol "LXRP"
and on the Canadian Securities Exchange under the symbol &#147;LXX&#148;. </P>
<P align=justify>Our company currently pursues business opportunities in diverse
industries including the food sciences, technology licensing, and ready-to-eat
food sectors. Our food sciences activities include the development of our
proprietary nutrient infusion technologies for the production of superfoods, and
the production of enhanced food products under our two consumer product brands,
ViPova<SUP>TM</SUP> and Lexaria Energy. Our patented and patent-pending lipid
nutrient infusion technology is believed to enable higher bioavailability rates
for CBD; THC; NSAIDs; vitamins; nicotine and other molecules than is possible
without lipophilic enhancement technology. This can allow for lower overall
dosing requirements and/or higher effectiveness in active molecule delivery.
Lexaria has caused to be filed several patent pending applications with the US
Patent and Trademark Office (&#147;USPTO&#148;), and also internationally under the Patent
Cooperation Treaty (PCT). On October 26, 2016, the USPTO issued U.S. Patent No.
9,474,725 (granted June 15 2017 in Australia No. 2015274698), Cannabinoid
Infused Food and Beverage Compositions and Methods of Use Thereof, pertaining to
Lexaria&#146;s method of improving bioavailability and taste of certain cannabinoid
lipophilic active agents in food products. On October 31, 2017, we announced
that the USPTO has issued a notice of allowance for our patent application no.
15/225,799, &#147;Food and Beverage Compositions Infused With Lipophilic Active
Agents and Methods of Use Thereof&#148; and on December 13, 2017 we announced that
the USPTO had granted this patent. That application pertains to the use of
Lexaria&#146;s DehydraTECH<SUP>TM</SUP> technology as a delivery platform for all
cannabinoids including THC, for fat soluble vitamins, non-steroidal
anti-inflammatory pain medications (&#147;NSAIDs&#148;), and for nicotine. On November 9,
2017, we announced our filing of a new patent application with the USPTO for the
use of our DehydraTECH<SUP>TM</SUP> technology for delivery of phosphodiesterase
type 5 (PDE5) inhibitors such as sildenafil and tadalafil, which are commonly
sold under the trade names Viagra<SUP>TM </SUP>and Cialis<SUP>TM</SUP>,
respectively. Lexaria hopes to reduce other common but less healthy ingestion
methods such as smoking as it embraces the benefits of public health. </P>
<P align=justify><B>Proposal 1 &#150; The Continuation </B></P>
<P align=justify>On August 31, 2017, our board of directors determined that it
would be in the best interest of our company to change our corporate
jurisdiction from the State of Nevada to the Province of British Columbia,
Canada. We intend to change the corporate jurisdiction of Lexaria from the State
of Nevada to the Province of British Columbia, Canada by means of a process
called a &#147;conversion&#148; under the <I>Nevada Revised Statutes</I> and a
&#147;continuation&#148; under the <I>Business Corporations Act</I> (British
Columbia).</P>
<P align=justify>If our stockholders approve the proposed continuation then we
intend to file articles of conversion with the Secretary of State of Nevada and
a continuation application with the Registrar of Companies of British Columbia.
Upon receipt of a certificate of continuation from the Registrar of Companies of
British Columbia, we will be continued as a British Columbia corporation and will be governed by the laws of
British Columbia. The assets and liabilities of the British Columbia corporation
immediately after the continuation will be identical to the assets and
liabilities of the Nevada corporation immediately prior to the continuation. The
officers and directors of our company immediately before the continuation
becomes effective will be the officers and directors of the British Columbia
corporation. The change of our corporate jurisdiction will not result in any
material change to our business and will not have any effect on the relative
equity or voting interests of our stockholders. Each previously outstanding
share of our common stock will become one common share of the British Columbia
corporation. </P>
<P align=center>5</P>
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<P align=justify>The continuation and the plan of conversion are also subject to
  approval by the holders of a majority of the outstanding shares of our common
stock and the Canadian Securities Exchange. </P>
<P align=justify>Our board of directors approved the plan of conversion as being
in the best interest of our company and recommends that you vote &#147;for&#148; the
approval of the plan of conversion.</P>
<P align=center><B>Our board of directors recommends that you vote FOR the
approval of the plan of conversion. </B></P>
<P align=justify><B>Reasons for the Change of Our Corporate
Jurisdiction</B><B><I> </I></B></P>
<P align=justify>We believe that the change of our corporate jurisdiction from
the State of Nevada to the Province of British Columbia, Canada will more
accurately reflect our operations, which are headquartered in and managed from
the Province of British Columbia, Canada. We also believe that changing our
corporate jurisdiction to the Province of British Columbia, Canada more
accurately reflects the identity of our company because Canada is the country
from which we have derived much of our financing, and our common stock is listed
on the Canadian Securities Exchange in Canada. Furthermore, all of our officers
and the majority of our directors are located in Canada, and a large amount of
our issued and outstanding stock is owned of record by persons not resident in
the United States. We believe that the change of our corporate jurisdiction may
also enable us to qualify as a &#147;foreign private issuer&#148; in the United States. As
a foreign private issuer, we believe that our regulatory compliance costs may
decrease and our ability to raise capital should improve because it should,
under certain circumstances, enable us to issue securities in private placement
offerings with a four-month hold period (for which we believe there is more
demand than there is for securities issued in a private placement with a minimum
hold period of six months, which is currently the case) without limiting our
access to the U.S. capital markets.</P>
<P align=justify><B>Regulatory Approvals</B><B><I> </I></B></P>
<P align=justify>In order for our company to carry out the continuation, it will
be necessary for us to comply with the provisions of the corporate law of the
State of Nevada<I> </I>and the <I>Business Corporations Act </I>(British
Columbia). Under the Nevada corporate law, a Nevada corporation is required to
obtain approval from the holders of a majority of its voting power in order to
carry out a conversion. We are now seeking approval from the holders of a
majority of the outstanding shares of our common stock. </P>
<P align=justify>Our directors and executive officers, who currently hold
approximately 30% of our outstanding common stock, have indicated that they
intend to vote for the approval of the continuation.</P>
<P align=justify>If our stockholders approve the continuation, then we intend to
file articles of conversion with the Secretary of State of Nevada. After that,
we intend to submit a continuation application to the Registrar of Companies of
British Columbia. Upon the filing of the continuation application and subsequent
receipt of a certificate of continuation from the Registrar of Companies of
British Columbia, we will be continued as a British Columbia corporation. </P>
<P align=justify>The continuation is subject to the approval of the Canadian
Securities Exchange. </P>
<P align=justify><B>Appraisal Rights</B><B><I> </I></B></P>
<P align=justify>Under Nevada law, our stockholders are entitled, after
complying with certain requirements of Nevada law, to dissent from approval of
the continuation pursuant to Chapter 92A of the <I>Nevada Revised Statutes</I>
(<B>&#147;NRS&#148;</B>) and to be paid the &#147;fair value&#148; of their shares of our common
stock exclusive of any element of value arising from the accomplishment or
expectation of the continuation, if the continuation is completed. Stockholders
electing to exercise these appraisal rights must comply with the provisions of Chapter 92A of the NRS in
order to perfect their rights. We will require strict compliance with the
statutory procedures.</P>
<P align=center>6</P>
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<P align=justify>Please refer to the discussion of &#147;Appraisal Rights&#148; beginning
  on page 25 of this proxy statement/prospectus for a more comprehensive
  discussion of appraisal rights and how to exercise them. A copy of Chapter 92A
of the NRS is attached as Schedule &#147;B&#148; to this proxy statement/prospectus. </P>
<P align=justify><B>Certain Tax Consequences for Stockholders</B></P>
<P align=justify>The following is a brief summary of certain tax consequences
the change of our corporate jurisdiction may have for our company and our
stockholders. You should consult your own tax advisers with respect to your
particular circumstances. A more detailed summary of the factors affecting the
tax consequences for our company and our stockholders is set out under &#147;Certain
United States Federal Income Tax Consequences of the Change of Our Corporate
Jurisdiction&#148; and &#147;Certain Canadian Federal Income Tax Consequences of the
Change of Our Corporate Jurisdiction&#148; on pages 33 and 37, respectively, of this
proxy statement/prospectus. </P>
<P align=justify><B><I>United States Federal Income Tax Consequences
</I></B></P>
<P align=justify>Lexaria BC may be treated as a U.S. corporation for U.S.
federal income tax purposes. Lexaria BC, a non-U.S. corporation generally would
be classified as a non-U.S. entity (and, therefore, non-U.S. tax residents)
under general rules of U.S. federal income taxation. However, Section 7874 of
the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;), contains rules that
can result in a non-U.S. corporation being taxed as a U.S. corporation for U.S.
federal income tax purposes, unless certain specific tests regarding the level
of business activities are satisfied. Based on the anticipated level of business
activities of Lexaria BC and its relevant affiliates, it is unclear whether the
tests would be satisfied. Satisfaction of these tests will not be finally
determined until after the time of the Change of Jurisdiction. If it were
determined that Lexaria BC would be taxed as a U.S. corporation for U.S. federal
income tax purposes, Lexaria BC may be liable for both Canadian and U.S. taxes,
which could have a material adverse effect on its financial condition and
results of operations.</P>
<P align=justify>On the other hand, if Lexaria BC is to be treated as a non-U.S.
corporation for U.S. federal tax purposes, certain adverse U.S. federal income
tax consequences could apply to a U.S. Holder if Lexaria BC were treated as a
passive non-U.S. investment company <B>(&#147;PFIC&#148;)</B> for any taxable year during
which the U.S. Holder holds Lexaria BC shares. Lexaria BC may be classified as a
PFIC and there can be no assurance that Lexaria BC or any of its non-U.S.
corporate subsidiaries would not be treated as a PFIC for any taxable year. If
Lexaria BC were treated as a PFIC, U.S. Holders of Lexaria BC shares could be
subject to certain adverse U.S. federal income tax consequences with respect to
a gain realized on a taxable disposition of such shares, and certain
distributions received on such shares. In addition, dividends received with
respect to Lexaria BC shares or with respect to the relevant non-U.S. corporate
subsidiary, as applicable, would not constitute qualified dividend income
eligible for preferential tax rates if Lexaria BC or the relevant non-U.S.
corporate subsidiary, as applicable, were treated as a PFIC for the taxable year
of the distribution or for its preceding taxable year. Certain elections may be
available to U.S. Holders to mitigate some of the adverse tax consequences
resulting from PFIC treatment.</P>
<P align=justify><B><I>Canadian Federal Income Tax Consequences</I></B> </P>
<P align=justify>As a result of the continuation, Lexaria will be considered to
have disposed of its assets to Lexaria BC for proceeds equal to their fair
market value. Lexaria will be subject to Canadian federal income tax liabilities
with respect to any gains realized as a result of the deemed disposition of all
of its assets that constitute &#147;taxable Canadian property&#148; for the purposes of
the Canadian federal income tax. </P>
<P align=justify>The continuation will not cause a disposition or deemed
disposition of the shares of Lexaria held by any stockholder, and therefore will
not cause the realization of any capital gain or capital loss by the stockholder
in respect of such shares. For a more detailed summary of the Canadian federal
income tax consequences, please see &#147;Certain Canadian Federal Income Tax
Consequences of the Change of Our Corporate Jurisdiction&#148; on page 37 of this
proxy statement/prospectus. </P>
<P align=center>7</P>
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<P align=justify><B>Our Authorized Capital after the Change of Our Corporate
Jurisdiction</B><B><I> </I></B></P>
<P align=justify>The application for the continuation provides that our
authorized capital after the change of our corporate jurisdiction will consist
of an unlimited number of common shares without par value and an unlimited
number of preferred shares without par value. Our certificate of incorporation
presently provides that our authorized capital is 220,000,000 shares of common
stock with a par value of $0.001 per share. </P>
<P align=justify><B>Accounting Treatment of the Change of Our Corporate
Jurisdiction</B><B><I> </I></B></P>
<P align=justify>For United States accounting purposes, the change of our
corporate jurisdiction from the State of Nevada to the Province of British
Columbia, Canada by means of the continuation represents a non-substantive
exchange to be accounted for in a manner consistent with a transaction between
entities under common control. All assets, liabilities, revenues and expenses
will be reflected in the accounts of Lexaria BC based on existing carrying
values at the date of the exchange. The historical comparative figures of
Lexaria BC will be those of Lexaria.</P>
<P align=justify>We currently prepare our financial statements in accordance
with the United States generally accepted accounting principles but will begin
to report our financial statements in accordance with IFRS after the
consummation of the change of our corporate jurisdiction. </P>
<P align=justify><B>How the Change of Our Corporate Jurisdiction will Affect
Your Rights as a Stockholder</B><B><I> </I></B></P>
<P align=justify>You will continue to hold the same number of shares you now
hold following the change of our corporate jurisdiction from the State of Nevada
to the Province of British Columbia, Canada. However, the rights of stockholders
under Nevada law differ in certain substantive ways from the rights of
stockholders under British Columbia law. Examples of some of the changes in
stockholder rights which will result from the change of our corporate
jurisdiction are described in the discussion of &#147;Material Differences of the
Rights of Our Stockholders After the Change of Our Corporate Jurisdiction&#148;
beginning on page 28. </P>
<P align=justify><B>Exchange of Share Certificates</B><B><I> </I></B></P>
<P align=justify>Upon the effectiveness of the continuation, Lexaria BC will
mail a letter of transmittal with instructions to each holder of record of
shares of Lexaria outstanding immediately before the effective time of the
continuation for use in exchanging certificates formerly representing shares of
Lexaria for certificates representing shares of Lexaria BC. Certificates should
not be surrendered by the holder thereof until they have received the letter of
transmittal from Lexaria BC. See page 27 for a more complete discussion
regarding the exchange of share certificates. </P>
<P align=justify><B>Reporting Obligations under Securities Laws</B><B><I>
</I></B></P>
<P align=justify>If we change our corporate jurisdiction to the Province of
British Columbia, Canada, we will still have to comply with reporting
requirements under both the United States and Canadian securities laws. However,
these requirements should be reduced because we would no longer be a United
States company. </P>
<P align=justify>We currently prepare our financial statements in accordance
with United States generally accepted accounting principles (<B>&#147;US GAAP&#148;</B>).
We file our audited annual financial statements with the Securities and Exchange
Commission on annual reports on Form 10-K and our unaudited interim financial
statements with the Securities and Exchange Commission on quarterly reports on
Form 10-Q. Additionally, we are a reporting issuer in the Provinces of British
Columbia and Alberta. Upon completion of the continuation, we anticipate that we
will meet the definition of a &#147;foreign private issuer&#148; under the Securities
Exchange Act of 1934. As a foreign private issuer, we anticipate that we will
file an annual report on Form 20-F each year with the Securities and Exchange
Commission. We will not be required to file interim quarterly reports on Form
10-Q, however we will be required to file our interim financial statements and
management&#146;s discussion and analysis, in the form required by Canadian
securities legislation, with the Securities and Exchange Commission on Form 6-K.
We anticipate that we will prepare our financial statements in accordance with
IFRS subsequent to the change of our corporate jurisdiction. </P>
<P align=justify>In addition, as a foreign private issuer, our directors,
officers and stockholders owning more than 10% of our outstanding common stock
will no longer be subject to the insider reporting requirements of Section 16(b)
of the Securities Exchange Act of 1934 and we will no longer be subject to the
proxy rules of Section 14 of the Securities Exchange Act of 1934. Furthermore, Regulation FD does not apply
to non-United States companies and will not apply to us upon completion of the
continuation. </P>
<P align=center>8</P>
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<P align=justify>Whether or not we change our corporate jurisdiction to the
  Province of British Columbia, Canada, we will remain subject to Canadian
  disclosure requirements including those requiring that we publish news releases,
  file reports about material changes to or for our company, send you information
  circulars with respect to meetings of our stockholders, file annual and
  quarterly financial statements and related management&#146;s discussion and analysis
  and those that require that our officers, directors and major shareholders file
reports about trading in our shares. </P>
<P align=justify><B>Quotation on the OTCQX  and Listing on the Canadian
Securities Exchange</B><B><I> </I></B></P>
<P align=justify>Our common stock is quoted on the OTCQX  Board under the symbol
&#147;LXRP&#148; and our shares are listed for trading on the Canadian Securities Exchange
under the symbol &#147;LXX&#148;. We expect that immediately following the continuation,
the common shares of Lexaria BC will continue to be quoted on the OTCQX  under
the new symbol &#147;LXRPF&#148;, and listed on the Canadian Securities Exchange under the
current symbol &#147;LXX&#148;.</P>
<P align=justify><B>Proposal 2 &#150; Election of Directors </B></P>
<P align=justify>Our board of directors has nominated Chris Bunka, John
Docherty, Nicholas Baxter and Ted McKechnie as candidates for directors to be
elected at the annual and special meeting. These nominees are all of our current
directors.</P>
<P align=justify>Each director who is elected will hold office until the next
annual meeting of stockholders and until his or her successor is elected and
qualified. Any director may resign his or her office at any time and may be
removed at any time by the holders of a majority of the shares then entitled to
vote at an election of directors.</P>
<P align=center><B>Our board of directors recommends that you vote FOR the
nominees. </B></P>
<P align=justify><B>Proposal 3 - Ratification of the Continued Appointment of
the Independent Registered Public Accounting Firm</B></P>
<P align=justify>Our board of directors is asking our stockholders to ratify the
continued appointment of Davidson &amp; Company LLP, Chartered Accountants, as
our independent registered public accounting firm for the fiscal year ending
August 31, 2018.</P>
<P align=center><B>Our board of directors recommends that you vote FOR the
ratification. </B></P>
<P align=center><B>RISK FACTORS </B></P>
<P align=justify>An investment in our common stock involves a number of very
significant risks. You should carefully consider the following risks and
uncertainties in addition to other information in this proxy
statement/prospectus in evaluating the proposed continuation, our company and
our business. Our business, operating results and financial condition could be
seriously harmed as a result of the occurrence of any of the following risks.
You could lose all or part of your investment due to any of these risks. You
should invest in our common stock only if you can afford to lose your entire
investment. </P>
<P align=justify><B>Risks Relating to the Continuation </B></P>
<P align=justify><B><I>We may still be treated as a U.S. corporation and taxed
on our worldwide income after the continuation. </I></B></P>
<P align=justify>The continuation of our company from the State of Nevada to the
Province of British Columbia, Canada is considered a migration of our company
from the State of Nevada to the Province of British Columbia, Canada. Certain
transactions whereby a U.S. corporation migrates to a foreign jurisdiction can
be considered by the United States Congress to be an abuse of the U.S. tax rules
because thereafter the foreign entity is not subject to U.S. tax on its
worldwide income. Section 7874(b) of the Internal Revenue Code of 1986, as
amended (the <B>&#147;Code&#148;</B>), was enacted in 2004 to address this potential
abuse. Section 7874(b) of the Code provides generally that certain corporations
that migrate from the United States will nonetheless remain subject to U.S. tax
on their worldwide income unless the migrating entity has substantial business
activities in the foreign country to which it is migrating when compared to its
total business activities. </P>
<P align=center>9</P>
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<P align=justify>If Section 7874(b) of the Code applies to the migration of our
company from the State of Nevada to the Province of British Columbia, Canada,
our company would continue to be subject to United States federal income
taxation on its world-wide income. Section 7874(b) of the Code could apply to
our migration unless we have substantial business activities in Canada when
compared to our total business activities. </P>
<P align=justify>If Lexaria BC is treated as a U.S. corporation for U.S. federal
tax purposes under Section 7874 of the Code, then Lexaria BC believes the
Continuation would be treated as a reorganization under Section 368(a) of the
Code and the following U.S. federal income tax consequences generally would
result for U.S. Holders:</P>
<P align=justify>(a) no gain or loss will be recognized by a U.S. Holder on the
exchange of Lexaria Shares for Lexaria BC Shares pursuant to the Continuation;
<BR>(b) the tax basis of a U.S. Holder in the Lexaria BC Shares acquired in
exchange for Lexaria Shares pursuant to the Continuation would be equal to such
U.S. Holder&#146;s tax basis in Lexaria Shares exchanged; <BR>(c) the holding period
of a U.S. Holder with respect to the Lexaria BC Shares acquired in exchange for
Lexaria Shares pursuant to the Continuation will include such U.S. Holder&#146;s
holding period for Lexaria Shares; and <BR>(d) U.S. Holders who exchange Lexaria
Shares for Lexaria BC Shares pursuant to the Continuation generally would be
required to report certain information to the IRS on their U.S. federal income
tax returns for the tax year in which the Continuation occurs, and to retain
certain records related to the Continuation. </P>
<P align=justify><B><I>We may be classified as a Passive Foreign Investment
Company as a result of the continuation. </I></B></P>
<P align=justify>Sections 1291 to 1298 of the Code contain the Passive Foreign
Investment Company (<B>&#147;PFIC&#148;</B>) rules. These rules generally provide for
punitive treatment to &#147;U.S. holders&#148; (as defined in the section titled &#147;Certain
United States<I> </I>Federal Income Tax Consequences&#148;) of PFICs. A foreign
corporation is classified as a PFIC if more than 75% of its gross income is
passive income or more than 50% of its assets produce passive income or are held
for the production of passive income. <B>These rules would not apply if the
Section 7874(b) rules, as noted above, deem Lexaria BC to be considered as a
U.S. corporation for U.S. federal tax purposes.</B></P>
<p align="justify">Because we expect that most of our assets  after the continuation will be cash or cash equivalents and shares of our  wholly-owned subsidiary, we may in the future be classified as a PFIC if Section  7874 is not applicable.&nbsp; If we are  classified as a PFIC after migration, then the holders of shares of our company  who are U.S. taxpayers may be subject to PFIC provisions which may impose U.S.  taxes, in addition to those normally applicable, on the sale of their shares of  our company or on distribution from our company. </p>
<P align=justify><B><I>If we complete the continuation, we will no longer be
required to file quarterly financial statements that have been reviewed by our
independent auditors on Forms 10-Q, as required by the Securities Exchange Act
of 1934. </I></B></P>
<P align=justify>If we change our corporate jurisdiction to the Province of
British Columbia, Canada, we will still have to comply with reporting
requirements under United States securities laws. However, these requirements
could be reduced because we will no longer be incorporated in a state of the
United States. </P>
<P align=justify>We currently prepare our financial statements in accordance
with United States generally accepted accounting principles (<B>&#147;US GAAP&#148;</B>).
We file our audited annual financial statements with the Securities and Exchange
Commission with our annual reports on Form 10-K and we file our unaudited
interim financial statements with the Securities and Exchange Commission with
our quarterly reports on Form 10-Q. Upon completion of the continuation, we
anticipate that we will meet the definition of a &#147;foreign private issuer&#148; under
the Securities Exchange Act of 1934, as amended. As a foreign private issuer, we
anticipate that we will be eligible to file our annual reports each year with
the Securities and Exchange Commission on Form 20-F. As a foreign private issuer
filing annual reports on Form 20F, we would not be required to file quarterly
reports on Forms 10-Q. Instead, we would file with the Securities and Exchange
Commission on a quarterly basis interim financial statements that are not
required to be reviewed by our auditors, together with management&#146;s discussion
and analysis in the form required under Canadian securities legislation. We
anticipate that we will begin to prepare our financial statements in accordance
with IFRS subsequent to the change of our corporate jurisdiction. </P>
<P align=justify><B><I>If we complete the continuation, insiders of our company
will no longer be required to file insider reports under Section 16(a) of the
Securities Exchange Act of 1934 and they will no longer be subject to the &#147;short
swing profit rule&#148; of Section 16(b) of the Securities Exchange Act of
1934.</I></B> </P>
<P align=center>10</P>
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<P align=justify>As a foreign private issuer, our directors, officers and
stockholders owning more than 10% of our outstanding common stock will be
subject to the insider filing requirements imposed by Canadian securities laws
but they will be exempt from the insider requirements imposed by Section 16 of
the Securities Exchange Act of 1934. The Canadian securities laws do not impose
on insiders any equivalent of the &#147;short swing profit rule&#148; imposed by Section
16 and, after completion of the continuation, our insiders will not be subject
to liability for profits realized from any &#147;short swing&#148; trading transactions,
or a purchase and sale, or a sale and purchase, of our equity securities within
less than six months. As a result, our stockholders may not enjoy the same
degree of protection against insider trading as they would under Section 16 of
the Securities Exchange Act of 1934. </P>
<P align=justify><B><I>If we complete the continuation, our company will no
longer be required to comply with Regulation FD.</I></B> </P>
<P align=justify>Regulation FD, which was promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934 to prevent certain
selective disclosure by reporting companies, does not apply to non-United States
companies and will not apply to us upon completion of the continuation. As a
result, our stockholders may not enjoy the same degree of protection against
selective disclosure as they would under Section 16 of the Securities Exchange
Act of 1934. </P>
<P align=justify><B><I>Your rights as a stockholder of our company will change
as a result of the continuation.</I></B></P>
<P align=justify>Because of the differences between Nevada law and British
Columbia law, your rights as a stockholder will change if the continuation is
completed. For a detailed discussion of these differences, see &#147;Material
Differences of the Rights of Our Stockholders After the Change of Our Corporate
Jurisdiction.&#148; beginning at page 28 of this proxy statement/prospectus.</P>
<P align=justify><B><I>The market for shares of our company as a British
Columbia corporation may differ from the market for shares of our company as a
Nevada corporation.</I></B></P>
<P align=justify>Although we anticipate that our common shares will requalify to
be quoted on the OTC Markets Group Inc.&#146;s OTCQX  and be listed on the Canadian
Securities Exchange following the completion of the continuation, the market
prices, trading volume and volatility of the shares of our company as a British
Columbia corporation could be different from those of the shares of our company
as a Nevada corporation. We cannot predict what effect, if any, the continuation
will have on the market price prevailing from time to time or the liquidity of
our common shares. </P>
<P align=justify><B><I>The exercise of dissent and appraisal rights by our
shareholders may adversely impact Lexaria BC. </I></B></P>
<P align=justify>Pursuant to the Dissenters Rights Provisions of Nevada
corporate law, if the conversion and continuation is completed, former
stockholders who did not vote in favor of the continuation may elect to have the
company purchase their shares for a cash price that is equal to the &#147;fair value&#148;
of such shares, as determined in a judicial proceeding. The fair value means the
value of such shares immediately before the effectuation of the continuation
excluding any appreciation or depreciation in anticipation of the continuation,
unless exclusion of any appreciation or depreciation would be inequitable. If
sufficient shareholders elect to have us purchase their shares, the liability
resulting from the fair value of those shares will adversely impact the
financial condition of the company, cause significant volatility in the price of
the our company&#146;s common shares, or materially impair the ability of our company
to execute its plan of operation.</P>
<P align=justify><B>Risks Associated With Our Business</B></P>
<P align=justify><B><I>Because there is no assurance that we will generate
material revenues, we face a high risk of business failure.</I></B></P>
<P align=justify>There can be no assurance that our current or future products
will be successful, and we cannot be sure that our overall business model within
any particular sector will ever come to fruition, and if they do, will not
decline over time. We may not recover all or any portion of our capital
investment in product development, marketing, or other aspects of the business.
Although we will exercise due consideration in our development of new products,
and the marketing of them, ultimate consumer acceptance of these products is not
reliably forecastable.</P>
<P align=justify>In addition, our product development plans may be curtailed,
delayed or cancelled as a result of lack of adequate capital and other factors,
such as weather, compliance with governmental regulations, current and
forecasted prices for input costs of food products and changes in the estimates
of costs to complete the projects. We will continue to gather information about
our planned products, and it is possible that additional information may cause
our company to alter our schedule or determine that a product should not be pursued
at all. You should understand that our plans regarding our products are subject
to change.</P>
<P align=center>11</P>
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<P align=justify>Our revenues now are generated from being a food sciences and
  products company. We should be considered to be a start-up: the revenue
recognized for the year ended August 31, 2017 was $63,639.</P>
<P align=justify><B><I>The food industry is highly competitive and there is no
assurance that we will be successful in developing or successfully selling
products.</I></B></P>
<P align=justify>The food industry is intensely competitive. We compete with
numerous individuals and companies, including many food manufacturing and
production companies, which have substantially greater technical, financial and
operational resources and staff. Accordingly, there is a high degree of
competition for desirable distribution channels, &#147;shelf space&#148; and salespeople
in both the food industries as well as the legal cannabis industries. We cannot
predict if the necessary funds can be raised to assist in our development of any
distribution channels that may be helpful to our ability to generate sales and
potential profits.</P>
<P align=justify><B><I>There can be no assurance that we will develop any
product that will meet with widespread consumer acceptance. </I></B><B></B></P>
<P align=justify>Both new and established food and cannabis products fail to
generate consumer interest on a regular basis. There is no assurance that a food
or cannabis product that is successfully adopted by consumers at one time; will
still be in demand at a future time. If we cannot develop and sell products in
commercial quantities, our business may fail.</P>
<P align=justify><B><I>Even if we develop food or intellectual property-based
products or revenue streams, the potential profitability of each depends upon
factors beyond the control of our company. </I></B><B></B></P>
<P align=justify>The potential profitability of food products and of
intellectual property revenue streams is dependent upon many factors beyond our
control. For instance, prices and markets for food products are unpredictable,
highly volatile, potentially subject to controls or any combination or other
factors, and respond to changes in domestic, international, political, social
and economic environments. These changes and events may materially affect our
future financial performance. These factors cannot be accurately predicted and
the combination of these factors may result in our company not receiving an
adequate return on invested capital.</P>
<P align=justify>In addition, a product or technology that is initially
successful and possibly even profitable may not remain so due to changes in
consumer demand, regulatory environments, or other causes. There is no assurance
that an initially successful product or technology will remain so.</P>
<P align=justify><B><I>Our failure to protect our intellectual property may have
a material adverse effect on our ability to develop and commercialize our
products</I></B>.</P>
<P align=justify>Because patents involve complex legal and factual questions,
the issuance, scope, validity, and enforceability of patents cannot be predicted
with certainty.</P>
<P align=justify>Some of our patent pending applications may not be granted as
patents. Even if patents are issued, they may not be issued with claims of
sufficient breadth to protect our nutrient infusion technology or may not
provide us with competitive advantage against competitors with similar products
or technologies. Issued patents may be challenged, invalidated, or circumvented.
If patents issued to us are invalidated or found to be unenforceable, we could
lose the ability to exclude others from making, using or selling the inventions
claimed. Moreover, an issued patent does not give us the right to use the
patented technology or commercialize a product using the technology. Third
parties may have blocking patents that could be used to prevent us from
developing our products, selling our products, or commercializing our nutrient
infusion technology. Others may also independently develop products or
technologies similar to those that we have developed or may reverse engineer or
discover our trade secrets through proper means. </P>
<P align=justify>Enforcing a claim that a third party infringes on, has
illegally obtained or is using an intellectual property right, is expensive and
time-consuming and the outcome is unpredictable. In addition, enforcing such a
claim could divert management&#146;s attention from our business. If any intellectual
property rights were to be infringed, disclosed to, or independently developed
by a competitor, our competitive position could be harmed. Any adverse outcome
of such litigation or settlement of such dispute could subject us to significant
liabilities and could put one or more of our patent pending applications at risk
of being invalidated.</P>
<P align=center>12</P>
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<P align=justify>Furthermore, because of the substantial amount of discovery
required in connection with intellectual property litigation, there is risk that
some of our confidential information could be compromised. This disclosure could
provide our competitors with access to our proprietary information and may harm
our competitive position. </P>
<P align=justify><B><I>The marketability of food products will be affected by
numerous factors beyond our control which may result in us not receiving an
adequate return on invested capital to be profitable or viable.</I></B><B>
</B></P>
<P align=justify>The marketability of food products will be affected by numerous
factors beyond our control. These factors include market fluctuations in
consumer preferences for various food items based on factors such as pricing,
macro trends for certain ingredients or flavors, ruling by regulators on health
issues associated with certain foods, and more. The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may
result in us not receiving an adequate return on invested capital to be
profitable or viable. </P>
<P align=justify><B><I>Both food products and cannabis products are subject to
comprehensive regulation which may cause substantial delays or require capital
outlays in excess of those anticipated causing an adverse effect on our
company</I></B><I>.</I> </P>
<P align=justify>Food production and safety operations, and cannabis products
and sales operations, are subject to federal, state, and local laws relating to
the protection of human health and safety. Food production and cannabis
operations are each also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards through a wide
variety of regulations. Various permits from government bodies may be required
by us in order to conduct our business. Regulations and standards imposed by
federal, provincial, or local authorities may be changed at any moment in time
and any such changes may have material adverse effects on our activities.
Changes in regulations are impossible to foresee and could be disruptive or
destructive to our business plans and execution. Moreover, compliance with such
laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on us. Additionally, we may be
subject to liability for contaminants or other damages. To date, we have not
been required to spend any material amount on compliance with environmental
regulations. However, we may be required to do so in the future and this may
affect our ability to expand or maintain our operations. </P>
<P align=justify><B><I>We are not the "operator" of vertically integrated food
production facilities, and so we are exposed to the risks of our third-party
operators. </I></B><B></B></P>
<P align=justify>We rely on the expertise of contracted third-parties for their
judgment, experience and advice related to the manufacturing and/or packaging of
our food products. We can give no assurance that these third party operators or
consultants will always act in our best interests, and we are exposed as a third
party to their operations and actions and advice in those operations and
activities in which we are contractually bound.</P>
<P align=justify><B><I>Our management has limited experience and training in the
food processing and manufacturing industries, and in the cannabis products
industries, and could make uninformed decisions that negatively impact our
operations and our company. </I></B><B></B></P>
<P align=justify>Because our management has limited experience and training in
the food processing and manufacturing industry, and in the cannabis products
industry, we may not have sufficient expertise to make informed best practices
decisions regarding our operations. It is possible that, due to our limited
knowledge, we might elect to undergo manufacturing processes and incur financial
burdens that a more experienced food manufacturing team might elect not to
complete. Our ability to internally evaluate food and cannabis operations and
opportunities could be less thorough than that of a more highly trained
management team.</P>
<P align=justify><B><I>Our company has no operating history and an evolving
business model which raises doubt about our ability to achieve profitability or
obtain financing. </I></B><B></B></P>
<P align=justify>Our company has no significant history of operations in the
legal medical marijuana sector, the legal hemp oil infused products sector, or
in the food products sector. Moreover, our business model is still evolving and
subject to change. Our company's ability to continue as a going concern is
dependent upon our ability to obtain adequate financing and to reach profitable
levels of operations. In that regard we have no proven history of performance,
earnings or success. There can be no assurance that we will achieve
profitability or obtain future financing. </P>
<P align=justify>Uncertain demand for our products may cause our business plan
to be unprofitable. </P>
<P align=center>13</P>
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<P align=justify>Demand for medical marijuana and for cannabis or hemp related
products is dependent on a number of social, political and economic factors that
are beyond the control of our company. While we believe that demand for
marijuana and hemp products will continue to grow across North America, there is
no assurance that such increase in demand will happen or that our endeavors will
be profitable. </P>
<P align=justify><B><I>We may not acquire market share or achieve profits due to
competition in our industries. </I></B><B></B></P>
<P align=justify>Our company operates in highly competitive marketplaces with
various competitors. Increased competition may result in reduced gross margins
and/or loss of market share, either of which would seriously harm its business
and results of operations. Management cannot be certain that the company will be
able to compete against current or future competitors or that competitive
pressure will not seriously harm its business. Some of our company's competitors
are much larger and have greater access to capital, sales, marketing and other
resources. These competitors may be able to respond more rapidly to new
regulations or devote greater resources to the development and promotion of
their business model than the company can. Furthermore, some of these
competitors may make acquisitions or establish co-operative relationships among
themselves or with third parties in the industry to increase their ability to
rapidly gain market share. </P>
<P align=justify><B><I>The speculative nature of our business plan may result in
the loss of your investment. </I></B></P>
<P align=justify>Our operations are in the start-up stage only, and are
unproven. We may not be successful in implementing our business plan to become
profitable. There may be less demand for our services than we anticipate. There
is no assurance that our business will succeed and you may lose your entire
investment. </P>
<P align=justify><B><I>Changing consumer preferences may cause our planned
products to be unsuccessful in the marketplace.</I></B><B> </B></P>
<P align=justify>The decision of a potential client to purchase our products may
be motivated by cultural phenomena or by perceived health or nutritional
benefits. The cultural desirability or popularity of hemp related products is
subject to change due to factors beyond our immediate control. Similarly, the
perceived nutritional or health related benefits of our products are subject to
change in light of continuing research or the introduction of competitive
products. Changes in consumer and commercial preferences, or trends, toward or
away from cannabis or hemp related products would have a corresponding impact on
the development of the market for our current and planned products. There can be
no assurance that the products supplied by our company and or its partners will
be successful in establishing or maintaining a significant share of the consumer
market. </P>
<P align=justify><B><I>General economic factors may negatively impact the market
for our planned products.</I></B><B> </B></P>
<P align=justify>The willingness of businesses to spend time and money on
non-essential food and health products may be dependent upon general economic
conditions; and any material downturn may reduce the likelihood of consumers
incurring costs toward what some may consider a discretionary expense item.
Willingness by customers to buy our products may be dependent upon general
economic conditions and any material downturn may reduce the potential
profitability of the food sciences or cannabis business sectors. </P>
<P align=justify><B><I>A wide range of economic and logistical factors may
negatively impact our operating results.</I></B><B> </B></P>
<P align=justify>Our operating results will be affected by a wide variety of
factors that could materially affect revenues and profitability, including the
timing and cancellation of customer orders and projects, competitive pressures
on pricing, availability of personnel, and market acceptance of our services. As
a result, we may experience material fluctuations in future operating results on
a quarterly and annual basis which could materially affect our business,
financial condition and operating results. </P>
<P align=justify><B><I>Loss of consumer confidence in our company or in our
industry may harm our business.</I></B><B> </B></P>
<P align=justify>Demand for our services may be adversely affected if consumers
lose confidence in the quality of our services or the industry&#146;s practices.
Adverse publicity may discourage businesses from buying our services and could
have a material adverse effect on our financial condition and results of
operations. </P>
<P align=justify><B><I>The failure to secure customers may cause our operations
to fail. </I></B><B></B></P>
<P align=center>14</P>
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<P align=justify>We currently do not have many long-term agreements with any
customers. Many of our products and services may be provided on a &#147;onetime&#148;
basis. Accordingly, we will require new customers on a continuous basis to
sustain our operations. </P>
<P align=justify><B><I>We could be required to enter into fixed price contracts
which will expose us to significant market risk.</I></B><B> </B></P>
<P align=justify>Fixed price contracts require the service provider to perform
all agreed services for a specified lump-sum amount. We anticipate a material
percentage of our services will be performed on a fixed price basis. Fixed price
contracts expose us to some significant risks, including under-estimation of
costs, ambiguities in specifications, unforeseen costs or difficulties, and
delays beyond our control. These risks could lead to losses on contracts which
may be substantial and which could adversely affect the results of our
operations. </P>
<P align=justify><B><I>If we fail to effectively and efficiently advertise, the
growth of our business may be compromised.</I></B><B> </B></P>
<P align=justify>The future growth and profitability of our food products
business will be dependent in part on the effectiveness and efficiency of our
advertising and promotional expenditures, including our ability to (i) create
greater awareness of our services, (ii) determine the appropriate creative
message and media mix for future advertising expenditures, and (iii) effectively
manage advertising and promotional costs in order to maintain acceptable
operating margins. There can be no assurance that we will experience benefits
from advertising and promotional expenditures in the future. In addition, no
assurance can be given that our planned advertising and promotional expenditures
will result in increased revenues, will generate levels of service and name
awareness or that we will be able to manage such advertising and promotional
expenditures on a cost-effective basis. </P>
<P align=justify><B><I>Our success is dependent on our unproven ability to
attract qualified personnel.</I></B><B> </B></P>
<P align=justify>We will depend on our ability to attract, retain and motivate
our management team, consultants and other employees. There is strong
competition for qualified technical and management personnel in the food science
sector, and it is expected that such competition will increase. Our planned
growth will place increased demands on our existing resources and will likely
require the addition of technical personnel and the development of additional
expertise by existing personnel. There can be no assurance that our compensation
packages will be sufficient to ensure the continued availability of qualified
personnel who are necessary for the development of our business. </P>
<P align=justify><B><I>We may not be able to obtain all of the licenses
necessary to operate our business, which would cause our business to
fail.</I></B><B> </B></P>
<P align=justify>Our operations may require licenses and permits from various
governmental authorities to conduct our business activities. We believe that we
will be able to obtain all necessary licenses and permits under applicable laws
and regulations for our operations and believe we will be able to comply in all
material respects with the terms of such licenses and permits. However, such
licenses and permits are subject to change in various circumstances. There can
be no guarantee that we will be able to obtain or maintain all necessary
licenses and permits. </P>
<P align=justify><B><I>If we fail to effectively manage our growth our future
business results could be harmed and our managerial and operational resources
may be strained.</I></B><B> </B></P>
<P align=justify>As we proceed with our business plan, we expect to experience
significant and rapid growth in the scope and complexity of our business. We
will need to add staff to market our services, manage operations, handle sales
and marketing efforts and perform finance and accounting functions. We will be
required to hire a broad range of additional personnel in order to successfully
advance our operations. This growth is likely to place a strain on our
management and operational resources. The failure to develop and implement
effective systems, or to hire and retain sufficient personnel for the
performance of all of the functions necessary to effectively service and manage
our potential business, or the failure to manage growth effectively, could have
a materially adverse effect on our business and financial condition. </P>
<P align=justify><B>Risks Associated with Our Company</B></P>
<P align=justify><B><I>We have a limited operating history on which to base an
evaluation of our business and prospects and we can provide investors with no
assurance that we will generate any operating revenues or ever achieve
profitable operations. </I></B><B></B></P>
<P align=center>15</P>
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<P align=justify>We have only relatively recently entered into the business that
is our current operations and we have not yet generated any material revenues
from our operations. In addition, our operating history has been restricted to
the acquisition and exploration of our properties and subsequently the
development of our current business and this does not provide a meaningful basis
for an evaluation of our prospects. We anticipate that we will continue to incur
operating costs without realizing any material revenues during the next fiscal
year. During the 12 month period ending August 31, 2018, we expect to spend
approximately $1,750,000 on the expansion of our business and operations and on
general and administrative expenses. We therefore expect to continue to incur
significant losses into the foreseeable future. If we are unable to generate
significant revenues from operations, we will not be able to earn profits or
continue operations. At this early stage of our operation, we also expect to
face the risks, uncertainties, expenses and difficulties frequently encountered
by companies at the start up stage of their business development. We cannot be
sure that we will be successful in addressing these risks and uncertainties and
our failure to do so could have a materially adverse effect on our financial
condition. There is no history upon which to base any assumption as to the
likelihood that we will prove successful and we can provide investors with no
assurance that we will generate any operating revenues or ever achieve
profitable operations.</P>
<P align=justify><B><I>Our independent certified public accounting firm, in the
notes to the audited financial statements for the year ended August 31, 2017
states that there is a substantial doubt that we will be able to continue as a
going concern. </I></B><B></B></P>
<P align=justify>We have experienced significant losses since inception.
Although our management believes that we have sufficient funds to meet our
obligations as they become due for the next twelve months, future failure to
arrange adequate financing on acceptable terms and to achieve profitability
would have an adverse effect on our financial position, results of operations,
cash flows and prospects. Accordingly, there is substantial doubt that we will
be able to continue as a going concern.</P>
<P align=justify><B><I>Without additional financing to develop our business
plan, our business may fail.</I></B><B> </B></P>
<P align=justify>Because we have generated only minimal revenue from our
business and cannot anticipate when we will be able to generate meaningful
revenue from our business, we will need to raise additional funds to conduct and
grow our business. We do not currently have sufficient financial resources to
completely fund the development of our business plan. We anticipate that we will
need to raise further financing. We do not currently have any arrangements for
financing and we can provide no assurance to investors that we will be able to
find such financing if required. The most likely source of future funds
presently available to us is through the sale of equity capital. Any sale of
share capital will result in dilution to existing security-holders. </P>
<P align=justify><B><I>Conflicts of interest between our company and our
directors and officers may result in a loss of business opportunity.
</I></B><B></B></P>
<P align=justify>Our directors and officers are not obligated to commit their
full time and attention to our business and, accordingly, they may encounter a
conflict of interest in allocating their time between our future operations and
those of other businesses. In the course of their other business activities,
they may become aware of investment and business opportunities which may be
appropriate for presentation to us as well as other entities to which they owe a
fiduciary duty. As a result, they may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. They may
also in the future become affiliated with entities, engaged in business
activities similar to those we intend to conduct. </P>
<P align=justify>In general, officers and directors of a corporation are
required to present business opportunities to a corporation if: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>The corporation could financially undertake the
      opportunity; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>The opportunity is within the corporation&#146;s line of
      business; and </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>It would be unfair to the corporation and its
      stockholders not to bring the opportunity to the attention of the
      corporation. </P></TD></TR></TABLE>
<P align=justify>We have adopted a code of ethics that obligates our directors,
officers and employees to disclose potential conflicts of interest and prohibits
those persons from engaging in such transactions without our consent. Despite
our intentions, conflicts of interest may nevertheless arise which may deprive
our company of a business opportunity, which may impede the successful
development of our business and negatively impact the value of an investment in
our company. </P>
<P align=center>16</P>
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<P align=justify><B><I>Because all of our officers and directors are located
outside of the United States, you may have no effective recourse against them
for misconduct and you may not be able to enforce judgment and civil liabilities
against them. </I></B><B></B></P>
<P align=justify>All of our directors and officers are nationals and/or
residents of countries other than the United States and all or a substantial
portion of their assets are located outside the United States. As a result, it
may be difficult for investors to enforce within the United States any judgments
obtained against our officers or directors, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any state thereof.</P>
<P align=justify><B>Risks Associated with Our Common Stock </B></P>
<P align=justify><B><I>Trading on the OCTQX and CSE may be volatile and
sporadic, which could depress the market price of our common stock and make it
difficult for our stockholders to resell their shares.</I></B><B> </B></P>
<P align=justify>Our common stock is quoted on the OTCQX  electronic quotation
service operated by OTC Markets Group Inc. Trading in stock quoted on the OTCQX  is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTCQX  is not a
stock exchange, and trading of securities on the OTCQX  is often more sporadic
than the trading of securities listed on a quotation system like Nasdaq or a
stock exchange like Amex. Accordingly, shareholders may have difficulty
reselling any of the shares. </P>
<P align=justify><B><I>Our stock is a penny stock. Trading of our stock may be
restricted by the Securities and Exchange Commission&#146;s penny stock regulations
which may limit a stockholder&#146;s ability to buy and sell our stock.</I></B><B>
</B></P>
<P align=justify>Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines &#147;penny stock&#148; to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and &#147;accredited investors&#148;. The term
&#147;accredited investor&#148; refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the Securities and Exchange Commission which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer&#146;s
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer&#146;s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser&#146;s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock. </P>
<P align=justify><B><I>The Financial Industry Regulatory Authority, or FINRA,
has adopted sales practice requirements which may also limit a stockholder&#146;s
ability to buy and sell our stock.</I></B><B> </B></P>
<P align=justify>In addition to the &#147;penny stock&#148; rules described above, FINRA
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer&#146;s financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares. </P>
<P align=center>17</P>
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<P align=justify><B><I>Because we do not intend to pay any dividends on our
shares, investors seeking dividend income or liquidity should not purchase our
shares.</I></B><B> </B></P>
<P align=justify>We have not declared or paid any dividends on our shares since
inception, and do not anticipate paying any such dividends for the foreseeable
future. We presently do not anticipate that we will pay dividends on any of our
common stock in the foreseeable future. If payment of dividends does occur at
some point in the future, it would be contingent upon our revenues and earnings,
if any, capital requirements, and general financial condition. The payment of
any common stock dividends will be within the discretion of our Board of
Directors. We presently intend to retain all earnings to implement our business
plan; accordingly, we do not anticipate the declaration of any dividends for
common stock in the foreseeable future. </P>
<P align=justify>Investors seeking dividend income or liquidity should not
invest in our shares. </P>
<P align=center><B>FORWARD-LOOKING STATEMENTS </B></P>
<P align=justify>This proxy statement/prospectus contains forward-looking
statements. Forward-looking statements are projections of events, revenues,
income, future economic performance or management&#146;s plans and objectives for
future operations. In some cases, you can identify forward-looking statements by
the use of terminology such as &#147;may&#148;, &#147;should&#148;, &#147;expect&#148;, &#147;plan&#148;, &#147;anticipate&#148;,
&#147;believe&#148;, &#147;estimate&#148;, &#147;predict&#148;, &#147;potential&#148; or &#147;continue&#148; or the negative of
these terms or other comparable terminology. Examples of forward-looking
statements made in this proxy statement/prospectus include statements about:
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>Our future product development and results, </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>Our future capital expenditures, and </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>Our future investments in and acquisitions of other
      companies or technologies. </P></TD></TR></TABLE>
<P align=justify>These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">General economic and business conditions,
</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">Exposure to market risks in our financial
      instruments, </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">Fluctuations in worldwide prices and demand for
      our products, </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">Fluctuations in the levels of our research and
      development activities, </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">Regulatory uncertainties and potential product
      liabilities, </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">Political changes in Canada and the United
      States, which could affect our operations there, and </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">The risks in the section of this proxy
      statement/prospectus entitled &#147;Risk Factors&#148;, </TD></TR></TABLE>
<P align=justify>any of which may cause our company&#146;s or our industry&#146;s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. </P>
<P align=justify>While these forward-looking statements and any assumptions upon
which they are based are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein. Except as required by applicable
law, including the securities laws of the United States and Canada, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results. </P>
<P align=center>18</P>
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<P align=center><B>QUESTIONS AND ANSWERS ABOUT THE ANNUAL AND SPECIAL MEETING OF
STOCKHOLDERS </B></P>
<P align=justify><B>Why am I receiving these materials?</B> </P>
<P align=justify>Our board of directors is soliciting proxies for use at the annual and special meeting to be held at the office of our law firm, Macdonald Tuskey, located at Suite 409 &ndash; 221 West Esplanade, North Vancouver, British Columbia V7M 3J3, Canada, at 11:00 a.m., local time, on Wednesday, June 13, 2018 or at any adjournment of the meeting. These materials were first sent or given to our stockholders on or about May 16, 2018. </P>
<P align=justify><B>What is included in these materials?</B> </P>
<P align=justify>These materials include: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>the notice of the annual and special meeting of
      stockholders; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>this proxy statement/prospectus for the annual and
      special meeting of stockholders; and </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>the proxy card. </P></TD></TR></TABLE>
<P align=justify><B>What items will be voted at the annual and special
meeting?</B> </P>
<P align=justify>Our stockholders will vote on: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>the approval of the plan of conversion, whereby our
      corporate jurisdiction will be changed from the State of Nevada to the
      Province of British Columbia, Canada by means of a process called a
      &#147;conversion&#148; and a &#147;continuation&#148;; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>the election of directors; and </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>the ratification of the continued appointment of our
      independent registered public accounting firm. </P></TD></TR></TABLE>
<P align=justify><B>What do I need to do now?</B> </P>
<P align=justify>We urge you to carefully read and consider the information
contained in this proxy statement/prospectus. We request that you cast your vote
on each of the proposals described in this proxy statement/prospectus. You are
invited to attend the annual and special meeting, but you do not need to attend
the annual and special meeting in person in order to vote your shares. Even if
you do not plan to attend the annual and special meeting, please vote by proxy
by following the instructions provided in the proxy card. </P>
<P align=justify><B>Who can vote at the annual and special meeting?</B> </P>
<P align=justify>Our board of directors has fixed the close of business on April 27,
  2018  as the record date for the determination of the stockholders entitled to
notice of, and to vote at, the annual and special meeting or any adjournment. If
you were a stockholder of record on the record date, you are entitled to vote at
the annual and special meeting. </P>
<P align=justify><B>How many votes do I have? </B></P>
<P align=justify>On each proposal to be voted upon, you have one vote for each
share of our common stock that you owned on the record date. There is no
cumulative voting. </P>
<P align=justify><B>How do I vote my shares?</B> </P>
<P align=justify>If you are a stockholder of record, you may vote in person or
by proxy. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>To vote in person, come to the annual and special
      meeting, and we will give you a ballot when you arrive. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>If you do not wish to vote in person or if you will not
      be attending the annual and special meeting, you may vote by proxy by
      mail, by telephone or via the Internet by following instructions provided
      in the proxy card. </P></TD></TR></TABLE>
<p align="center">19</p>
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<!--$$/page=--><A name=page_24></A>
<P align=justify>If you hold your shares in &#147;street name&#148; and: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>you wish to vote in person at the annual and special
      meeting, you must obtain a valid proxy from your broker, bank, or other
      nominee that holds your shares giving you the right to vote the shares at
      the annual and special meeting. Please follow the instructions from your
      broker, bank or other nominee, or contact your broker, bank or other
      nominee to request a proxy card. </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>you do not wish to vote in person or you will not be
      attending the annual and special meeting, you must vote your shares in the
      manner prescribed by your broker, bank or other nominee. Your broker, bank
      or other nominee should have enclosed or otherwise provided a voting
      instruction card for you to use in directing the broker, bank or nominee
      how to vote your shares. </P></TD></TR></TABLE>
<P align=justify><B>What is the difference between a stockholder of record and a
&#147;street name&#148; holder?</B> </P>
<P align=justify>If your shares are registered directly in your name with our
transfer agent, Computershare Investor Services Inc., then you are a stockholder
of record with respect to those shares. </P>
<P align=justify>If your shares are held in a stock brokerage account or by a
bank or other nominee, then the broker, bank, or other nominee is the
stockholder of record with respect to those shares. However, you are still the
beneficial owner of those shares, and your shares are said to be held in &#147;street
name.&#148; Street name holders generally cannot vote their shares directly and must
instead instruct the broker, bank, or other nominee how to vote their shares.
Street name holders are also invited to attend the annual and special meeting.
</P>
<P align=justify><B>What does it mean if I receive more than one proxy card?</B>
</P>
<P align=justify>If you receive more than one proxy card, it means that you hold
shares registered in more than one name or in different accounts. To ensure that
all of your shares are voted, please vote by proxy by following instructions
provided in each proxy card. If some of your shares are held in &#147;street name,&#148;
you should have received voting instructions with these materials from your
broker, bank or other nominee. Please follow the voting instructions provided to
ensure that your vote is counted. </P>
<P align=justify><B>What vote is required for the election of directors or for
the approval of a proposal?</B> </P>
<P align=justify>The proposals for approval and adoption of the plan of
conversion must receive votes &#147;For&#148; from the holders of a majority of the
outstanding shares of our common stock. </P>
<P align=justify>For the election of directors, the nominees who receive more
votes &#147;For&#148; than the combined number of votes &#147;Against&#148; plus votes that abstain
will be elected as directors. There is no cumulative voting in the election of
directors. </P>
<P align=justify>For the ratification of the continued appointment of the
independent registered public accounting firm to be approved, the proposals must
receive more votes &#147;For&#148; than the combined number of votes &#147;Against&#148; plus votes
that abstain. </P>
<P align=justify><B>How are votes counted?</B> </P>
<P align=justify>For the approval and adoption of the plan of conversion, you
may vote &#147;For&#148;, &#147;Against&#148;, or &#147;Abstain&#148; for the proposals. Votes that abstain
and broker non-votes will have the same effect as &#147;Against&#148; votes.</P>
<P align=justify>For the election of directors, you may vote &#147;For&#148;, &#147;Against&#148;,
or &#147;Abstain&#148; for each nominee for director. Votes that abstain will have the
same effect as &#147;Against&#148; votes. Broker non-votes will have no effect on the
outcome of the vote on the election of directors.</P>
<P align=justify>For the ratification of the continued appointment of the
independent registered public accounting firm, you may vote &#147;For&#148;, &#147;Against&#148;, or
&#147;Abstain&#148; for the proposals. Votes that abstain will have the same effect as
&#147;Against&#148; votes. Broker non-votes will have no effect on the outcome of the vote
on these proposals. </P>
<P align=justify>A &#147;broker non-vote&#148; occurs when a broker, bank, or other
nominee holding shares for a beneficial owner in street name does not vote on a
particular proposal because it does not have discretionary voting power with
respect to that proposal and has not received instructions with respect to that
proposal from the beneficial owner of those shares, despite voting on at least
one other proposal for which it does have discretionary authority or for which
it has received instructions. </P>
<P align=center>20</P>
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<P align=justify><B>What happens if I do not make specific voting choices?</B>
</P>
<P align=justify>If you are a stockholder of record and you submit your proxy
without specifying how you want to vote your shares, then the proxy holder will
vote your shares in the manner recommended by our board of directors on all
proposals. </P>
<P align=justify>If you hold your shares in street name and you do not give
instructions to your broker, bank or other nominee to vote your shares, the
rules that govern brokers, banks, and other nominees who are the stockholders of
record of shares held in street name generally give the discretion to vote
uninstructed shares on routine matters but withhold the discretion to vote them
on non-routine matters.</P>
<P align=justify><B>What is the quorum requirement?</B> </P>
<P align=justify>A quorum of stockholders is necessary for the transaction of
business at the annual and special meeting. The presence in person or by proxy
of stockholders entitled to cast at least one third of the shares entitled to
vote at the annual and special meeting constitutes a quorum. Your shares will be
counted towards the quorum requirement only if you or the registered holder of
your shares is present in person or by proxy at the annual and special meeting.
Votes that abstain and broker non-votes will be counted towards the quorum
requirement. If there is no quorum, the officer presiding at the meeting will
have power to adjourn the meeting from time to time until a quorum is present.
</P>
<P align=justify><B>How does the board of directors recommend that I vote?</B>
</P>
<P align=justify>Our board of directors recommends that you vote your shares:
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>&#147;For&#148; the approval of the plan of conversion; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>&#147;For&#148; the election of all nominees for directors; and
    </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>&#147;For&#148; the ratification of the continued appointment of
      the independent registered public accounting firm.
</P></TD></TR></TABLE>
<P align=justify><B>Can I change my vote after submitting my proxy?</B> </P>
<P align=justify>Yes. You may revoke your proxy and change your vote at any time
before the final vote at the annual and special meeting. If you are a
stockholder of record, you may vote again on a later date via the Internet or by
telephone (only your latest Internet or telephone proxy submitted prior to the
annual and special meeting will be counted), by signing and returning a new
proxy card with a later date, or by attending the annual and special meeting and
voting in person. <B>Your attendance at the annual and special meeting will not
automatically revoke your proxy unless you vote again at the annual and special
meeting or specifically request in writing that your prior proxy be revoked.</B>
You may also request that your prior proxy be revoked by delivering to us at
Lexaria Bioscience Corp., 156 Valleyview Road, Kelowna, British Columbia, Canada
V1X 3M4, Attention: Chief Executive Officer, a written notice of revocation
prior to the annual and special meeting. </P>
<P align=justify>If you hold your shares in street name, you will need to follow
the voting instructions provided by your broker, bank or other nominee regarding
how to revoke or change your vote. </P>
<P align=justify><B>How can I attend the annual and special meeting?</B> </P>
<P align=justify>You may call us at (250) 765-6424 or the toll-free number
1-866-__________________________if you want to obtain directions in order to
attend the annual and special meeting and vote in person. </P>
<P align=justify>You may be asked to present valid government issued picture
identification, such as a driver&#146;s license or passport, before being admitted to
the annual and special meeting. If you hold your shares in street name, you will
also need proof of ownership to be admitted to the annual and special meeting. A
recent brokerage statement or letter from your broker, bank or other nominee is
an example of proof of ownership. </P>
<P align=center>21</P>
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<P align=justify><B>Who pays the cost of proxy preparation and
solicitation?</B><B> </B></P>
<P align=justify>We pay the cost of proxy preparation and solicitation,
including the reasonable charges and expenses of brokers, banks or other
nominees for forwarding proxy materials to street name holders.</P>
<P align=justify>We are soliciting proxies primarily by mail. In addition, our
directors, officers and regular employees may solicit proxies by telephone,
facsimile, mail, other means of communication or personally. These individuals
will receive no additional compensation for such services. </P>
<P align=justify>We will ask brokers, banks, and other nominees to forward the
proxy materials to their principals and to obtain their authority to execute
proxies and voting instructions. We will reimburse them for their reasonable
charges and expenses. </P>
<P align=justify><B><I>Common Stock </I></B></P>
<P align=justify>Holders of our common stock have one vote for each share on
each matter submitted to a vote of our stockholders. Except as otherwise
provided by law or as provided in any resolution adopted by our board of
directors providing for the issuance of any series of preferred stock, the
holders of our common stock possess all voting power. There is no cumulative
voting in the election of directors. According to our bylaws, generally, all
elections and questions are decided by the vote of a majority in interest of our
stockholders present in person or represented by proxy and entitled to vote at
the meeting. According to our bylaws, generally, the presence in person or by
proxy of our stockholders entitled to cast at least one third of the shares
entitled to vote at the meeting constitutes a quorum. According to our bylaws,
generally, any action required to be taken at the meeting of our stockholders,
or any action which may be taken at such meeting, may be taken without a meeting
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon are present and voted. Our certificate of
incorporation provides that our board of directors is expressly authorized to
make, alter or repeal our bylaws.</P>
<P align=justify>The holders of our common stock are entitled to receive, when,
as and if declared by our board of directors, out of funds legally available
therefore, dividends payable in cash, stock or otherwise. Our board of directors
is not obligated to declare a dividend. Any future dividends will be subject to
the discretion of our board of directors and will depend upon, among other
things, future earnings, the operating and financial condition of our company,
its capital requirements, general business conditions and other pertinent
factors. It is not anticipated that dividends will be paid in the foreseeable
future.</P>
<P align=justify>Upon any liquidation of our company, the remaining net assets
of our company are to be distributed pro rata to the holders of our common
stock, to the exclusion of holders of our preferred stock.</P>
<P align=justify>Our common stock is not convertible or redeemable and has no
preemptive, subscription or conversion rights. There are no conversions,
redemption, sinking fund or similar provisions regarding our common stock.</P>
<P align=center><B>PROPOSAL 1 &#150; THE CONTINUATION </B></P>
<P align=justify><B>General Overview of the Continuation </B></P>
<P align=justify>On August 31, 2017, our board of directors determined that it
would be in the best interest of our company to change our corporate
jurisdiction from the State of Nevada to the Province of British Columbia,
Canada. We intend to change the corporate jurisdiction of Lexaria from the State
of Nevada to the Province of British Columbia, Canada by means of a process
called a &#147;conversion&#148; under the <I>Nevada Revised Statutes</I> and a
&#147;continuation&#148; under the <I>Business Corporations Act</I> (British
Columbia).</P>
<P align=justify>If our stockholders approve the proposed continuation then we
intend to file articles of conversion with the Secretary of State of Nevada and
a continuation application with the Registrar of Companies of British Columbia.
Upon receipt of a certificate of continuation from the Registrar of Companies of
British Columbia, we will be continued as a British Columbia corporation and
will be governed by the laws of British Columbia. The assets and liabilities of
the British Columbia corporation immediately after the continuation will be
identical to the assets and liabilities of the Nevada corporation immediately
prior to the continuation. The officers and directors of Lexaria Nevada
immediately before the continuation becomes effective will be the officers and
directors of the British Columbia corporation. The change of our corporate
jurisdiction will not result in any material change to our business and will not
have any effect on the relative equity or voting interests of our stockholders.
Each previously outstanding share of our common and preferred stock will become
one common or preferred share, as the case may be, of the British Columbia
corporation. </P>
<P align=center>22</P>
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<P align=justify>The continuation and the plan of conversion are also subject to
  approval by the holders of a majority of the outstanding shares of our common
stock and the Canadian Securities Exchange. </P>
<P align=justify>The change of our corporate jurisdiction will result in changes
in the rights and obligations of our current stockholders under applicable
corporate laws. For an explanation of these differences see the discussion of
&#147;Material Differences of the Rights of Our Stockholders After the Change of Our
Corporate Jurisdiction&#148; beginning on page 28 of this proxy statement/prospectus.
In addition, the change of our corporate jurisdiction may have material tax
consequences to stockholders which may or may not be adverse to any particular
stockholder depending on the stockholder&#146;s particular circumstances. For a more
detailed explanation of the tax consequences, see &#147;Certain United States Federal
Income Tax Consequences of the Change of Our Corporate Jurisdiction&#148; and
&#147;Certain Canadian Federal Income Tax Consequences of the Change of Our Corporate
Jurisdiction&#148; beginning on pages 33 and 37, respectively, of this proxy
statement/prospectus. </P>
<P align=justify><B>Certain Terms of the Plan of Conversion </B></P>
<P align=justify>A summary of the material terms of the plan of conversion is
set forth below. The full text of the plan of conversion is attached as Schedule
&#147;A&#148; to this proxy statement/prospectus. </P>
<P align=justify><B><I>Principal Terms of the Conversion </I></B></P>
<P align=justify>The plan of conversion provides that at the effective time of
the conversion, Lexaria will be converted into Lexaria Bioscience Corp., a
British Columbia corporation continued under the <I>Business Corporations
Act</I> (British Columbia). At the effective time of the conversion, the
continuation application and articles of Lexaria BC, in the forms attached as
Appendix &#147;A&#148; and Appendix &#147;B&#148;, respectively, of the plan of conversion will
replace the articles of incorporation and bylaws of Lexaria. </P>
<P align=justify><B><I>Effective Time of the Conversion</I></B> </P>
<P align=justify>The plan of conversion provides that, as promptly as
practicable after the approval of the plan of conversion by the holders of a
majority of the outstanding shares of common stock of Lexaria, Lexaria will file
the articles of conversion with the Secretary of State of Nevada and a
continuation application with the Registrar of Companies of British Columbia.
The plan of conversion provides that the effective date and time of the
conversion will be the date and time on and at which the continuation becomes
effective under the laws of Nevada or the date and time on and at which the
continuation becomes effective under the laws of British Columbia, whichever
occurs later. </P>
<P align=justify><B><I>Manner and Basis of Converting Shares of Common
Stock</I></B> </P>
<P align=justify>At the effective time of the conversion, each share of common
stock of Lexaria, with a par value of $0.001 per share, issued and outstanding
immediately before the effective time of the conversion will, by virtue of the
conversion and without any action on the part of the holder thereof, be
converted into and become one validly issued, fully paid and non-assessable
common share, without par value, of Lexaria BC. </P>
<P align=justify><B><I>Manner and Basis of Converting Options and Other
Rights</I></B> </P>
<P align=justify>At the effective time of the conversion, each option, warrant
or other right to acquire shares of common stock of Lexaria Nevada that is or
was outstanding immediately before the effective time of the conversion will, by
virtue of the conversion and without any action on the part of the holder
thereof, be converted into and become an option, warrant or right, respectively,
to acquire, upon the same terms and conditions, the number of common shares of
Lexaria BC that such holder would have received had such holder exercised such
option, warrant or right, respectively, in full immediately before the effective
time of the conversion (whether or not such option, warrant or right was then
exercisable) and the exercise price per share under each such option, warrant or
right, respectively will be equal to the exercise price per share thereof immediately before the
effective time of the conversion, unless otherwise provided in the instrument or
agreement granting such option, warrant or right, respectively. </P>
<P align=center>23</P>
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<P align=justify><B><I>Effect of the Conversion</I></B> </P>
<P align=justify>At the effective time of the conversion, Lexaria will cease to
exist as a Nevada corporation, and the title to all real estate vested by deed
or otherwise under the laws of any jurisdiction, and the title to all other
property, real and personal, owned by Lexaria, and all debts due to Lexaria on
whatever account, as well as all other things in action or belonging to Lexaria
immediately before the conversion, will be vested in Lexaria BC, without
reservation or impairment. Lexaria BC will have all of the debts, liabilities
and duties of Lexaria Nevada, and all rights of creditors accruing and all liens
placed upon any property of Lexaria up to the effective time of the conversion
will be preserved unimpaired, and all debts, liabilities and duties of Lexaria
immediately before the conversion will attach to Lexaria BC and may be enforced
against it to the same extent as if it had incurred or contracted such debts,
liabilities and duties. Any proceeding pending against Lexaria may be continued
as if the conversion had not occurred or Lexaria BC may be substituted in the
proceeding in place of Lexaria. </P>
<P align=justify><B><I>Amendment</I></B> </P>
<P align=justify>The boards of directors of Lexaria may amend the plan of
conversion at any time before the effective time of conversion, provided,
however, that an amendment made subsequent to the approval of the conversion by
the stockholders of Lexaria must not (a) alter or change the manner or basis of
exchanging a stockholder&#146;s shares of Lexaria for a stockholder&#146;s shares, rights
to purchase a stockholder&#146;s shares, or other securities of Lexaria BC, or for
cash or other property in whole or in part or (b) alter or change any of the
terms and conditions of the plan of conversion in a manner that adversely
affects the stockholders of Lexaria. </P>
<P align=justify><B><I>Termination</I></B> </P>
<P align=justify>At any time before the effective time of the conversion, the
plan of conversion may be terminated and the conversion may be abandoned by the
board of directors of Lexaria, notwithstanding approval of the plan of
conversion by the stockholders of Lexaria. We anticipate that the plan of
conversion will be terminated if the proposed conversion is not approved by our
stockholders at the annual and special meeting. </P>
<P align=justify><B>Appraisal Rights </B></P>
<P align=justify>Under Nevada law, pursuant to the NRS &#167;&#167; 78.3793, 92A.300 &#150;
92A.500 (inclusive) (the &#147;<B>Dissenters Rights Provisions</B>&#148;) our stockholders
are entitled, after complying with certain requirements of Nevada law, to

dissent from approval of the continuation pursuant to Chapter 92A of the
<I>Nevada Revised Statutes</I> of the State of Nevada (<B>&#147;NRS&#148;</B>) and to be
paid the &#147;fair value&#148; of their shares of our common stock exclusive of any
element of value arising from the accomplishment or expectation of the
continuation, if the continuation is completed. Stockholders electing to
exercise these appraisal rights must comply with the provisions of Chapter 92A
of the NRS in order to perfect their rights. We will require strict compliance
with the statutory procedures.</P>
<P align=justify>In the context of the continuation, the Dissenters&#146; Rights
Provisions provides that the former stockholders may elect to have our company
purchase their shares held by the former stockholders for a cash price that is
equal to the &#147;fair value&#148; of such shares, as determined in a judicial proceeding
in accordance with the Dissenters&#146; Rights Provisions. The fair value of the
shares of any former stockholder means the value of such shares immediately
before the effectuation of the continuation excluding any appreciation or
depreciation in anticipation of the continuation, unless exclusion of any
appreciation or depreciation would be inequitable. </P>
<P align=justify>A copy of the Dissenters&#146; Rights Provisions is attached as
Schedule &#147;B&#148; hereto. If you wish to exercise your dissenters&#146; rights or preserve
the right to do so, you should carefully review Schedule &#147;B&#148; hereto. IF YOU FAIL
TO COMPLY WITH THE PROCEDURES SPECIFIED IN THE DISSENTERS&#146; RIGHTS PROVISIONS IN
A TIMELY MANNER, YOU MAY LOSE YOUR DISSENTERS&#146; RIGHTS. BECAUSE OF THE COMPLEXITY
OF THOSE PROCEDURES, YOU SHOULD SEEK THE ADVICE OF COUNSEL IF YOU ARE
CONSIDERING EXERCISING YOUR DISSENTERS&#146; RIGHTS. Former stockholders who perfect
their dissenters&#146; rights by complying with the procedures set forth in the
Dissenters&#146; Rights Provisions will have the fair value of their Shares
determined by a Nevada state district court and will be entitled to receive a
cash payment equal to such fair value. Any such judicial determination of the fair value of shares could be based upon
any valuation method or combination of methods the court deems appropriate. The
value so determined could be more or less than the continuation to be paid in
connection with the continuation. In addition, former stockholders who invoke
dissenters&#146; rights may be entitled to receive payment of a fair rate of interest
from the effective time of the continuation on the amount determined to be the
fair value of their shares. If you do NOT plan to seek an appraisal of all of
your shares, please execute (or, if you are not the record holder of such
shares, to arrange for such record holder or such holder&#146;s duly authorized
representative to execute) and mail postage paid the enclosed Letter of
Transmittal to the agent at the address set forth in the Letter of Transmittal.
You should note that surrendering to Lexaria certificates for your shares will
constitute a waiver of your appraisal rights under the NRS. </P>
<P align=center>24</P>
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<P align=justify>All demands for appraisal should be addressed to Chris Bunka at
  Lexaria Bioscience Corp., 156 Valleyview Road, Kelowna, British Columbia, Canada
  V1X 3M4, before the vote on the continuation is taken at the annual and special
  meeting, and should be executed by, or on behalf of, the record holder of the
  shares of the common stock. The demand must reasonably inform us of the identity
  of the stockholder and the intention of the stockholder to demand appraisal of
his, her or its shares of our common stock.</P>
<P align=justify>In view of the complexity of the Dissenter&#146;s Rights Provisions
in Chapter 92A, stockholders desiring to dissent from the continuation and
pursue appraisal rights should consult their legal advisers.</P>
<P align=justify><B>Reasons for the Continuation </B></P>
<P align=justify>We believe that the change of our corporate jurisdiction to the
Province of British Columbia, Canada will more accurately reflect our
operations, which are headquartered in and managed from the Province of British
Columbia, Canada. We also believe that changing our corporate jurisdiction to
the Province of British Columbia, Canada more accurately reflects the identity
of our company because Canada is the country from which we have derived much of
our financing, and our common stock is listed on the Canadian Securities
Exchange in Canada. Furthermore, all of our officers and the majority of our
directors are located in Canada, and a large amount of our issued and
outstanding stock is owned of record by persons not resident in the United
States. We believe that the change of our corporate jurisdiction may also enable
us to qualify as a &#147;foreign private issuer&#148; in the United States. As a foreign
private issuer, we believe that our regulatory compliance costs may decrease and
our ability to raise capital should improve because it should, under certain
circumstances, enable us to issue securities in private placement offerings with
a four-month hold period (for which we believe there is more demand than there
is for securities issued in a private placement with a minimum hold period of
six-months, which is currently the case) without limiting our access to the U.S.
capital markets.</P>
<P align=justify>In addition to the potential benefits described above, the
continuation will impose some moderate costs on our company and will expose us
and our stockholders to some risk, including the risk of liability for taxation
and the potential for greater impediments to enforcement of judgments and orders
of United States courts and regulatory authorities against our company following
the consummation of the continuation. Please see the section entitled &#147;Risk
Factors&#148; commencing on page 10 for a more comprehensive discussion regarding the
risk factors of the continuation. There are also differences between the laws of
the State of Nevada and the laws of the Province of British Columbia. Please see
the section entitled &#147;Material Differences of the Rights of Our Stockholders
After the Change of Our Corporate Jurisdiction&#148; commencing on page 28 for a more
comprehensive discussion of our stockholders&#146; rights before and after the
proposed change of our corporate jurisdiction. Regardless of the risks and costs
associated with the change of our corporate jurisdiction, our board of directors
has determined that the potential advantages of the change of our corporate
jurisdiction outweigh the risks and costs.</P>
<P align=justify>Although our board of directors evaluated variations in the
basic structure of the continuation, our board of directors believes, based on
advice from management and its professional advisors, that the proposed
structure of our company as a British Columbia corporation is the best structure
to provide the advantages which our company is seeking without substantial
operational or financial risks. No assurance can be given, however, that the
anticipated benefits of the continuation will be realized.</P>
<P align=justify><B>Corporate Law Requirements </B></P>
<P align=justify>In order for our company to carry out the continuation, it will
be necessary for us to comply with the provisions of the corporate law of the
State of Nevada<I> </I>and the <I>Business Corporations Act </I>(British
Columbia). </P>
<P align=center>25</P>
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<P align=justify>The corporate law of the State of Nevada allows a corporation
that is incorporated under the Nevada corporate law to convert into a foreign
entity pursuant to a conversion approved by the stockholders of the Nevada
corporation. Pursuant to the Nevada corporate law, the board of directors of
Lexaria has adopted the plan of conversion attached as Schedule &#147;A&#148; to this
proxy statement/prospectus and Lexaria, subject to approval by our
stockholders.</P>
<P align=justify>If holders of a majority of the voting power of our
stockholders vote to approve the plan of conversion, we intend to file articles
of conversion with the Nevada Secretary of State. After we file the articles of
conversion and pay to the Secretary of State of the State of Nevada all
prescribed fees, and we comply with all other requirements, the conversion will
become effective in accordance with the Nevada corporate law. </P>
<P align=justify>As we are proposing to continue into the jurisdiction of the
Province of British Columbia, we must also comply with the applicable provisions
of the <I>Business Corporations Act </I>(British Columbia) in order to
successfully complete the continuation. </P>
<P align=justify>A foreign corporation is permitted to continue from a foreign
jurisdiction into British Columbia by filing with the Registrar of Companies of
British Columbia a continuation application and providing to the Registrar of
Companies certain records and information that the Registrar of Companies may
require. We expect that the continuation of Lexaria into British Columbia will
be effective on the date and time that the continuation application, the form of
which is attached hereto as Appendix &#147;A&#148; of the plan of conversion, is filed
with the Registrar of Companies, assuming we provide the Registrar of Companies
with any records and information it may require. After Lexaria Nevada is
continued into British Columbia, the Registrar of Companies must issue a
certificate of continuation showing the name of the continued company (expected
to be &#147;Lexaria Bioscience Corp.&#148;) and the date and time on which it is continued
into British Columbia as a continued company. </P>
<P align=justify>If the continuation is approved by our stockholders, we expect
to file the articles of conversion and the continuation application promptly.
</P>
<P align=justify><B>Exchange of Share Certificates </B></P>
<P align=justify>Upon the effectiveness of the continuation, Lexaria BC will
mail a letter of transmittal with instructions to each holder of record of
shares of common stock of Lexaria outstanding immediately before the effective
time for use in exchanging certificates formerly representing shares of common
stock of Lexaria for certificates representing shares of Lexaria BC.
Certificates should not be surrendered by the holder thereof until they have
received the letter of transmittal from Lexaria BC.</P>
<P align=justify><B>Description of Our Securities after the Continuation
</B></P>
<P align=justify>Upon completion of the continuation, we will be authorized to
issue an unlimited number of common shares without par value and an unlimited
number of preferred shares without par value. </P>
<P align=justify><B><I>Common Shares</I></B></P>
<P align=justify>The holders of common shares of Lexaria BC will be entitled to
dividends, if, as and when declared by the board of directors of Lexaria BC,
entitled to one vote per share at meetings of shareholders or Lexaria BC and,
upon dissolution, entitled to share equally in such assets of Lexaria BC as are
distributable to the holders of common shares of Lexaria BC and subject to the
rights of the holders of preferred shares. </P>
<P align=justify><B><I>Preferred Shares</I></B> </P>
<P align=justify>Lexaria BC will be authorized to issue preferred shares in one
or more series. Subject to the <I>Business Corporations Act</I> (British
Columbia), the directors of Lexaria BC may, by resolution, if none of the shares
of any particular series are issued, alter articles of Lexaria BC and authorize
the alteration of the notice of articles of Lexaria BC, as the case may be, to
do one or more of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>determine the maximum number of shares of that series
      that Lexaria BC is authorized to issue, determine that there is no such
      maximum number, or alter any such determination;
</P></TD></TR></TABLE>
<p align="center">26</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>create an identifying name for the shares of that series,
      or alter any such identifying name; and </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>attach special rights or restrictions to the shares of
      that series, or alter any such special rights or restrictions.
  </P></TD></TR></TABLE>
<P align=justify>The holders of preferred shares will be entitled, on the
liquidation or dissolution of Lexaria BC, whether voluntary or involuntary, or
on any other distribution of the assets of Lexaria BC among shareholders of
Lexaria BC for the purpose of winding up its affairs, to receive, before any
distribution is made to the holders of common shares of Lexaria BC or any other
shares of Lexaria BC ranking junior to the preferred shares with respect to the
repayment of capital on the liquidation or dissolution of Lexaria BC, whether
voluntary or involuntary, or on any other distribution of the assets of Lexaria
BC among shareholders of Lexaria BC for the purpose of winding up its affairs,
the amount paid up with respect to each preferred share held by them, together
with the fixed premium (if any) thereon, all accrued and unpaid cumulative
dividends (if any and if preferential) thereon, which for such purpose will be
calculated as if such dividends were accruing on a day-to-day basis up to the
date of such distribution, whether or not earned or declared, and all declared
and unpaid non-cumulative dividends (if any and if preferential) thereon. After
payment to the holders of the preferred shares of the amounts so payable to
them, they will not, as such, be entitled to share in any further distribution
of the property or assets of Lexaria BC, except as specifically provided in the
special rights and restrictions attached to any particular series. All assets
remaining after payment to the holders of preferred shares as aforesaid will be
distributed rateably among the holders of common shares of Lexaria BC. </P>
<P align=justify>Except for such rights relating to the election of directors on
a default in payment of dividends as may be attached to any series of the
preferred shares by the directors, holders of preferred shares will not be
entitled, as such, to receive notice of, or to attend or vote at, any general
meeting of shareholders of Lexaria BC.</P>
<P align=justify><B>Material Differences of the Rights of Our Stockholders After
the Change of Our Corporate Jurisdiction </B></P>
<P align=justify>After the continuation, our stockholders will become the
holders of shares in the capital of a British Columbia corporation organized
under the <I>Business Corporations Act</I> (British Columbia) (the
<B>&#147;BCBCA&#148;</B>). The <I>Nevada Revised Statutes</I> of Nevada (the <B>&#147;NRS&#148;</B>)
differs in many respects from the BCBCA. The following is a summary description
of the principal differences that could affect the rights of our stockholders.
</P>
<P align=justify><B><I>Director Election </I></B></P>
<P align=justify>Under the BCBCA, shareholders of a corporation must, by
ordinary resolution at each annual meeting at which an election of directors is
required, elect directors to hold office. An ordinary resolution means a
resolution passed at a meeting of shareholders by a simple majority of the votes
cast by shareholders voting shares that carry the right to vote at a meeting.
Under the BCBCA, public companies such as our company must have at least three
directors. The proposed articles of Lexaria BC provide that changes in the
number of directors must be approved by ordinary resolution. However, the
proposed articles of Lexaria BC also provide that the directors of Lexaria BC
may appoint up to one-third of the number of the directors at the time of the
appointments (other than directors appointed by this method). Any director so
appointed ceases to hold office immediately before the next election or
appointment of directors, but is eligible for re-election or re-appointment.
</P>
<P align=justify>The NRS requires that a corporation have a minimum of one
director. The number of directors must be fixed by, or in the manner provided
in, the bylaws, unless the certificate of incorporation fixes the number of
directors, in which case a change in the number of directors must be made only
by amendment to the certificate, which requires stockholder approval. The number
of directors may be changed by resolution of the board of directors if the
certificate of incorporation or bylaws so provide. The certificate of
incorporation of Lexaria provides that the board of directors of Lexaria must
determine the number of directors, subject to the bylaws of Lexaria. The bylaws
of Lexaria provide that the number of directors must be a minimum of 1 and a
maximum of 8 unless and until otherwise determined by a vote of a majority of
the board of directors of Lexaria. Within these limits, the number of directors
must be determined from time to time by resolution of the board of directors or
by the stockholders at a meeting. The bylaws of Lexaria provide that generally
all elections must be decided by the vote of a majority in interest of the
stockholders present in person or represented by proxy and entitled to vote at
the meeting. </P>
<P align=center>27</P>
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<P align=justify><B><I>Removal of Directors </I></B></P>
<P align=justify>Under the BCBCA, a company may remove a director before the
expiration of the director&#146;s term of office by a special resolution. The special
resolution means a resolution passed at a meeting of shareholders by at least
2/3 of the votes cast by shareholders voting shares that carry the right to vote
at a meeting. </P>
<P align=justify>Under the NRS, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors. </P>
<P align=justify><B><I>Personal Liability of Directors and Derivative Actions
</I></B></P>
<P align=justify>The BCBCA entitles a shareholder, including a beneficial owner
of a share of a corporation, or a director of a corporation and any person whom
the court considers an appropriate person to make application, with the approval
of the Supreme Court of British Columbia, and in the name of the corporation, to
commence legal proceedings to enforce a right, duty or obligation owed to the
corporation that could be enforced by the corporation itself or to obtain
damages for any breach of a right, duty or obligation whether the right, duty or
obligation arises under the BCBCA or otherwise. Derivative actions, therefore,
may be brought by shareholders on behalf of a corporation against the
corporation&#146;s directors for damages or to enforce rights or duties owed by the
director to the corporation. With leave of the court, a complainant may, in the
name of and on behalf of a corporation, defend a legal proceeding brought
against the corporation. Under the BCBCA, there is no statutory limitation with
respect to the monetary liability which may be imposed on directors. </P>
<P align=justify>Under the NRS, a stockholder may bring a derivative action
against officers and directors of a corporation for breach of their fiduciary
duties to a corporation and its stockholders or for other fraudulent misconduct,
so long as the stockholder was a stockholder of the corporation at the time of
the transaction in question, or the stockholder obtained the stock thereafter
solely by operation of law, and remained so through the duration of the suit;
the plaintiff makes a demand on the directors of the corporation to assert the
corporate claim unless the demand would be futile; and the plaintiff is an
adequate representative of the other stockholders. </P>
<P align=justify>The NRS permits a corporation to adopt a provision in its
certificate of incorporation eliminating the liability of a director to the
corporation or its stockholders for monetary damages for breach of the
director&#146;s fiduciary duty of care, except under certain circumstances. The
certificate of incorporation of Lexaria provides that no director of the
corporation will be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided, however, that this
provision shall not eliminate or limit the liability of a director </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>from a breach of the director&#146;s duty of loyalty to the
      corporation or its stockholders; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>from acts or omissions not in good faith involving
      intentional misconduct or a knowing violation of law; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>from unlawfully paying a dividend or approving Nevada
      stock repurchases or redemptions; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>from a transaction where the director derived an improper
      personal benefit. </P></TD></TR></TABLE>
<P align=justify><B><I>Interested Shareholder Transactions and Anti-Takeover
Provisions </I></B></P>
<P align=justify>Some powers granted to companies under the NRS may allow a
Nevada corporation to make itself potentially less vulnerable to hostile
takeover attempts. These powers include the ability to: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>require that notice of nominations for directors be given
      to the corporation prior to a meeting where directors will be elected,
      which may give management an opportunity to make a greater effort to
      solicit its own proxies; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>only allow the board of directors to call a special
      meeting of stockholders, which may thwart a raider&#146;s ability to call a
      meeting to make disruptive changes; </P></TD></TR></TABLE>
<p align="center">28</p>
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<TABLE
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cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>provide that the power to determine the number of
      directors and to fill vacancies be vested solely in the board, so that the
      incumbent board, not a raider, would control vacant board positions;
    </P></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="5%">&nbsp; </TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>provide for supermajority voting in some circumstances,
      including mergers and certificate of incorporation amendments;
  </P></TD></TR></TABLE>
<P align=justify>There is no similar provision under the BCBCA. </P>
<P align=justify><B><I>Amendments to the Governing Documents </I></B></P>
<P align=justify>A BCBCA corporation may resolve to alter its articles: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>by the type of resolution specified by the BCBCA;
  </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>if the BCBCA does not specify the type of resolution, by
      the type of resolution specified by the articles; </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>if neither the BCBCA nor the articles specify the type of
      resolution, by a special resolution. </P></TD></TR></TABLE>
<P align=justify>The special resolution means a resolution passed at a meeting
of shareholders by at least 2/3 of the votes cast by shareholders voting shares
that carry the right to vote at a meeting. </P>
<P align=justify>According to the proposed articles of Lexaria BC, subject to
the BCBCA, Lexaria BC may by resolution of the directors: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>create one or more classes or series of shares or, if
      none of the shares of a class or series of shares are allotted or issued,
      eliminate that class or series of shares; </P></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="5%">&nbsp; </TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>increase, reduce or eliminate the maximum number of
      shares that Lexaria BC is authorized to issue out of any class or series
      of shares or establish a maximum number of shares that Lexaria BC is
      authorized to issue out of any class or series of shares for which no
      maximum is established; </P></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="5%">&nbsp; </TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="5%">&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>if Lexaria BC is authorized to issue shares of a class of
      shares with par value: </P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD>
      <P align=justify>decrease the par value of those shares;</P></TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD>
      <P align=justify>if none of the shares of that class of shares are
      allotted or issued, increase the par value of those shares;</P></TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD>
      <P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares with par value into shares of smaller par value;
  or</P></TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=top width="5%">(iv) </TD>
    <TD>
      <P align=justify>consolidate all or any of its unissued, or fully paid
      issued, shares with par value into shares of larger par
  value;</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares without par value; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>consolidate all or any of its unissued, or fully paid
      issued, shares without par value; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares by way of a share dividend; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>change all or any of its unissued, or fully paid issued,
      shares with par value into shares without par value or all or any of its
      unissued shares without par value into shares with par value; </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>alter the identifying name of any of its shares; or
    </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>otherwise alter its shares or authorized share structure
      when required or permitted to do so by the BCBCA.
</P></TD></TR></TABLE>
<p align="center">29</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=justify>According to the proposed articles of Lexaria BC, Lexaria BC
may by resolution of the directors alter its notice of articles in order to
change its name or adopt or change any transaction of that name. Also, if the
BCBCA does not specify the type of resolution and the articles of Lexaria BC do
not specify another type of resolution, Lexaria BC may by resolution of the
directors alter the articles. </P>
<P align=justify>A BCBCA corporation may, by the type of shareholders&#146;
resolution specified by the articles, or, if the articles do not specify the
type of resolution, by a special resolution: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>create special rights or restrictions for, and attach
      those special rights or restrictions to, the shares of any class or series
      of shares, whether or not any or all of those shares have been issued;
    </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%"></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>vary or delete any special rights or restrictions
      attached to the shares of any class or series of shares, whether or not
      any or all of those shares have been issued. </P></TD></TR></TABLE>
<P align=justify>A right or special right attached to issued shares must not be
prejudiced or interfered with under the BCBCA or under the memorandum, notice of
articles or articles unless the shareholders holding the shares of the class or
series of shares to which the right or special right is attached consent by a
special separate resolution of those shareholders which, if passed at a meeting,
requires the majority of the votes specified in the articles for a special
separate resolution (or, failing which, a separate resolution) of that class or
series. If the articles do not specify the majority required, then a majority of
two-thirds of the votes cast is required. The special separate resolution is in
addition to the resolution authorizing the alterations.</P>
<P align=justify>The NRS provide that the vote of holders of a majority of the
outstanding shares entitled to vote is required to alter, amend, change or
repeal a corporation&#146;s certificate of incorporation, unless otherwise specified
in a corporation&#146;s certification of incorporation or bylaws. In addition, if the
amendment to the certificate of incorporation would increase or decrease the
aggregate number of authorized shares of a class, increase or decrease the par
value of the shares of such class, or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely, that
class is entitled to vote separately on the amendment whether or not it is
designated as voting stock. Furthermore, if the proposed amendment would alter
or change the powers, preferences or special rights of one or more series of any
class so as to affect them adversely, but will not so affect the entire class,
then only the shares of the series so affected by the amendment will be
considered a separate class for purposes of the class vote. The NRS reserves the
power to the stockholders to adopt, amend or repeal the bylaws unless the
certificate of incorporation confers such power on the board of directors in
addition to the stockholders. The certificate of incorporation of Lexaria
provides that the board of directors of Lexaria is expressly authorized to make,
alter or repeal our bylaws. </P>
<P align=justify><B><I>Shareholder Quorum and Voting Requirements </I></B></P>
<P align=justify>Under the BCBCA, the quorum for the transaction of business at
a meeting of shareholders of a company may be established by the articles. The
proposed articles of Lexaria BC provides that, generally, the quorum for the
transaction of business at a meeting of shareholders is 2 persons who are, or
who represent by proxy, shareholders who, in the aggregate, hold at least 1/20
of the issued shares entitled to be voted at the meeting.</P>
<P align=justify>Except where the BCBCA or the articles require approval by a
special resolution or unanimous resolution, a simple majority of the votes cast
by shareholders voting shares that carry the right to vote at a meeting is
required to approve any resolution properly brought before the stockholders.
</P>
<P align=justify>Under the NRS, a corporation&#146;s certificate of incorporation and
bylaws may specify the number of shares necessary to constitute a quorum at any
meeting of shareholders; provided, however, that a quorum may not consist of
less than one-third of the shares entitled to vote at the meeting. The bylaws of
Lexaria provide that the presence in person or by proxy of stockholders entitled
to cast at least one third of the shares entitled to vote at the meetings of
stockholders constitutes a quorum. </P>
<P align=justify>The bylaws of Lexaria provide that generally all elections and
questions must be decided by the vote of a majority in interest of the
stockholders present in person or represented by proxy and entitled to vote at
the meeting. </P>
<P align=center>30</P>
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noShade SIZE=5>
<!--$$/page=--><A name=page_35></A>
<P align=justify><B><I>Special Meeting of Shareholders </I></B></P>
<P align=justify>The BCBCA provides that a board of directors or the holders of
5% of the issued shares of a corporation with a right to vote can call or
requisition a special meeting. </P>
<P align=justify>Under the NRS, a special meeting may be called by a board of
directors or by any other person authorized to do so in the corporation&#146;s
certificate of incorporation or bylaws. The bylaws of Lexaria provide that
special meetings of the stockholders or of any class or series thereof entitled
to vote may be called by the President or by the chairman of the board of
directors, or at the request in writing by stockholders of record owning at
least 20% percent of the issued and outstanding voting shares of common stock of
Lexaria. </P>
<P align=justify><B><I>Votes Required for Extraordinary Transactions
</I></B></P>
<P align=justify>Under the BCBCA, approvals of amalgamations (except
amalgamations between a corporation and wholly owned subsidiaries),
consolidations, and sales, leases, or exchanges of substantially all the
property of a corporation, other than in the ordinary course of business of the
corporation requires approval by the stockholders by a special resolution at a
duly called meeting. The special resolution means a resolution passed at a
meeting of shareholders by at least 2/3 of the votes cast by shareholders voting
shares that carry the right to vote at a meeting. </P>
<P align=justify>Under the NRS, mergers or consolidations generally require the
approval of the holders of a majority of the outstanding stock of the
corporation entitled to vote and stockholder approval is not required by a
Nevada corporation: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>if it is the surviving corporation in a merger requiring
      the issuance of common stock not exceeding 20% of the corporation&#146;s common
      stock outstanding immediately prior to the merger, the merger agreement
      does not amend in any respect the survivor&#146;s certification of
      incorporation, and stockholder approval is not specifically mandated in
      the survivor&#146;s certification of incorporation; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>if it is the surviving corporation in a merger with a
      subsidiary in which it ownership was 90% or greater.
</P></TD></TR></TABLE>
<P align=justify>Unless a greater percentage is required by the certificate of
incorporation, a sale, lease, or exchange of all or substantially all the
property or assets of a Nevada corporation or an amendment to its certificate of
incorporation also requires the approval of the holders of a majority of the
outstanding stock entitled to vote on the matter. </P>
<P align=justify><B><I>Shareholder Action by Written Consent (In Lieu of a
Meeting) </I></B></P>
<P align=justify>Under the BCBCA, any action required or permitted to be taken
at a meeting of the stockholders by an ordinary resolution may be taken by a
written resolution signed by a special majority of the stockholders entitled to
vote on such resolution. The proposed articles of Lexaria BC provide that a
special majority is two-thirds of the votes cast on the resolution. Any action
required or permitted to be taken at a meeting of the stockholders by a special
resolution may be taken by a written resolution signed by all the shareholders
entitled to vote on such resolution. </P>
<P align=justify>Under the NRS, stockholders may execute an action by written
consent in lieu of a stockholder meeting, unless such right is eliminated in the
corporation&#146;s certificate of incorporation or bylaws, if holders of outstanding
stock representing not less than the minimum number of votes that would be
necessary to take the action at an annual or special meeting execute a written
consent providing for the action.</P>
<P align=justify><B><I>Rights of Dissent and Appraisal </I></B></P>
<P align=justify>Under the BCBCA, in certain circumstances, a registered
shareholder who disagrees with a proposed corporate action can require the
company to purchase his or her shares for their fair value. The actions giving
rise to a right of dissent are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>an alteration in the articles of a company by altering
      the restrictions on the business carried on or to be carried on by the
      company, or in its powers; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>various forms of corporation reorganizations,
      amalgamation, or arrangements (where permitted);
</P></TD></TR></TABLE>
<p align="center">31</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>a proposed sale, lease or exchange of all or
      substantially all of the corporation&#146;s assets; or </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>in respect of any resolution or court order or
      arrangement permitting dissent. </P></TD></TR></TABLE>
<P align=justify>Under the NRS, stockholders have the right to dissent and
exercise appraisal rights only with respect to forms of corporate mergers and
consolidations and not in the case of other fundamental change such as the sale
of all or substantially all of the assets of the corporation or amendments to
the certification of incorporation, unless so provided in the corporation&#146;s
certificate of incorporation. Stockholders who have neither voted in favor of
nor consented to the merger or consolidation have the right to seek appraisal of
their shares by demanding payment in cash for their shares equal to the fair
value of such shares. Fair value is determined by a court in an action timely
brought by the stockholders who have properly demanded appraisal of their
shares. In determining fair value, the court may consider all relevant factors,
including the rate of interest which the resulting or surviving corporation
would have had to pay to borrow money during the pendency of the court
proceedings. In addition, under the NRS, appraisal rights are not available for
any shares of the surviving corporation if the merger did not require the vote
of the stockholders of the surviving corporation. </P>
<P align=justify><B><I>Oppression Remedies </I></B></P>
<P align=justify>Under the BCBCA, a shareholder of a corporation has the right
to apply to a court on the grounds that the corporation is acting or proposes to
act in a way that is prejudicial to the shareholder. After the application is
filed, the court may make any order as it sees fit, including an order to
prohibit any act proposed by the corporation. </P>
<P align=justify>There are no equivalent statutory remedies under the NRS;
however, stockholders may be entitled to remedies for a violation of a
director&#146;s fiduciary duties under Nevada common law. </P>
<P align=justify><B><I>Inspection of Corporate Books and Records </I></B></P>
<P align=justify>Under the BCBCA, current shareholders of a corporation are
entitled to inspect, without charge, all of the records the corporation is
required to maintain under the BCBCA, except for minutes of directors&#146; meetings
and directors&#146; consent resolutions (and those of committees of directors) and
written dissents to resolutions of directors. However, shareholders have the
right to inspect the portions of minutes of directors&#146; meetings, or of
directors&#146; consent resolutions and other records that contain disclosures of
conflicts of interest by directors and senior officers, and the right to inspect
disclosures of certain financial assistance made by the corporation.</P>
<P align=justify>Under NRS, stockholders have the right for any proper purpose
to inspect, upon written demand under oath stating the purpose for such
inspection, the corporation&#146;s stock ledger, list of stockholders and its other
books and records, and to make copies or extracts of the same. A proper purpose
means a purpose reasonably related to a person&#146;s interests as a stockholder.
</P>
<P align=justify><B>Accounting Treatment of the Change of Our Corporate
Jurisdiction </B></P>
<P align=justify>For United States accounting purposes, the change of our
corporate jurisdiction from the State of Nevada to the Province of British
Columbia, Canada by means of the continuation represents a non-substantive
exchange to be accounted for in a manner consistent with a transaction between
entities under common control. All assets, liabilities, revenues and expenses
will be reflected in the accounts of Lexaria BC based on existing carrying
values at the date of the exchange. The historical comparative figures of
Lexaria BC will be those of Lexaria.</P>
<P align=justify>We currently prepare our financial statements in accordance
with the United States generally accepted accounting principles and will begin
to submit our financial statements in accordance with IFRS after the
consummation of the change of our corporate jurisdiction.</P>
<P align=justify><B>Certain United States Federal Income Tax Consequences of the
Change of Our Corporate Jurisdiction </B></P>
<P align=justify>The following is a general summary of certain U.S. federal
income tax considerations applicable to Shareholders resulting from the  change of our
corporate jurisdiction from the State of Nevada to the Province of British
Columbia, Canada by means of the continuation (the &#147;Continuation&#148;) and the
ownership and disposition of Lexaria BC Shares.</P>
<P align=center>32</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=justify>This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a Shareholder. For example, it does
not take into account the individual facts and circumstances of any particular
Shareholder that may affect the U.S. federal income tax considerations
applicable to such holder, nor does it address the state and local, federal
estate and gift, federal alternative minimum tax or foreign tax consequences to
a Shareholder relating to the Continuation and the ownership and disposition of
Lexaria BC Shares acquired thereby. Accordingly, this summary is not intended to
be, and should not be construed as, legal or U.S. federal income tax advice with
respect to any Shareholder. Each Shareholder is urged to consult its own tax
advisor regarding the U. S. federal tax consequences which may apply as a result
of the Continuation and the ownership and disposition of Lexaria and Lexaria BC
shares.</P>
<P align=justify>No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the &#147;IRS&#148;) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences to Shareholders as a result
of the of the Continuation. This summary is not binding on the IRS, and the IRS
is not precluded from taking a position that is different from, and contrary to,
the positions taken in this summary. In addition, because the authorities on
which this summary are based are subject to various interpretations, the IRS and
the U.S. courts could disagree with one or more of the positions taken in this
summary.</P>
<P align=justify>This summary is based on the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with
Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the &#147;Canada-U.S. Tax Convention&#148;), and U.S. court decisions that are applicable
and, in each case, as in effect and available, as of the date of this
registration statement. Any of the authorities on which this summary is based
could be changed in a material and adverse manner at any time, and any such
change could be applied on a retroactive or prospective basis which could affect
the U.S. federal income tax considerations described in this summary. This
summary does not discuss the potential effects, whether adverse or beneficial,
of any proposed legislation that, if enacted, could be applied on a retroactive
or prospective basis.</P>
<P align=justify>As used in this summary, the term &#147;U.S. Holder&#148; means a
beneficial owner of Lexaria Shares (or, after the Continuation has been
consummated, a beneficial owner of Lexaria BC Shares) that is for U.S. federal
income tax purposes:</P>
<P align=justify>(a) an individual who is a citizen or resident of the
U.S.;<BR>(b) a corporation, or other entity classified as a corporation that is
created or organized in or under the laws of the U.S. or any state in the U.S.,
including the District of Columbia; <BR>(c) an estate if the income of such
estate is subject to U.S. federal income tax regardless of the source of such
income; or <BR>(d) a trust if (i) such trust has validly elected to be treated
as a U.S. person for U.S. federal income tax purposes; or (ii) is subject to the
supervision of a court within the United States and the control of one or more
U.S. persons as described in the Code.</P>
<P align=justify>For purposes of this summary, a &#147;Non-U.S. Holder&#148; is a
beneficial owner of Lexaria Shares (or, after the Continuation, a beneficial
owner of Lexaria BC Shares) that is neither a U.S. Holder nor a partnership.</P>
<P align=justify>This summary does not address the U.S. federal income tax
considerations of the Continuation to Shareholders that are subject to special
provisions under the Code, including: (a) Shareholders that are tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (b) Shareholders that are financial institutions,
underwriters, insurance companies, real estate investment trusts, or regulated
investment companies; (c) Shareholders that are broker-dealers, dealers, or
traders in securities or currencies that elect to apply a mark-to-market
accounting method; (d) Shareholders that have a &#147;functional currency&#148; other than
the U.S. dollar; (e) Shareholders that own Lexaria Shares (or after the
Continuation is consummated, Lexaria BC Shares) as part of a straddle, hedging
transaction, conversion transaction, constructive sale, or other arrangement
involving more than one position; (f) Shareholders that acquired Lexaria Shares
(or after the Continuation is consummated, Lexaria BC Shares) in connection with
the exercise of employee stock options or otherwise as compensation for
services; (g) Shareholders that hold Lexaria Shares (or after the Continuation
is consummated, Lexaria BC Shares) other than as a capital asset within the
meaning of Section 1221 of the Code (generally, property held for investment
purposes); and (h) partnerships and other pass-through entities (and investors
in such partnerships and entities).</P>
<P align=center>33</P>
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<P align=justify>This summary also does not address the U.S. federal income tax
considerations applicable to Shareholders who are: (a) U.S. expatriates or
former long-term residents of the U.S.; (b) persons that have been, are, or will
be a resident or deemed to be a resident in Canada for purposes of the <I>Income
Tax Act</I> (Canada) (the <B>&#147;Canadian Act&#148;</B>); (c) persons that use or hold,
will use or hold, or that are or will be deemed to use or hold Lexaria Shares
(or after the Continuation is consummated, Lexaria BC Shares) in connection with
carrying on a business in Canada; (d) persons whose Lexaria Shares (or after the
Continuation is consummated, Lexaria BC Shares) constitute &#147;taxable Canadian
property&#148; under the Canadian Act; or (e) persons that have a permanent
establishment in Canada for the purposes of the Canada-U.S. Tax Convention.
Shareholders that are subject to special provisions under the Code, including
Shareholders described immediately above, should consult their own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences relating to
the Continuation and the ownership and disposition of Lexaria BC Shares received
pursuant to the Continuation.</P>
<P align=justify>Finally, this summary does not address the U.S. federal income
tax consequences of transactions effected prior or subsequent to, or
concurrently with the Continuation, including, without limitation: any vesting,
conversion, assumption, disposition, exercise, exchange or other transaction
involving any rights to acquire Lexaria Shares or Lexaria BC Shares, including
any options or warrants of Lexaria; and any transaction, other than the
Continuation, in which securities of Lexaria or Lexaria BC are acquired.</P>
<P align=justify>If an entity that is classified as a partnership (or
&#147;pass-through&#148; entity) for U.S. federal income tax purposes holds Lexaria Shares
(or after the Continuation is consummated, Lexaria BC Shares), the U.S. federal
income tax consequences to such partnership and the partners of such partnership
of participating in the Continuation and the ownership of Lexaria BC Shares
received pursuant to the Continuation generally will depend on the activities of
the partnership and the status of such partners. Partners of entities that are
classified as partnerships for U.S. federal income tax purposes should consult
their own tax advisors regarding the U.S. federal income tax consequences of the
Continuation and the ownership and disposition of Lexaria BC Shares received
thereby.</P>
<P align=justify><B>This discussion provides general information only and is not
intended to be tax advice to any particular Shareholder. Any U.S. Federal,
state, or local tax advice included in this discussion was not intended or
written to be used, and it cannot be used by any Shareholder, for the purpose of
avoiding any penalties that may be imposed by any U.S. Federal, state or local
governmental taxing authority or agency. This discussion was written solely to
support the promotion or marketing of the transactions or matters addressed in
this Memorandum. Investors should consult their own independent tax advisors in
determining the application to them of the U.S. federal income tax consequences
set forth below and any other U.S. federal, state, local foreign or other tax
consequences to them of the purchase, ownership and disposition of Lexaria and
Lexaria BC shares. Investors should note that no rulings have been or will be
sought from the IRS with respect to any of the U.S. federal income tax
consequences discussed below and no assurance can be given that the IRS will not
take positions contrary to the conclusions stated below.</B> </P>
<P align=justify><I>Tax Consequences of the Transaction to Lexaria and Lexaria
BC</I> </P>
<P align=justify>Neither Lexaria nor Lexaria BC will recognize a gain or loss in
the Continuation. </P>
<P align=justify><I>The U.S. Anti-Inversion Rules </I></P>
<P align=justify>Lexaria BC will be incorporated under the laws of British
Columbia, Canada. Generally, corporations incorporated outside of the United
States are not treated as U.S. corporations for U.S. federal income tax
purposes. However, as described below, Section 7874 of the Code treats certain
corporations incorporated outside the United States as U.S. corporations for
U.S. federal income tax purposes. Lexaria BC believes that it will be treated as
a U.S. corporation for U.S. federal income tax purposes as a result of the
Continuation.</P>
<P align=justify>Under Section 7874 of the Code, a corporation created or
organized outside the United States (i.e., a non-U.S. corporation) may
nevertheless be treated as a U.S. corporation for U.S. federal income tax
purposes (and, therefore, a U.S. tax resident and subject to U.S. federal income
tax on its worldwide income) if each of the following three conditions are met:
(i) the non-U.S. corporation acquires, directly or indirectly, or is treated as
acquiring under applicable Treasury Regulations, substantially all of the assets
held, directly or indirectly, by a U.S. corporation, (ii) after the acquisition,
the former stockholders of the U.S. corporation hold at least 80% (by vote or
value) of the shares of the non-U.S. corporation by reason of holding shares of
the U.S. corporation, and (iii) after the acquisition, the non-U.S. corporation&#146;s expanded affiliated group does not have
substantial business activities in the non-U.S. corporation&#146;s country of
organization or incorporation when compared to the expanded affiliated group&#146;s
total business activities.</P>
<P align=center>34</P>
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<P align=justify>As a result of the Continuation, (i) Lexaria BC will likely be
  treated as indirectly acquiring all of the assets of Lexaria and (ii) after the
  Continuation, the former stockholders of Lexaria will likely own, in the
  aggregate, at least 80% (by vote and value) of Lexaria BC common shares by
  reason of their ownership of Lexaria common stock. Lexaria BC believes that it
  does not have sufficient business activities in Canada, its country of
  incorporation, to satisfy the &#147;substantial business activity&#148; exception under
  applicable Section 7874 Treasury Regulations. Therefore, under current law,
  Lexaria BC should be treated as a U.S. corporation for U.S. federal income tax
purposes. </P>
<P align=justify>The remainder of this discussion assumes that Lexaria BC will
be treated as a U.S. corporation for U.S. federal income tax purposes. The U.S.
federal income tax consequences of owning Lexaria BC shares would be materially
different than those stated herein if, notwithstanding Lexaria BC&#146;s expectation,
Lexaria BC were to be treated as a non-U.S. corporation for U.S. federal income
tax purposes. See the discussion above under<I> &#147;Risk Factors&#151; We may be
classified as a Passive Foreign Investment Company&#133;&#148;</I><B><I> </I></B></P>
<P align=justify>No ruling from the IRS or legal opinion concerning the U.S.
federal income tax consequences of the Continuation has been obtained and none
will be requested. Thus, there can be no assurance that the IRS will not
challenge the qualification of the Continuation as a tax-deferred F
reorganization under Section 368(a)(1)(F) of the Code, or that, if challenged, a
U.S. court would not agree with the IRS.</P>
<P align=justify>If the Continuation qualifies as an F reorganization and
Lexaria BC is treated as a U.S. corporation for U.S. federal tax purposes under
Section 7874 of the Code, then the following U.S. federal income tax
consequences generally would result for U.S. Holders:</P>
<P align=justify>(a) no gain or loss will be recognized by a U.S. Holder on the
exchange of Lexaria Shares for Lexaria BC Shares pursuant to the Continuation;
<BR>(b) the tax basis of a U.S. Holder in the Lexaria BC Shares acquired in
exchange for Lexaria Shares pursuant to the Continuation would be equal to such
U.S. Holder&#146;s tax basis in Lexaria Shares exchanged; <BR>(c) the holding period
of a U.S. Holder with respect to the Lexaria BC Shares acquired in exchange for
Lexaria Shares pursuant to the Continuation will include such U.S. Holder&#146;s
holding period for Lexaria Shares; and <BR>(d) U.S. Holders who exchange Lexaria
Shares for Lexaria BC Shares pursuant to the Continuation generally would be
required to report certain information to the IRS on their U.S. federal income
tax returns for the tax year in which the Continuation occurs, and to retain
certain records related to the Continuation.</P>
<P align=justify>U.S. Holders are urged to consult their tax advisors as to the
particular consequences of the exchange of Lexaria stock for Lexaria BC shares
pursuant to the Continuation.</P>
<P align=justify><I>Distributions by Lexaria BC </I></P>
<P align=justify>The gross amount of cash distributions on Lexaria BC shares
would generally be taxable to U.S. Holders as dividend income to the extent of
the earnings and profits of Lexaria BC as determined for U.S. federal income
purposes. </P>
<P align=justify>To the extent that the amount of any distribution exceeds
Lexaria BC&#146;s earnings and profits, the distribution would generally first be
treated as a tax-free return of capital (with a corresponding reduction in the
adjusted tax basis of a U.S. holder&#146;s Lexaria BC common shares), and thereafter
would be taxed as a capital gain recognized on a taxable disposition.</P>
<P align=justify>Dividends paid in a currency other than U.S. dollars will be
included in a U.S. Holder&#146;s gross income in a U.S. dollar amount based on the
spot exchange rate in effect on the date of actual or constructive receipt,
whether or not the payment is converted into U.S. dollars at that time. The U.S.
Holder will have a tax basis in such currency equal to such U.S. dollar amount,
and any gain or loss recognized upon a subsequent sale or conversion of the
foreign currency for a different U.S. dollar amount will be U.S. source ordinary
income or loss. If the dividend were converted into U.S. dollars on the date of
receipt, a U.S. Holder generally should not be required to recognize foreign
currency gain or loss in respect of the dividend income.</P>
<P align=center>35</P>
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<P align=justify>A U.S. Holder would generally recognize a taxable gain or loss
on any sale or other taxable disposition of Lexaria BC shares in an amount equal
to the difference between the amount realized from such sale or other taxable
disposition and the U.S. Holder&#146;s adjusted tax basis in such shares. Such
recognized gain or loss generally would be a capital gain or loss. Capital gains
of non-corporate U.S. Holders (including individuals) generally would be subject
to U.S. federal income tax at preferential rates if the U.S. Holder has held the
Lexaria BC shares for more than one year as of the date of the sale or other
taxable disposition. The deductibility of capital losses is subject to
limitations. Any gain or loss recognized by a U.S. Holder on the sale or other
taxable disposition of Lexaria BC common shares generally would be treated as
U.S. source gain or loss.</P>
<P align=justify><B><I>Material U.S. Federal Income Tax Considerations for
Non-U.S. Holders</I></B></P>
<P align=justify>A non-U.S. Holder of Lexaria shares generally would not be
subject to U.S. federal income or withholding tax on any gain realized on the
disposition of Lexaria shares unless:</P>
<P align=justify>&#149; the gain is effectively connected with a U.S. trade or
business of such non-U.S. Holder (or, if an income tax treaty applies, is
attributable to a United States &#147;permanent establishment&#148;); or</P>
<P align=justify>&#149; such non-U.S. Holder is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition, and
certain other conditions are met.</P>
<P align=justify>Gain recognized by a non-U.S. Holder of Lexaria shares
described in the first bullet point above would generally be subject to tax
under the rules described above as if it were a U.S. Holder of Lexaria shares.
An individual non-U.S. Holder of Lexaria shares described in the second bullet
point above would generally be subject to a 30% tax on the gain, which may be
offset by U.S. source capital losses realized in the same year, even though the
individual is not considered a resident of the United States.</P>
<P align=justify>Additionally, non-U.S.  Holders generally would be required to recognize gain and be liable for U.S.  federal income and withholding tax with respect to a taxable sale, exchange or  other disposition of Lexaria shares if Lexaria were treated for U.S. federal  income tax purposes as a &ldquo;U.S. real property interest&rdquo; <b>(&ldquo;USRPHI&rdquo;)</b>. Subject to certain exceptions, Lexaria would generally be  a USRPHI if at any point in the preceding 5 years the fair market value of its  U.S. real property interests equaled or exceeded 50% of the sum of the fair  market values of its worldwide real property interests and other assets used or  held for use in a trade or business, all as determined under applicable  Treasury Regulations. While not free from doubt, Lexaria believes that Lexaria  has not been and will not be at the time of the Change of Jurisdiction a USRPHI  for U.S. federal income tax purposes. Non-U.S. Holders are urged to consult  their tax advisor about the consequences that could result if Lexaria were a  USRPHI. </P>
<P align=justify>Assuming that Lexaria BC is to be treated as a U.S. corporation
for U.S. federal tax purposes, a non-U.S. Holder generally would be subject to
U.S. federal withholding tax on dividends received from Lexaria BC, and could be
subject to U.S. federal income tax if the dividends were effectively connected
with the non-U.S. Holder&#146;s conduct of a trade or business in the United States
(and, if an income tax treaty applies, the dividends are attributable to a
permanent establishment or fixed place of business maintained by the non-U.S.
Holder in the United States). </P>
<P align=justify><b><i> Opinion of Tax Advisors </i></b></P>
<P align=justify> The forgoing information under the heading &ldquo;Certain United States Federal Income Tax Consequences of the Change of Our Corporate Jurisdiction - The Continuation&rdquo; has been reviewed by, and is the opinion of, Dale Matheson Carr-Hilton LaBonte LLP, United States and Canadian tax advisors to our company. </P>
<P align=justify><B>Certain Canadian Federal Income Tax Consequences of the
Change of Our Corporate Jurisdiction </B></P>
<P align=justify>The following summarizes certain Canadian federal income tax
consequences under the<B> </B>Canadian Act applicable to our company and our
stockholders resulting from the change of our corporate jurisdiction by means of
the continuation, and thereafter of holding and disposing of common shares in
the capital of Lexaria BC. </P>
<P align=justify>Comments on tax consequences to shareholders is restricted to
shareholders (each in this summary a <B>&#147;Holder&#148;</B>) of our company each of
whom is an individual (other than a trust) or corporation who or which, at all
material times for the purposes of the Canadian Act, holds all of its common
shares in the capital of Lexaria BC solely as capital property, acts at arm&#146;s
length with Lexaria BC, and is not a &#147;financial institution&#148; to which the &#147;mark
to market&#148; rules apply, a &#147;specified financial institution&#148; nor a shareholder in
respect of whom our company is a &#147;foreign affiliate&#148; under the Canadian Act.
Comment is further restricted, in the case of any Holder who is not resident in
Canada for Canadian federal income tax purposes (in this commentary, a
<B>&#147;Non-resident Holder&#148;</B>), to Non-resident Holders whose common shares in
the capital of Lexaria BC are not used in or in the course of carrying on a
business in Canada, and will not constitute &#147;taxable Canadian property&#148; at any
particular time after the change of our corporate jurisdiction. In general, a
common share of Lexaria BC held by a Non-resident Holder will
not constitute taxable Canadian property at any particular time after the change
of our corporate jurisdiction provided that at that time the common shares of
Lexaria BC are listed on a designated stock exchange for the purposes of the
Canadian Act, which includes Tiers 1 and 2 of the Canadian Securities Exchange,
unless at any particular time during the five year period that ends at that time
either the Non-resident Holder, or any one or more persons with whom the
Non-resident Holder does not deal at arm&#146;s length, alone or in any combination,
held or had a right to acquire 25% or more of the issued shares of any class in
the capital stock of Lexaria BC and more than 50% of the fair market value of
the common shares of Lexaria BC was derived directly or indirectly from one or
any combination of real or immovable property situated in Canada, Canadian
resource properties, timber resource properties, or options in respect of or
interests in the foregoing. &#150; </P>
<P align=center>36</P>
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<P align=justify>This summary assumes that we will not, at the time of the
  change of our corporate jurisdiction, own shares of a corporation that is
resident in Canada for the purposes of the Canadian Act. </P>
<P align=justify>Comment is based on the current provisions of the Canadian Act
and regulations, all amendments thereto publicly proposed by the Minister of
Finance of Canada to the date hereof, and our Canadian tax advisor&#146;s
understanding of the published administrative practices of the Canada Revenue
Agency (<B>&#147;CRA&#148;</B>). Unless otherwise expressly stated, it is assumed that all
such amendments will be enacted substantially as currently proposed, and that
there will be no other material change to any relevant law or administrative
practice, although no assurances can be given in these respects. Except to the
extent otherwise expressly provided, this summary does not take into account any
provincial, territorial or foreign tax law, nor any bilateral income tax treaty
to which Canada is a party. Canadian income tax laws, regulations and the
interpretation thereof are subject to change, which could materially alter the
following summary. If there should be any change having retroactive effect in
the Canadian Act, regulations or administrative practices of the CRA then there
may also be material changes to the following summary. </P>
<P align=justify>This summary is of a general nature only and is not, and is not
to be construed as, Canadian tax advice to any particular Holder. Each Holder is
urged to obtain independent advice as to the legal and Canadian tax implications
of the continuation, and thereafter of holding and disposing of common shares in
the capital of Lexaria BC, applicable to the Holder&#146;s particular circumstances. </P>
<P align=justify><B><I>The Continuation</I></B></P>
<P align=justify><I>Our Company </I></P>
<P align=justify><U>Continuation</U> </P>
<P align=justify>As a result of the continuation, Lexaria BC will be deemed to
have been incorporated in British Columbia from that point onward, and not to
have been incorporated elsewhere. Lexaria BC will be deemed to have had a
taxation year end immediately before the time of the continuation, and will be
deemed to have commenced a new tax year at the time of the continuation. Lexaria
BC will be able to choose a new fiscal year end falling within the 53 weeks
following the date of the continuation. </P>
<p align="justify">As a  result of the continuation, Lexaria will be deemed to have disposed of, and Lexaria  BC will be deemed to have immediately thereafter reacquired, each property  owned by Lexaria at its fair market value immediately before the time of the  continuation. Lexaria will be subject to Canadian federal income tax  liabilities with respect to any gains realized as a result of the deemed  disposition of all of its assets that constitute &ldquo;taxable Canadian property&rdquo;  for the purposes of the Canadian federal income tax.&nbsp; Following the continuation, gains arising on  the future disposition of property of Lexaria BC will be subject to tax in  Canada. However, the effect of the deemed disposition and reacquisition is that  any gains or losses that accrued to Lexaria before the continuation of Lexaria to  Canada will generally not be taken into account in determining Lexaria BC's liability  for tax under the Canadian Act when Lexaria BC actually disposes of, or is  deemed to dispose of, the property. The deemed disposition and reacquisition  will be relevant not only for capital gains purposes but also in determining  the cost of the Lexaria BC's property for capital cost allowance and inventory  purposes.</p>
<P align=center>37</P>
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<P align=justify><I>Resident Holders and Non-resident Holders </I></P>
<P align=justify><U>Continuation</U> </P>
<P align=justify>The continuation will not cause a disposition or deemed
disposition of the shares of common stock of Lexaria Nevada held by any Holder,
and therefore will not cause the realization of any capital gain or capital loss
by the Holder in respect of such shares. </P>
<P align=justify>The paid-up capital of shares of common stock of Lexaria BC may
be subject to adjustment upon the continuation. Lexaria BC will be deemed to
have disposed of all of its assets immediately before the continuation and to
have reacquired them on the continuation at a cost equal to their fair market
value. If the resulting tax cost of Lexaria BC&#146;s assets, net of Lexaria BC&#146;s
outstanding liabilities at the time of the continuation (<B>&#147;Net Tax Cost&#148;</B>)
is less than the aggregate paid-up capital of the common shares of Lexaria BC,
the paid-up capital of the common shares of Lexaria BC will be reduced to an
amount equal the Net Tax Cost. If Lexaria BC&#146;s Net Tax Cost is greater than the
aggregate paid-up capital of the common shares of Lexaria BC, Lexaria BC may
elect within 90 days of the continuation to increase the paid-up capital of the
common shares of Lexaria BC. If Lexaria BC makes such an election, Lexaria BC
will be deemed to have paid prior to the continuation, and the holders of the
common shares of Lexaria BC will be deemed to have received pro rata, a dividend
in respect of the common shares of Lexaria BC. It is not intended that Lexaria
BC will make this election if available.</P>
<P align=justify><B><I>Disposing of Common Shares</I></B></P>
<P align=justify><I>Canadian Resident Holders </I></P>
<P align=justify>The normal rules for the taxation of capital gains and losses
applicable before the change of our corporate jurisdiction to Holders who are
resident in Canada for the purposes of the Canadian Act (each a <B>&#147;Resident
Holder&#148;</B>) will continue to apply to Resident Holders in respect of a
disposition of common shares in the capital of Lexaria BC after the
continuation. </P>
<P align=justify>In summary, these rules will provide that a Resident Holder who
disposes of such a common share after the continuation will realize a capital
gain (capital loss) equal to the amount by which the proceeds received by the
Resident Holder on the disposition exceed (are exceeded by) the adjusted cost
base of the common share to the Resident Holder. </P>
<P align=justify>The Resident Holder will be required to include one half of any
such capital gain (taxable capital gain) in income to be taxed at normal rates.
</P>
<P align=justify>The Resident Holder may deduct one half of any such capital
loss (allowable capital loss) from taxable capital gains realized in the
taxation year of the Resident Holder in which the disposition occurs and, to the
extent not so deductible, from taxable capital gains realized in any of the
three preceding taxation years or any subsequent taxation year. </P>
<P align=justify>The Resident Holder, if a &#147;Canadian-controlled private
corporation&#148; as defined for the purposes of the Canadian Act, will be required
to include any taxable capital gain so arising in its &#147;aggregate investment
income&#148; and pay an additional refundable tax equal to 10 2/3% of its aggregate
investment income, and will be entitled to a refund of such additional tax at
the rate of 38 1/3% of refund for every CDN$1 of taxable dividends that it
subsequently pays. </P>
<P align=justify><I>Non-resident Holders </I></P>
<P align=justify>Generally, a Non-resident Holder who is a US resident for the
purposes of the Canada &#150; U.S. Income Tax Convention who disposes of common
shares in the capital of Lexaria BC after the change of our corporate
jurisdiction will not incur any tax liability provided that at the time of
disposition not more than 50% of the value of the common shares in the capital
of Lexaria BC derives from &#147;real property&#148; situated in Canada as defined for the
purposes of the Canada &#150; U.S. Income Tax Convention (which includes among other
things, any right to explore for or exploit mineral deposits and sources in
Canada and other natural resources in Canada, or any right to an amount computed
by reference to the production, including profit, from, or to the value of
production from, mineral deposits and sources in Canada and other natural
resources in Canada). </P>
<P align=center>38</P>
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<P align=justify>A Non-resident Holder who disposes of common shares in the
capital of Lexaria BC after the change of our corporate jurisdiction will not
incur any liability for Canadian federal income tax in respect of any taxable
capital gain so arising, nor be permitted to deduct any allowable capital loss
so arising from taxable capital gains (if any) of the Non-resident Holder
otherwise subject to Canadian federal income tax if at the time of disposition
such common shares are not taxable Canadian property to the Non-resident Holder.
</P>
<P align=justify>The Non-resident Holder will not be required to obtain a tax
clearance certificate from CRA in respect of the disposition provided that at
the time of disposition the common shares in the capital of Lexaria BC are
listed on a Canadian or foreign &#147;recognized stock exchange&#148; (as defined under
the Canadian Act), which includes a designated stock exchange, such as the
Canadian Securities Exchange. </P>
<P align=justify>Any Non-resident Holder who is contemplating disposing of
common shares in the capital of Lexaria BC after the change of our corporate
jurisdiction should obtain Canadian tax advice as to whether the Non-resident
Holder will be subject to Canadian tax, or be required to obtain a tax clearance
certificate from CRA, in respect of the disposition. </P>
<P align=justify><B><I>Dividends on Common Shares</I></B></P>
<P align=justify><I>Canadian Resident Holders </I></P>
<P align=justify>A Resident Holder who is an individual will be required to
include the amount of any dividend actually or deemed to have been received
after the change of our corporate jurisdiction on a common share in the capital
of Lexaria BC in income, subject to the usual dividend gross-up and dividend tax
credit rules applicable to dividends paid by a taxable Canadian corporation.
</P>
<P align=justify>A Resident Holder that is a corporation will be required to
include the amount of any dividend actually or deemed to have been received by
it after the change of our corporate jurisdiction on a common share in the
capital of Lexaria BC in income, but generally will be entitled to deduct an
equivalent amount in computing its taxable income. The corporation, if it is a
&#147;private corporation&#148; as defined for the purposes of the Canadian Act, or a
corporation controlled by or for the benefit of an individual or any related
group of individuals, may be liable for a 38 1/3% refundable tax (<B>&#147;Part IV
Tax&#148;</B>) on any such dividend to the extent that the dividend was deductible in
computing its taxable income, and will be entitled to a refund of such Part IV
Tax at the rate of 38 1/3% of refund for every CDN$1 of taxable dividends that
it subsequently pays. </P>
<P align=justify><I>Non-resident Holders </I></P>
<P align=justify>Each Non-resident Holder will be required to pay Canadian
withholding tax on the amount of any dividend, including any stock dividend,
paid or credited or deemed to be paid or credited by Lexaria BC after the change
of our corporate jurisdiction to the Non-resident Holder on a common share. The
rate of withholding tax is 25% of the gross amount of the dividend, or such
lesser rate as may be available under an applicable income tax treaty. The rate
of withholding tax under the Canada &#150; U.S. Income Tax Convention, subject to the
limitation of benefits article, applicable to a dividend paid to a Non-resident
Holder who is a resident of the United States for the purposes of the Canada &#150;
U.S. Income Tax Convention is 5% if the Non-resident Holder is a company that
owns at least 10% of the voting stock of Lexaria BC, and 15% in any other case,
of the gross amount of the dividend. Lexaria BC will be required to withhold any
such tax from the dividend, and remit the tax directly to CRA for the account of
the Non-resident Holder. </P>
<P align=justify><b> <i>Opinion of Tax Advisors </i> <i></i></b></P>
<P align=justify> The forgoing information under the heading &ldquo;Certain Canadian Federal Income Tax Consequences of the Change of Our Corporate Jurisdiction - The Continuation&rdquo; has been reviewed by, and is the opinion of, Dale Matheson Carr-Hilton LaBonte LLP, United States and Canadian tax advisors to our company. </P>
<P align=justify><B>Reporting Obligations under Securities Laws </B></P>
<P align=justify>If we change our corporate jurisdiction to the Province of
British Columbia, Canada, we will still have to comply with reporting
requirements under both the United States and Canadian securities laws. However,
these requirements should be reduced because we would no longer be a United
States company. </P>
<P align=justify>We currently prepare our financial statements in accordance
with United States generally accepted accounting principles (<B>&#147;US GAAP&#148;</B>).
We file our audited annual financial statements with the Securities and Exchange
Commission on annual reports on Form 10-K and our unaudited interim financial
statements with the Securities and Exchange Commission on quarterly reports on
Form 10-Q. Additionally, we are a reporting issuer in the Provinces of British
Columbia and Ontario. Upon completion of the continuation, we anticipate that we
will meet the definition of a &#147;foreign private issuer&#148; under the Securities
Exchange Act of 1934. As a foreign private issuer, we anticipate that we will
file an annual report on Form 20-F each year with the Securities and
Exchange Commission. We will not be required to file interim quarterly reports
on Form 10-Q, however we will be required to file our interim financial
statements and management&#146;s discussion and analysis, in the form required by
Canadian securities legislation, with the Securities and Exchange Commission on
Form 6-K. We anticipate that we will prepare our financial statements in
accordance with IFRS subsequent to the change of our corporate jurisdiction. </P>
<P align=center>39</P>
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<P align=justify>In addition, as a foreign private issuer, our directors,
  officers and stockholders owning more than 10% of our outstanding common stock
  will no longer be subject to the insider reporting requirements of Section 16(b)
  of the Securities Exchange Act of 1934 and we will no longer be subject to the
  proxy rules of Section 14 of the Securities Exchange Act of 1934. Furthermore,
  Regulation FD does not apply to non-United States companies and will not apply
to us upon completion of the continuation. </P>
<P align=justify>Whether or not we change our corporate jurisdiction to the
Province of British Columbia, Canada, we will remain subject to Canadian
disclosure requirements including those requiring that we publish news releases,
file reports about material changes to or for our company, send you information
circulars with respect to meetings of our stockholders, file annual and
quarterly financial statements and related management&#146;s discussion and analysis
and those that require that our officers, directors and major shareholders file
reports about trading in our shares. </P>
<P align=justify><B>Quotation on the OTCQX  and Listing on the Canadian
Securities Exchange</B> </P>
<P align=justify>Our common stock is quoted on the OTCQX  under the symbol &#147;LXRP&#148;
and our shares are listed for trading on the Canadian Securities Exchange under
the symbol &#147;LXX&#148;. We expect that immediately following the continuation, the
common shares of Lexaria BC will requalify to be quoted on the OTCQX  under the
new symbol &#147;LXRPF&#148;, and continue to be listed on the Canadian Securities
Exchange however under the symbol &#147;LXX&#148;.</P>
<P align=center><B>Our board of directors recommends that you vote FOR the
continuation. </B></P>
<P align=center><B>PROPOSAL 2 &#150; ELECTION OF DIRECTORS </B></P>
<P align=justify>Our board of directors has nominated the persons named below as
candidates for directors to be elected at the annual and special meeting. These
nominees are all of our current directors. Unless otherwise directed, the proxy
holders will vote the proxies received by them for the four nominees named
below. </P>
<P align=justify>Each director who is elected will hold office until the next
annual meeting of stockholders and until his or her successor is elected and
qualified. Any director may resign his or her office at any time and may be
removed at any time by the holders of a majority of the shares then entitled to
vote at an election of directors. If elected at the annual and special meeting,
these nominees will continue to serve as directors of Lexaria BC subsequent to
the change of our corporate jurisdiction. </P>
<P align=justify><B>Nominees</B></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD noWrap align=left bgColor=#eeeeee><B>Name</B> </TD>
    <TD noWrap align=center width="30%" bgColor=#eeeeee><B>Position Held with
      Our Company</B> </TD>
    <TD noWrap align=center width="10%" bgColor=#eeeeee
      ><B>Age</B> </TD>
    <TD noWrap align=center width="30%" bgColor=#eeeeee><B>Date First Elected
      or Appointed</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>Chris Bunka </TD>
    <TD align=center width="30%">Director, Chief Executive Officer, Chairman
      of <BR>the Board of Directors </TD>
    <TD align=center width="10%" >56 </TD>
    <TD align=center width="30%">October 26, 2006 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#ffffff>John Docherty </TD>
    <TD align=center width="30%" bgColor=#ffffff>Director, President </TD>
    <TD align=center width="10%" bgColor=#ffffff >47 </TD>
    <TD align=center width="30%" bgColor=#ffffff>April 15, 2015 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#ffffff>Nicholas Baxter </TD>
    <TD align=center width="30%" bgColor=#ffffff>Director </TD>
    <TD align=center width="10%" bgColor=#ffffff >64 </TD>
    <TD align=center width="30%" bgColor=#ffffff>July 8, 2011 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#ffffff>Ted McKechnie </TD>
    <TD align=center width="30%" bgColor=#ffffff>Director </TD>
    <TD align=center width="10%" bgColor=#ffffff >70 </TD>
    <TD align=center width="30%" bgColor=#ffffff>September 16, 2015
  </TD></TR></TABLE></DIV>
<P align=center><B>Our board of directors recommends that you vote FOR the
nominees. </B></P>
<P align=center><B>PROPOSAL 3 &#150; RATIFICATION OF THE CONTINUED APPOINTMENT OF THE
INDEPENDENT </B><BR><B>REGISTERED PUBLIC ACCOUNTING FIRM </B></P>
<P align=justify>Our board of directors is asking our stockholders to ratify the
continued appointment of Davidson &amp; Company LLP, Chartered Accountants, as
our independent registered public accounting firm for the fiscal year ending
August 31, 2018. </P>
<P align=justify>Stockholder ratification of the continued appointment of
Davidson &amp; Company LLP is not required under the Nevada corporate law, our bylaws or otherwise. However, our board of
directors is submitting the continued appointment of Davidson &amp; Company LLP
as our independent registered public accounting firm to our stockholders for
ratification as a matter of good corporate governance practices. If our
stockholders fail to ratify the continued appointment, our board of directors
will reconsider whether or not to retain the firm. Even if the appointment is
ratified, our board of directors in its discretion may direct the appointment of
a different independent registered public accounting firm at any time during the
year if our board of directors determines that such a change would be in the
best interest of our company and our stockholders. </P>
<P align=center>40</P>
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<P align=justify>Representatives of Davidson &amp; Company LLP are not expected
  to be present at the annual and special meeting. However, we will provide
  contact information for Davidson &amp; Company LLP to any stockholders who would
like to contact the firm with questions. </P>
<P align=justify>Unless otherwise directed, the proxy holders will vote the
proxies received by them for the ratification of the continued appointment of
Davidson &amp; Company LLP as our independent registered public accounting firm
for the fiscal year ending August 31, 2018. </P>
<P align=left><B>Our board of directors recommends that you vote FOR the
ratification. </B></P>
<P align=center><B>EXPERTS AND COUNSEL </B></P>
<P align=justify>The financial statements of our company included in this proxy
statement/prospectus have been audited by Davidson &amp; Company LLP, Chartered
Accountants, to the extent and for the period set forth in their report (which
contains an explanatory paragraph regarding our ability to continue as a going
concern) appearing elsewhere in the proxy statement/prospectus, and are included
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting. </P>
<P align=justify>Macdonald Tuskey, of Suite 409 &#150; 221 West Esplanade, North
Vancouver, British Columbia V7M 3J3, Canada has advised us in connection with
certain U.S. and Canadian non-tax legal matters with respect to the
continuation. </P>
<P align=justify>Dale Matheson Carr-Hilton Labonte LLP of Vancouver, British
Columbia has advised us in connection with certain U.S. and Canadian federal
income tax consequences with respect to the continuation. </P>
<P align=center><B>INTEREST OF NAMED EXPERTS AND COUNSEL </B></P>
<P align=justify>No expert named in the registration statement of which this
proxy statement/prospectus forms a part as having prepared or certified any part
thereof (or is named as having prepared or certified a report or valuation for
use in connection with such registration statement) or counsel named in this
proxy statement/prospectus as having given an opinion upon the validity of the
securities being offered pursuant to this proxy statement/prospectus or upon
other legal matters in connection with the registration or offering such
securities was employed for such purpose on a contingency basis. Also at the
time of such preparation, certification or opinion or at any time thereafter,
through the date of effectiveness of such registration statement or that part of
such registration statement to which such preparation, certification or opinion
relates, no such person had, or is to receive, in connection with the offering,
a substantial interest, direct or indirect, in our company or any of its parents
or subsidiaries. Nor was any such person connected with our company or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee. </P>
<P align=center><B>DESCRIPTION OF BUSINESS </B></P>
<P align=justify><B>Corporate History</B></P>
<P align=justify>We were incorporated in the State of Nevada on December 9,
2004. We were an exploration and development oil and gas company engaged in the
exploration for and development of petroleum and natural gas in North America
from the date of incorporation until 2014. During 2014 we submitted an
application to enter the legal medical marijuana business in Canada (since
retracted), acquired certain biotechnology-related intellectual property and
also launched a hemp oil-based food supplement company in the USA. We maintain
our registered agent's office and our U.S. business office at Nevada Agency and
Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501. Our U.S.
telephone number is (755) 322-0626. The address of our principal executive
office is 156 Valleyview Rd., Kelowna, BC, Canada, V1X 3M4.</P>
<P align=center>41</P>
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<P align=justify>Our common stock is quoted on the OTCQX  under the symbol "LXRP"
and on the Canadian Securities Exchange under the symbol &#147;LXX&#148;. </P>
<P align=justify><B>Subsidiaries</B></P>
<P align=justify>We have two wholly-owned subsidiaries.The first, Lexaria
Canpharm Corp., is a Canadian federal company incorporated on April 4, 2014,
which we formed for the purpose of entering into Canadian business activities.
The second, PoViva Tea, LLC (&#147;PoViva", formerly known as Poppy`s Tea LLC), is an
entity converted into the state of Nevada on December 12, 2014. We acquired a
51% membership interest in PoViva on November 12, 2014, and acquired the
remaining 49% interest on October 25, 2017. In addition, we have a 50%-owned
subsidiary, Ambarii Trade Corporation, that was incorporated on April 24, 2017
under the laws of the Province of British Columbia. </P>
<P align=justify><B>Our Business</B></P>
<P align=justify>Our company currently pursues business opportunities in diverse
industries including the food sciences, technology licensing, and ready-to-eat
food sectors. Our food sciences activities include the development of our
proprietary nutrient infusion technologies for the production of superfoods, and
the production of enhanced food products under our two consumer product brands,
ViPova<SUP>TM</SUP> and Lexaria Energy. Our patented and patent-pending lipid
nutrient infusion technology is believed to enable higher bioavailability rates
for CBD; THC; NSAIDs; vitamins, nicotine and other molecules than is possible
without lipophilic enhancement technology. This can allow for lower overall
dosing requirements and/or higher effectiveness in active molecule delivery.
Lexaria has caused to be filed several patent pending applications with the US
Patent and Trademark Office (&#147;USPTO&#148;), and also internationally under the Patent
Cooperation Treaty (PCT). On October 26, 2016, the USPTO issued U.S. Patent No.
9,474,725 (granted June 15 ,  2017 in Australia No. 2015274698), Cannabinoid
Infused Food and Beverage Compositions and Methods of Use Thereof, pertaining to
Lexaria&#146;s method of improving bioavailability and taste of certain cannabinoid
lipophilic active agents in food products. On October 31, 2017, we announced
that the USPTO has issued a notice of allowance for our patent application no.
15/225,799, &#147;Food and Beverage Compositions Infused With Lipophilic Active
Agents and Methods of Use Thereof&#148;. That application pertains to the use of
Lexaria&#146;s DehydraTECHTM technology as a delivery platform for all cannabinoids
including THC, for fat soluble vitamins, non-steroidal anti-inflammatory pain
medications (&#147;NSAIDs&#148;), and for nicotine. The US patent was subsequently awarded
on December 13, 2017. On November 9, 2017, we announced our filing of a new
patent application with the USPTO for the use of our DehydraTECHTM technology
for delivery of phosphodiesterase type 5 (PDE5) inhibitors such as sildenafil
and tadalafil, which are commonly sold under the trade names Viagra<SUP>TM
</SUP>and Cialis<SUP>TM</SUP>, respectively. Lexaria hopes to reduce other
common but less healthy ingestion methods such as smoking as it embraces the
benefits of public health. </P>
<P align=justify>Our company was an oil and gas company engaged in the
exploration for oil and natural gas in Canada and the United States. We were
generating revenues from our business operations in Mississippi. On November 26,
2014, we executed an agreement for the sale of all or our working interests in
Belmont Lake oil field for total consideration of $1,400,000. The transaction
was completed on December 5, 2014. A total net amount of $721,806 was paid to
the Company after all short-term debts were paid out from the sale. </P>
<P align=justify>In March of 2014, we began our entry into the medicinal
marijuana business through an application to become a Licensed Producer under
the MMPR in Canada. No such license has been granted and we subsequently sold
our interest in that application. In November of 2014, the Company acquired a
51% membership interest in PoViva Tea LLC for alternative health products, in
the food supplement sector. We acquired the remaining 49% in PoViva in October,
2017.</P>
<P align=justify>&nbsp;Lexaria is now primarily a biosciences company focused on
the delivery of lipophilic active molecules based upon its proprietary infusion
technologies. Secondarily and more generally, we continue to investigate
opportunities to license our technology within the US state-legal regulated
medical marijuana sector where possible; and to review additional opportunities
in alternative health sectors. This includes the acquisition or development of
intellectual property if and when we believe it advisable to do so. We have
filed for and received issuance or allowance of patent protection of what we
believe to be a unique manner in which to more efficiently deliver certain
molecules such as THC, CBD, Nicotine, NSAIDs, and Vitamins, all through everyday
food products. Lexaria has multiple patents pending in over 40 countries around
the world and was granted its first patents in the USA and in Australia related
to edible forms of cannabinoids. To achieve sustainable and profitable growth,
our company intends to control the timing and costs of our projects wherever
possible. </P>
<p align=center>42</p>
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<P align=justify><I>Enertopia Joint Venture</I></P>
<P align=justify>On May 28, 2014, our company and Enertopia Corp. entered into a
definitive agreement to develop a joint business for the production,
manufacture, propagation, import/export, testing, research and development of
marijuana in the Province of Ontario under the MMPR. Pursuant to the Agreement,
ownership, revenues, and liability related to the Joint Venture were to be
divided 51% to Enertopia and 49% to Lexaria. Expenses incurred by the joint
venture would be allocated 45% to Enertopia and 55% to Lexaria. Enertopia was
responsible for management of the joint venture for as long as it maintained
majority ownership. Lexaria and Enertopia contributed $55,000 and $45,000 to the
joint venture, respectively. The joint venture identified a production location
in Burlington, Ontario and received municipal approval for the site in July,
2014. We intended to engage an architect to design the production facility upon
acceptance of our application. Construction was anticipated to cost
approximately $3,000,000 and Lexaria would have been responsible for $1,650,000
of this cost. Unable to estimate when a production license might be granted by
Health Canada, the joint venture sought assurances from Health Canada prior to
commencement of construction. In the event that Health Canada did not grant a
production license by May 27, 2015, the joint venture was to terminate. On
August 1, 2014, through our wholly owned subsidiary Lexaria Canpharm Corp., we
signed an extension to the letter of intent with 1475714 ONTARIO INC. and Thor
Pharma Corp. (a subsidiary of Enertopia Corp.) to secure a 5-year lease on the
Burlington, Ontario facility for our Burlington joint venture. The proposed
Burlington, Ontario facility comprised of 30,000 ft&#178;, with Lexaria and Enertopia
having acquired a right of first refusal for another 45,000 square feet totaling
75,000 ft&#178; to accommodate future growth. Planned production areas have 22 foot
ceilings which could allow for the possibility of a 2nd mezzanine level in many
areas for further expansion. The production target for the facility based on
30,000 ft&#178; (with approximately 50% devoted to production space) was
approximately 10,000 kilograms per year. </P>
<P align=justify>By November 30, 2014, our Burlington joint venture had
announced that its application to Health Canada&#146;s for the Burlington facility
had advanced from preliminary to enhanced screening. By December 12, 2014, the
joint venture was extended to June 12, 2015. </P>
<P align=justify>On June 11, 2015, we entered into a Letter of Intent dated June
10, 2015 with Shaxon Enterprises Ltd. to sell our 49% interest in the Burlington
joint venture, including our interest in MMPR application number 10QMM0610 for
the proposed Burlington, Ontario production facility. Subsequent to the LOI with
Shaxon Enterprises Ltd., our joint venture agreement with Enertopia which was
entered into on May 28, 2014 was terminated due to the pending sale of the
project. As a result of the termination, 500,000 restricted and escrowed common
shares of Lexaria issued to Enertopia at a deemed price of $0.40 were returned
to treasury and cancelled. The Enertopia and Lexaria Master Joint Venture
Agreement entered into on March 5, 2014 is still effective and governs the
relationship between our company and Enertopia.</P>
<P align=justify>On June 26, 2015, we signed share purchase agreement dated June
24, 2015 with Enertopia Corp. and Shaxon Enterprises Ltd. to sell our interest
in the Burlington joint venture along with the MMPR application number
10MMPR0610. The Burlington MMPR license application will continue in the
application process under new ownership. Pursuant to the agreement, the joint
venture received a non-refundable $10,000 deposit and is entitled to receive up
to $1,500,000 in milestone payments upon the Burlington facility becoming
licensed under the MMPR. These monies would be split 51% to Enertopia and 49% to
Lexaria. Notwithstanding the foregoing, we can neither guarantee nor provide a
meaningful time estimate regarding the grant of a production license for the
Burlington facility. There is no assurance that any monies will in fact ever be
received from our sale of the license application. </P>
<P align=justify><I>Food Science and Technology</I></P>
<P align=justify>Lexaria has developed and out-licenses its disruptive
technology that promotes healthier ingestion methods, lower overall dosing and
higher effectiveness of lipophilic active molecules. Lexaria is focusing its
capital and management time on its pursuit of intellectual property, technology
licensing opportunities, and an expanding portfolio of patent pending
applications. The company introduced an expanding variety of hemp oil-fortified
consumer food products throughout 2015. From January 2015 to December 2015, we
introduced seven (7) flavors of teas; hot chocolate; coffee, and two (2) flavors
of protein energy bars &#150; all utilizing our patent pending technology for the
more efficient delivery of hemp oil infused within those food products.</P>
<P align=justify>On November 11, 2014, our Company acquired 51% of PoViva Tea
LLC and executed an operating agreement to develop a business of legally
producing, manufacturing, importing/exporting, testing, researching and
developing, a line of hemp oil with cannabidiol-infused teas. Lexaria oversees
all aspects of the business including, but not limited to, production, product
quality, licensing, testing, product legality, accounting, marketing, capital
investment, capital raising, sales, branding, advertising and fulfillment.
Pursuant to the agreement, PoViva Tea LLC was overseen by a Management Committee
composed of two representatives from Lexaria and one of the founding members of
PoViva. </P>
<P align=center>43</P>
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<P align=justify>Subsequently, we acquired the remaining 49% interest of PoViva
from the founding members on October 25, 2017. We paid US$70,000 for the 49%
interest, granted a waiver on certain debts, and a 5%, 20-year royalty on net
profits of ViPova Tea tea, coffee, and hot chocolate sales. No Lexaria stock or
options were issued. </P>
<P align=justify>In the production of the products, for each batch of hemp oil
purchased as a raw material to be used in ViPova-branded products, we assess if
the product inputs and the completed products comply with all applicable food
and drug laws, and that the inputs and the finished products meet all applicable
legal and quality standards including and as it relates to hemp oil content; THC
content; molds and mildews; heavy metals; and may measure additional components.
The US Federal government, through the US Department of Health and Human
Services, owns US Patent #6630507, which among other things, claims that:</P>
<DIV align=center>
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  <TR vAlign=top>
    <TD align=left>
      <P align=justify><I>&#147;Cannabinoids have been found to have antioxidant
      properties, unrelated to NMDA receptor</I> <I>antagonism. This new found
      property makes cannabinoids useful in the treatment and prophylaxis of</I>
      <I>wide variety of oxidation associated diseases, such as ischemic,
      age-related, inflammatory and</I> <I>autoimmune diseases. The cannabinoids
      are found to have particular application as neuroprotectants,</I> <I>for
      example in limiting neurological damage following ischemic insults, such
      as stroke and trauma, or in</I> <I>the treatment of neurodegenerative
      diseases, such as Alzheimer's disease, Parkinson's disease and HIV</I>
      <I>dementia.&#148;</I> </P></TD></TR></TABLE></DIV>
<P align=justify>For reference, cannabinoids are compounds that affect
cannabinoid receptors located on many human cells. CB1 receptors are widely
found within the human brain; and CB2 receptors are found with the human immune
system and have been linked to anti-inflammatory and other responses.</P>
<P align=justify>Despite independent scientific findings in many locations
around the world, some regulatory agencies do not officially recognize that a
human endocannabinoid system exists.</P>
<P align=justify>Over one hundred different cannabinoids have been isolated from
the cannabis plant, most of which do not have psychoactive properties. One that
does have psychoactive properties is tetrahydrocannabinol (THC).
Endocannabinoids are produced naturally in the human body while
phytocannabinoids are produced in several plant species, most abundantly in the
Cannabis plant.</P>
<P align=justify>Cannabidiol is one of the major phytocannabinoid forms of
cannabinoids, contributing more than 35% of the extracts from the cannabis plant
resin. Cannabidiol occurs naturally in other plant species beyond cannabis. For
example, the most widely acknowledged alternative source of phytocannabinoid is
in the better understood Echinacea species, in widespread use as a dietary
supplement. Most phytocannabinoids are virtually insoluble in water but are
soluble in lipids and alcohol.</P>
<P align=justify><I>Status of Operations</I></P>
<P align=justify>Part of our corporate strategy is to build national brands
through products that large groups of potential customers are already familiar
and comfortable with. PoViva Tea LLC has filed patents pending to bind active
hemp oil ingredients with a lipid, potentially allowing for more efficient and
comforting delivery of the CBD.</P>
<P align=justify>We began producing cash flows from our products in January
2015; focused on the immediate opportunities in the hemp oil-sector derived from
hemp that is federally legal in the US. Cannabinoids have been found by many
researchers to have antioxidant properties and Lexaria has explored and will
continue to evaluate opportunities to use the patented and patent pending
process it has acquired with ViPova teas, to infuse hemp oil ingredients into a
number of popular food and beverages. </P>
<P align=justify>Lexaria has launched a line of products, always relying on our
patented and patent pending hemp oil-infusion process, to bring hemp oil into
the mainstream. Because hemp oil does not have psychoactive properties we expect
our products to appeal to the widest possible customer base. Initially we have
and will continue to focus our sales efforts across the continental USA. Some
studies have found that 3% of the Canadian population regularly consumes hemp
food products, while 1% of the American population regularly consumes hemp food
products. We believe the consumption of hemp based food products offers
exceptional growth possibilities.</P>
<P align=justify>Lexaria commissioned three new websites in 2015 &#150; one for
ViPova-branded food products, another for a new Lexaria corporate website, and a
third for Lexaria Energy branded consumer products - which were completed
throughout 2015 and which have been  and/or are expected to be significantly updated
during 2017 and 2018.  All the sites are in operation and the two consumer products websites allow customers to place orders and
interact with normal e-commerce capabilities. The majority of our product have
taken place through these websites. A contracted national distribution center
ensures rapid and accurate fulfillment of all orders. A 1-800 ordering center
has also been placed into operation. </P>
<P align=center>44</P>
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<P align=justify>Lexaria continues to explore opportunities to expand the
  &#147;Lexaria Energy&#148; brand that is 100% owned by the company. Under this brand, the
  company has developed and sells hemp oil-infused consumer products for people
  with active lifestyles, such as protein bars, protein shakes and other similar
  products. A protein bar was in production and was available for sale under two
  different recipes and flavors, but is currently unavailable. The Lexaria Energy
  brand utilizes the same patented and patent-pending infusion process across its
product line.</P>
<P align=justify>On August 11, 2015, Lexaria signed a license agreement with
PoViva Tea LLC for $10,000, granting Lexaria a 35-year non exclusive worldwide
license to unencumbered use of PoViva Tea LLC&#146;s IP Rights, including rights of
resale. This license agreement ensured that Lexaria had full access to the
underlying patent pending infusion technology. Subsequently, Lexaria acquired a
100% interest in PoViva Tea LLC and corresponding control of the IP Rights.</P>
<P align=justify>On August 24, 2015, the company announced achievements in
enhanced gastrointestinal absorption of cannabidiol (CBD) utilizing Lexaria&#146;s
patent pending technology. The third-party testing was conducted in two phases
of <I>in vitro</I> tests beginning in June and completed in August, 2015.</P>
<P align=justify>The independent laboratory results delivered average CBD
permeability of 499% of baseline permeability, compared to CBD permeability
without Lexaria&#146;s technology. These results exceed Company expectations. This
was assessed in a strictly controlled, <I>in vitro </I>experiment using a human
intestinal tissue model. Samples of Lexaria&#146;s commercially available
CBD-fortified ViPova&#153; black tea were administered in the model compared with
concentration-matched CBD control preparations that lacked Lexaria&#146;s
patent-pending formulation and process enhancements. Lexaria believes that its
<I>in vitro</I> findings provide compelling evidence of the intestinal
absorption enhancing capabilities of its technology, based on which it is
exploring opportunities to progress to more advanced, follow-on bioavailability
testing in animals. </P>
<P align=justify>The tests also showed 325% of baseline gastro-intestinal
permeability of CBD comparing Lexaria&#146;s CBD-fortified ViPova&#153; black tea to a
second control of CBD and black tea combined, <I>without</I> Lexaria&#146;s
patent-pending formulation enhancements. This confirmed that the specialized
processing undertaken by Lexaria during its manufacturing process together with
its formulation enhancements, does indeed significantly improve absorption
levels.</P>
<P align=justify>The bioavailability of CBD (or of THC) varies greatly by
delivery method. Smoking typically delivers cannabinoids at an average
bioavailability rate of 30% (Huestis (2007) Chem. Biodivers. 4:1770&#150;1804;
McGilveray (2005) Pain Res. Manag. 10 Suppl. A:15A &#150; 22A). By comparison, orally
consumed cannabis edibles typically deliver cannabinoids at an average
bioavailability rate of only 5% (Karschner et al. (2011) Clin. Chem. 57:66&#150;75).
</P>
<P align=justify>The company&#146;s above described findings suggest that its
technology may achieve a 5-fold improvement in cannabinoid absorption in edible
form over that which can be achieved without its proprietary process and
formulation enhancements. This conceptually supports that Lexaria&#146;s technology
represents a significant breakthrough in cannabinoid delivery by approximating
the high absorption levels achieved as though through administration by smoking,
but without the associated negative effects on human health caused by
smoking.</P>
<P align=justify>The tests were completed in two phases culminating with testing
using simulated intestinal fluid conditions that delivered these findings. These
results were stronger than earlier iterations of the tests that did not use a
simulated intestinal fluid environment and contributed to Lexaria&#146;s
understanding of the mechanisms at work. For these and other reasons, Lexaria
believes that bioavailability testing in animals is likely to yield even
stronger absorption results in the presence of natural intestinal fluid
conditions.</P>
<P align=justify>CBD has been repeatedly found to provide beneficial pain
relieving, anti-inflammatory, anti-anxiety, neuroprotection, anti-psychotic, and
anti-convulsive effects among others. Lexaria&#146;s patent-pending technology could
significantly reduce individual serving requirements for CBD to consumers. This
could lead to reduced costs of consumption for consumers and increased
profitability for Lexaria.</P>
<P align=justify>Lexaria believes that the same technology used to enhance the
absorption of CBD in the recent laboratory tests, is applicable to THC,
nicotine, NSAIDs and other lipophilic compounds that are widely used today, and
it has received allowance granted patent from the USPTO for the use of its
technology across all of these types of molecules during December, 2017.</P>
<P align=center>45</P>
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<P align=justify>On November 3, 2015, Lexaria Energy10 protein bars became
  available for retail sales with 2 new flavors. The company sold a  Cashew Berry
  Date vegan bar ,  which is optimal for pre-workout or morning use, with 10 grams of
  protein and a combination of dates, cherries and blueberries for energy from
  natural sugar sources. The 70-gram bar delivers energy for a workout or for the
  day to come. The Chocolate Berry Date bar is optimal for post-workout and for
  afternoon or evening use, or anytime one has the munchies. This 82-gram bar has
  21 grams of protein and 13 grams of fiber to provide one&#146;s body with comfort and
  cleansing after strenuous activity. Since the initial production run, the original contract manufacturer of these protein bars was unable to fulfill additional orders and, as at the date of this Registration Statement, we have not secured an alternative manufacturer. As a a result the product has been temporarily discontinued until we identify and engage a suitable manufacturer. </P>
<P align=justify>During January 2015, Lexaria conducted a study of nitric oxide
levels in humans, as a biomarker for absorption of cannabidiol, with the
expectation that it would provide additional evidence of the efficient
absorption of cannabidiol from Lexaria food products enhanced with hemp oil, by
demonstrating the elevation of nitric oxide in the human body in response to
product ingestion.</P>
<P align=justify>The study data from human subjects demonstrated significant
elevation of systemic nitric oxide levels as a surrogate biomarker for
cannabidiol (CBD) bioabsorption in response to ingestion of Lexaria's products.
This provided clinical support for the CBD bioavailability enhancing properties
of Lexaria's patent-pending technology, on the premise that bioavailable CBD is
known to elevate levels of the endocannabinoid anandamide in the human body
which, in turn, stimulates release of nitric oxide in the vascular system. </P>
<P align=justify>In summary, consuming Lexaria and ViPova food products resulted
in elevated levels of nitric oxide within the body. The results of the study
indicated that all Lexaria and ViPova food products elicited significant
increases in salivary nitric oxide, achieving levels from 110 &#181;M to as high as
220 &#181;M in the test subjects. The beverage products generally had faster initial
responses in as little as 15 minutes after product ingestion, whereas the
initial responses from the protein-energy bars required 30 minutes. The faster
response time with the beverage products was to be expected, given the relative
ease of digesting liquids versus solids. All products sustained their maximum
levels of nitric oxide detection through to the 60-minute end-points used in the
study, indicating a need for additional study to determine the length of time
that nitric oxide levels remain elevated following production consumption.</P>
<P align=justify>The study assessed six flavors of ViPova&#153; tea (Yunan Black,
Herbal Cherry Black, Earl Grey, Herbal Bengal Chai, Herbal Masala Chai and Decaf
English Breakfast), ViPova&#153; Columbian Supremo Coffee, ViPova&#153; Hot Chocolate and
Lexaria Energy Foods&#146; Chocolate Berry Date and Cashew Berry Date protein-energy
bars.</P>
<P align=justify>Six healthy human subjects (3 male and 3 female) between the
ages of 22 and 65 years of age were recruited for the study. Subjects were
screened for cardiovascular and allergic response to hemp products, were
non-smokers and did not have any history of substance or alcohol abuse. One
product was studied per day across all six subjects, with each subject consuming
a full product serving size. Subjects were required to refrain from eating food
or using vape products for at least 12 hours before test article administration
on each day of the study. Nitric oxide levels in the test subjects were assessed
using a commercially available, colorimetric test kit designed to quantify
systemic nitric oxide via a detectable salivary marker. Immediately before test
article administration each day, all subjects were required to demonstrate a
negative baseline nitric oxide saliva test. Subjects were considered to have a
negative test strip reading at a level of 20 &#181;M according to the test strip
scale, and positive readings anywhere above this. Subjects performed salivary
nitric oxide testing at 15, 30, 45 and 60 minutes&#146; post-consumption of each
product. All subjects remained sedentary from baseline through to the completion
of testing for each product.</P>
<P align=justify>On January 28, 2016, Lexaria signed a distribution agreement
with Telluride Coffee Roasters, LLC, which subsequently expired.</P>
<P align=justify>On May 14, 2016, the company entered into a Licensing Agreement
allowing the Licensee, for a two-year period, to utilize the company&#146;s
technology to create, test, manufacture, and sell marijuana-infused consumable
and/or topical products, in the state of Colorado, with an option of extending
the terms of the Licensing Agreement to Washington, Oregon, and California. In
addition to the granting of the license, the company will provide support
services to the Licensee in connection with the use of the company&#146;s technology
during the term of the Licensing Agreement. The Licensing Agreement is the first
contracted, predictable, and significant revenue stream to be achieved as a
direct result of Lexaria&#146;s technological advantage in the marketplace. Under the
terms of the Licensing Agreement, the Licensee will pay a minimum of $122,000 in
pre-defined staged payments to Lexaria over the initial two-year term. As per
the Licensing Agreement, if the Licensee were to introduce certain
product lines utilizing Lexaria&#146;s technology in each of the four states
contemplated, Lexaria could expect to receive a maximum of $1,064,000 over
approximately 3.5 years, and the Licensee would enjoy semi-exclusivity to
introduce its products in each of those states.</P>
<P align=center>46</P>
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<P align=justify>On September 8th, 2016, the company announced signing new
  definitive technology licensing and private label agreements with Timeless
  Herbal Care Limited. Lexaria will earn a pre-defined premium to costs on all raw
  ingredient sourcing and manufacturing, and will further earn a pre-defined
  royalty rate on all gross product sales revenues earned by Timeless Herbal Care
  Limited. The agreement is for an initial term of 5 years. No business activity
has occurred as yet under this agreement.</P>
<P align=justify>On November 22, 2016, the company signed a Memorandum of
Understanding with NeutriSci International Inc. (&#147;NeutriSci&#148;) regarding the
formation of a 50/50 joint venture to develop, produce, and sell a line of
healthy edible cannabinoid products using Lexaria&#146;s patented technology and
NeutriSci proprietary pterostilbene tablet formula and international
distribution network. The joint venture expects to commercialize any newly
created cannabinoid edible products through distribution programs and existing
strategic partners. Product development is underway and a joint venture
subsidiary has been formed.</P>
<P align=justify>On January 19, 2017, the Company and NeutriSci announced the
successful development and initial trial of the industry&#146;s first zero-sugar
cannabinoid / pterostilbene edible tablet utilizing both NeutriSci&#146;s and
Lexaria&#146;s proprietary and patented technologies. NeutriSci and Lexaria completed
a definitive joint venture agreement on April 6, 2017 pursuant to which the two
company intend to market and commercialize a line of edible products. Product
development is continuing.</P>
<P align=justify>On February 6, 2017, the Company through its wholly owned
Canadian subsidiary Lexaria CanPharm Corp., signed and entered a master
collaborative research agreement with the National Research Council of Canada
(&#147;NRC&#148;) to investigate technical aspects and new opportunities associated with
bioavailability enhancement of lipophilic active ingredient compositions. Under
the agreement, the Company and the NRC will both provide up to CAD$125,000 in
funding for this research, a total investment of up to CAD$250,000. The master
research agreement has an 18-month term, during which a number of shorter-term
studies will be undertaken. The collaboration will investigate and define the
chemical nature of the molecular association that Lexaria`s patented technology
is believed to effectuate between lipophilic active agents and fatty acids as
solubility and bioavailability enhancing agents. The first phase of research
under this agreement was underway as of August 31, 2017. </P>
<P align=justify>On March 14, 2017, the Company commenced the formal design
phase for studies to be conducted under the master collaborative research
agreement with the NRC. A number of studies have been proposed and are currently
being evaluated, with the intention to begin work and produce results over
multiple intervals in the coming months. As noted above, the first phase of
research under this agreement was underway as of August 31, 2017. In aggregate,
results from these studies will add to the understanding of the physical and
biochemical characteristics imparted on molecules that have been subjected to
Lexaria&#146;s technology, with a view to further demonstrating the power of the
technology to prospective commercial partners across the various consumer
product sectors the Company is targeting. </P>
<P align=justify>On March 24, 2017, the Company engaged Dig Media Inc. Investing
News Network to conduct a twelve month marketing and lead generation campaign in
consideration for $48,000.</P>
<P align=justify> On January 25, 2018, Lexaria CanPharmCorp., a wholly owned subsidiary of the Company, entered into a definitive technology licensing agreement with Cannfections Group Inc. whereby Lexaria will provide its patented DehydraTECH<sup>TM</sup> technology to empower next-generation performance in cannabis infused chocolates and candies to be developed and sold in Canada and internationally.
</P>
<P align=justify> Under the terms of the Agreement, Lexaria can offer other licensee partners the option of utilizing Cannfection's formulation and manufacturing expertise to produce cannabis infused, DehydraTECH&trade;-powered chocolates and gummies where approved. The Agreement is expected to lead to new product entries for Canadian cannabis edibles, and exportation to the increasing number of other international markets where permitted around the world. The term of the Agreement is seven years. </P>
<P align=justify>The company does not know and cannot know whether the above
described strategies and arrangements will achieve success by yielding
marketable intellectual property or products. In the event that marketable
intellectual property or products are achieved, we cannot guarantee that we will
be able to successfully commercialize them. It can be a challenge to
economically introduce new technology or consumer products into a competitive
wholesale or retail marketplace, and we can offer no assurances that our
products will be a commercial success.</P>
<P align=justify>The continuation of our business interests in these sectors is
dependent upon obtaining further financing,  successful programs of
development, and, ultimately, achieving a profitable level of operations. The
issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.</P>
<P align=center>47</P>
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<P align=justify>There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations. There is significant uncertainty as to whether we can obtain
additional financing.</P>
<P align=justify>Our business plan does not anticipate that we will hire a large
number of employees or that we will require extensive office space. We expect to
be able to utilize contracted third parties for most of our production and
distribution needs, instead focusing on our capital on higher value added
aspects of the business such as research and development, and scientific
testing. We have no current plans to build our own production facility.</P>
<P align=justify>Our company relies on the business experience of our existing
management, on the technical abilities of consulting experts, and on the
technical and operational abilities of its operating partner companies to
evaluate business opportunities.</P>
<P align=justify><I>Competition</I></P>
<P align=justify>The biotech and biosciences industries are mature business
sectors with hundreds or thousands of corporate participants. We experience
competitive threats from existing and new companies, some of which are
multi-billion biotech firms against which our competitive position is easily
threatened. </P>
<P align=justify>The legal marijuana industry is comprised of several
sub-sectors, and is legal under different guidelines in many states though it
remains illegal under most federal laws. Notwithstanding, the overall sector is
generally recognized to be one of the fastest growing in the USA, with
state-legal revenue of over $4 billion in 2015. Independent projections and
publicized reports expect revenue of $20 billion or more in 2020, both as the
sector gains in credibility and acceptance, and as more and more states legalize
either medical use or adult recreational use; or both. In any fast growing
industry, competition is expected to be both strong and also difficult to
evaluate as to the most effective competitive threats. While we are an early
adopter within the cannabinoid delivery sector, there are already reports of
more than 300 public companies that have claimed to be involved in the sector in
some fashion; and an unknown number of private companies. Our current strategies
may prove to be ineffective as the sector grows and matures, and if so, we will
have to adapt quickly to changing sectoral circumstances.</P>
<P align=justify>Competition in alternative health sectors and in consumer
products in the USA is fierce. We expect to encounter competitive threats from
existing participants in the sector and new entrants. Although PoViva Tea LLC
has filed patent pending applications and obtained certain patents to protect
intellectual property, there is no assurance that patents will be granted nor
that other firms may not file superior patents pending. Food supplements,
organic foods, and health food markets are all well established and our Company
will face many challenges trying to enter these markets.</P>
<P align=justify><I>Compliance with Government Regulations </I></P>
<P align=justify>At least 26 States in the USA have passed some form of
legislation related to that state&#146;s permission to grow, cultivate, sell or use
marijuana either for medical purposes or for recreational or &#147;adult use&#148;
purposes; or both. The legislation that exists in one state is not necessarily
harmonious with that in another, leading to potential conflicts between state
laws. It is most often not legal to transport cannabis-related products across
state lines.</P>
<P align=justify>Lexaria does not &#147;touch the plant&#148; in any location within or
outside of the USA. We comply with federal law that provides for certain
exemptions for agricultural (industrial) hemp and certain byproducts to be
manufactured and sold in the US. Our technology may have applications within the
legal marijuana sector and we may seek to license that technology to companies
that have met and comply with state regulations for the sale or distribution of
cannabis related products in any particular jurisdiction. </P>
<P align=justify>Lexaria&#146;s patented and patent-pending technologies may also
have application in completely separate sectors such as vitamins, non-steroidal
anti-inflammatories, and nicotine. We have no products nor operations in any of
these sectors today. If we enter any of these sectors at any time, we will be
exposed to and will have to comply with, all local, state and federal
regulations in each of those sectors. As a result of the possibility of Lexaria
being involved in a number of disparate business sectors, compliance with government
regulations could require significant resources and expertise from our company.</P>
<P align=center>48</P>
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<P align=justify><I>Significant Acquisitions and Dispositions</I> </P>
<P align=justify>We do not intend to purchase any significant equipment over the
twelve months other than office computers, furnishings, and communication
equipment as required, although that strategy could change if food manufacturing
considerations demand it.</P>
<P align=justify><I>Research and Development</I></P>
<P align=justify>Lexaria incurred $54,185 (2016 $9,024) in research and
development expenditures over the last fiscal year. Following our successful
financing efforts during fiscal 2017, the Company announced a $1 million budget
to conduct research and development and additional scientific testing. Specific
research &amp; development programs are currently in the planning stage, and
will be refined, implemented or delayed according to our financial ability.
Because the Company&#146;s patent portfolio coverage is significantly expanded by the
notice of patent allowance issued by the USPTO in October 2017, Lexaria is
examining accelerated timetable options for testing, research and development of
nutritional &amp; health products falling within the scope of the notice of
allowance, namely those which employ our DehydraTECH<SUP>TM</SUP> technology as
a delivery platform for THC, fat soluble vitamins, non-steroidal
anti-inflammatory pain medications (&#147;NSAIDs&#148;), and for nicotine. For example,
the Company plans to conduct in vitro absorption tests of our patented
technology on molecules such as Vitamin E, Ibuprofen, and Nicotine. We also plan
to conduct our first ever in vivo absorption tests on CBD and on nicotine, all
during the upcoming fiscal year.</P>
<P align=justify>Depending on how many of these tests are undertaken, it could
require budgets of as much as $1,000,000, or as little as $65,000, to do so. It
is in our best interests to remain flexible at this early stage of our R&amp;D
efforts in order to capitalize on potential novel findings from early-stage
tests and thus re-direct research into specific avenues that offer the most
reward.</P>
<P align=justify><I>Contractors</I></P>
<P align=justify>We primarily use sub-contractors and consultants in the
intellectual property development and licensing, and alternative health product
sectors. We also primarily engage with consultants to serve our executive needs.
</P>
<P align=justify>On December 1, 2016 we entered into a Management Services
Agreement with CAB Financial Services Ltd (&#147;CAB&#148;) for the services of
Christopher Bunka for a fee of $12,000 per month. The term of the agreement is
two years but can be terminated by either party by providing two months&#146; notice.
The company may pay Mr. Bunka a bonus from time to time, at its sole discretion.
Mr. Bunka will be entitled to receive common stock-based and stock option based
bonuses upon achieving certain milestones during the time of his consultancy
with the company. These milestones are:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the first 12 months after the date of the
      agreement with CAB, upon the company achieving non- refundable revenues of
      $200,000 to any single customer in any consecutive 60-day period, CAB
      would be entitled to an award of 100,000 restricted common shares of the
      company and after the first 12-month period, expiring after 24 months of
      the amended agreement, upon the company achieving non-refundable revenues
      of $200,000 to any single customer in any consecutive 60-day period, CAB
      would be entitled to an award of 50,000 restricted common shares of the
      company. These awards are limited to one payment per customer during the
      24-month period but payable for each customer that meets the revenue
      thresholds. </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the first 12 months after the agreement, the
      company achieving non-refundable revenues of $500,000 in any fiscal
      quarter would result in an award to CAB of 200,000 common shares of the

      company and after the first 12 months, expiring 24 months after the
      amended agreement, the company achieving non- refundable revenues of
      $500,000 in any fiscal quarter would result in an award to CAB of 100,000
      common shares of the company. These awards are limited to one payment per
      fiscal quarter. </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the term of the agreement, for each provisional
      patent application substantively devised by CAB and successfully created,
      written and filed with the US Patent Office for the company&#146;s Technology,
      CAB will be entitled to an award of 250,000 restricted common shares of
      the company. </P></TD></TR></TABLE>
<P align=justify>On September 1, 2014, we entered into a contract with M&amp;E
Services Ltd., (&#147;M&amp;E&#148;) for the services of Allan Spissinger as Controller of
our Company in consideration of CAD$2,500 per month plus GST. This contract was
amended on December 1, 2014 to CAD$3,400 a month plus GST.
Additional work performed is billed on an hourly basis.</P>
<P align=center>49</P>
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<P align=justify>On June 1 2017, we entered a new contract with M&amp;E Services
  Ltd. following Allan Spissinger appointment as our Chief Financial Officer and
  Corporate Secretary. That agreement is for a term of one year, and provides for
  payment of CAD$8,000 per month plus good and services tax. Additional milestone
payments may be paid as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>During the first twelve (12) months after signing; for
      combined Lexaria Energy and ViPova products and including all combined
      sales efforts and/or technology licensing revenues, achieving
      non-refundable revenues of US$200,000 to any single customer in any
      consecutive 60-day period would result in a restricted common share award
      of 100,000 Company shares; and, after the first twelve (12) months after
      signing and expiring twenty-four (24) months after signing; for combined
      Lexaria Energy and ViPova products and including all sales efforts,
      achieving non-refundable revenues of US$200,000 to any single customer in
      any consecutive 60-day period would result in a restricted common share
      award of 50,000 Company shares; this clause limited to one payment per
      customer during the 24-month period, but payable on each customer that
      meets these sales/licensing thresholds; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="90%">
      <P align=justify></P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149; </TD>
    <TD align=left width="90%">
      <P align=justify>During the first twelve (12) months after signing; for
      combined Lexaria Energy and ViPova products and including all combined
      sales efforts and/or technology licensing revenues, achieving
      non-refundable revenues of US$500,000 in any fiscal quarter would result
      in a restricted common share award of 200,000 Company shares; and, after
      the first twelve (12) months after signing and expiring twenty-four (24)
      months after signing; for combined Lexaria Energy and ViPova products and
      including all sales efforts, achieving non-refundable revenues of
      US$500,000 in any fiscal quarter would result in a restricted common share
      award of 100,000 Company shares; this clause limited to one payment per
      fiscal quarter; </P></TD></TR></TABLE>
<P align=justify>We appointed Mr. John Docherty as President of Lexaria
effective April 15, 2015. On March 1, 2017 we entered into an agreement
with Docherty Management Limited for the services of Mr. Docherty which provides
for monthly compensation of CAD$15,000, plus additional milestone payments as
follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the first twelve months after signing; for
      combined Lexaria Energy and ViPova products and including all combined
      sales efforts and/or technology licensing revenues, achieving
      non-refundable revenues of $200,000 to any single customer in any
      consecutive 60-day period would result in a restricted common share award
      of 100,000 Company shares; and, after the first twelve months after
      signing and expiring twenty four months after signing; for combined
      Lexaria Energy and ViPova products and including all sales efforts,
      achieving non-refundable revenues of $200,000 to any single customer in
      any consecutive 60-day period would result in a restricted common share
      award of 50,000 Company shares; this clause limited to one payment per
      customer during the 24-month period, but payable on each customer that
      meets these sales/licensing </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD width="90%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the first twelve months after signing; for
      combined Lexaria Energy and ViPova products and including all combined
      sales efforts and/or technology licensing revenues, achieving
      non-refundable revenues of $500,000 in any fiscal quarter would result in
      a restricted common share award of 200,000 Company shares; and, after the
      first twelve months after signing and expiring twenty-four months after
      signing; for combined Lexaria Energy and ViPova products and including all
      sales efforts, achieving nonrefundable revenues of $500,000 in any fiscal
      quarter would result in a restricted common share award of 100,000 Company
      shares; this clause limited to one payment per fiscal quarter; </P></TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD width="90%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&#149;&nbsp;&nbsp;</TD>
    <TD align=left width="90%">
      <P align=justify>During the time this Agreement remains in effect, for
      each new provisional patent application substantially devised by
      Consultant and successfully created, written and filed with the US Patent
      Office for Company- owned intellectual property, a restricted common share
      award of 250,000 Company shares, this clause not limited to frequency of
      payment but each patent application to be approved by the Board of
      Directors of the company, in advance; </P></TD></TR></TABLE>
<P align=justify>On June 19,
  2017, we entered into an agreement with Phil
Ainslie, PhD, Professor and Canada Research Chair in Cerebrovascular Physiology
at the University of British Columbia Okanagan. Pursuant to the agreement Dr.
Ainslie shall design and manage R&amp;D programs on our behalf in consideration
of CAD$3,854 per month for a period of twelve months. The agreement shall
continue month to month following the term unless terminated with sixty days&#146;
notice.</P>
<P align=center>50</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_55></A>
<P align=justify>On June 19,  2017, the entered into a Management Services
Agreement with Alex Blanchard Capital for the services of Mr. Blanchard as
manager of our investor relations &amp; communications. The agreement is for six
months continuing month to month and may be terminated thereafter with one
month&#146;s notice for CAD$7,500 per month. Mr. Blanchard was granted 200,000
warrants exercisable at $0.29 and 300,000 stock options exercisable at $0.295
vesting 100,000 options at each of the 1st, 2nd and 3rd anniversaries of the
contract provided that the contract is not terminated. As at August 31st, 2017,
$37,878 was recognized in consulting for the grant of the warrants.</P>
<P align=justify>On August 15, 2017, we entered into a corporate development
services agreement with Mr. Adam Mogil for a term of one year. Pursuant to the
agreement we issued 500,000 warrants to Mr. Mogil in consideration of his
services. Each warrant entitles the consultant to purchase one common share of
the Company at a price of $0.44 per share with a term expiring on August 14,
2018. The Company recognized $34,344, representing the fair value of such
warrants. </P>
<P align=justify> On January 17, 2018 the Company engaged JGRNT Capital Corp to provide strategic business development services for a one-year term with base compensation set at CAD$1,000 (approximately USD$804) monthly.  The Company also awarded 500,000 warrants to JGRNT Capital Corp with each warrant exercisable for two years to purchase one common shares of the Company at the price of US$1.83. </P>
<P align=justify>We do not expect any material changes in the number of
employees over the next 12-month period. We do and will continue to outsource
contract employment as needed. However, with widespread consumer acceptance of
our new products that requires more significant operations, we may retain
additional employees.</P>
<P align=justify><B>Patents and Trademarks</B></P>
<P align=justify>Through the November 2014 acquisition of 51% of Poviva Teas LLC
(and the subsequent acquisition of 100% of PoViva Teas in October, 2017) Lexaria
acquired control of certain patents issued and pending with the United States
Patent Office and internationally. Lexaria has worked to broaden the patents and
extend their utility to molecules other than those originally named.</P>
<P align=justify>On June 11, 2015, Lexaria initiated the simultaneous filing of
a U.S. utility patent application and an International patent application under
the Patent Cooperation Treaty (PCT) procedure, both at the U.S. Patent and
Trademark Office (&#147;USPTO&#148;). These applications follow the company&#146;s 2014 and
2015 family of provisional patent application filings in the U.S. and serve two
additional broad purposes:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1) </TD>
    <TD>
      <P align=justify>Lexaria is seeking protection of its intellectual
      property under international treaties. To this end Lexaria has filed for
      PCT patent application protection. There are 148 countries that are
      signatories to the Patent Cooperation Treaty, including such major markets
      as Canada, China, India, much of Europe and the Middle East, the United
      Kingdom and Japan among others.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2) </TD>
    <TD>
      <P align=justify>Lexaria believes its lipid infusion technology has
      applications beyond the delivery of just cannabinoids. Based on further
      formulation testing, Lexaria has included additional lipophilic molecules
      that may be delivered via food and beverage formats utilizing its
      technology, widely encompassing three major new market opportunities for
      the company: Nicotine; Nonsteroidal Anti-Inflammatories (NSAIDs); and
      Vitamins.</P></TD></TR></TABLE>
<P align=justify>In December 2015, the Company filed two further provisional
patent applications in the U.S. These new applications served to further broaden
the variety and applicability of base compounds that can be used when
formulating the Company&#146;s lipid based technology. The first of these
applications identify compounds like edible starches (e.g., tapioca starch) that
are commonly used in food products today and could, therefore, serve as a base
for formulating and incorporating the Company&#146;s Technology into a wide variety
of every day food products. The second of these applications identify emulsifier
compounds like gum Arabic that are commonly used in beverage products today in
order to facilitate similar flexibility for formulating the Company&#146;s Technology
in every day, shelf-stable beverages. </P>
<P align=justify>On October 26, 2016, the USPTO issued U.S Patent No. 9474725,
Cannabinoid Infused Food and Beverage Compositions and Methods of Use Thereof,
pertaining to our method of improving bioavailability and taste of certain
cannabinoid lipophilic active agents in food products. This is the Company&#146;s
first patent granted and has a publish date of October 27, 2016 (June 10 2017 in
Australia No. 2015274698) and protects our technology for twenty years. The
technology consists of: the following patent applications, patents granted, and
PCT International Patent Applications; all technical know-how and trade secrets
in regard to such named patents, including the use, manufacture or formulation
thereof, that is owned or controlled by Lexaria as well as any future
continuations, continuations in part or divisional applications filed pursuant
to the patent applications: </P>
<P align=justify>U.S. Patent Granted No. 9,474,725 awarded October 27, 2016 and
scheduled to expire no sooner than June 10, 2035. </P>
<P align=center>51</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_56></A>
<P align=justify>U.S. Patent Granted No. 9,839,612 B2 awarded December 12, 2017.
</P>
<P align=justify>U.S. Provisional Patent Application No. 62/010,601. </P>
<P align=justify>U.S. Provisional Patent Application No. 62/037,706. </P>
<P align=justify>U.S. Provisional Patent Application No. 62/153,835. </P>
<P align=justify>U.S. Provisional Patent Application No. 62/161,324. </P>
<P align=justify>U.S. Provisional Patent Application No. 15/225,802. </P>
<P align=justify>U.S. Provisional Patent Application No. 62/264,959. </P>
<P align=justify>U.S. Provisional Patent Application No. 62/264,967. </P>
<P align=justify>U.S. Utility Patent Application No. 14/735,844. </P>
<P align=justify>PCT International Patent Application No. PCT/US15/35128. </P>
<P align=justify>PCT International Patent Application No. PCT/US16/64295. </P>
<P align=justify>PCT International Patent Application No. PCT/US16/64296. </P>
<P align=justify>National filings thereunder:
<BR>2949369,<BR>201580031524.X,<BR>15806768.6,<BR>201647041745.00 <BR>516371405
</P>
<P align=justify>Australian Patent Granted No. 2015274698 awarded June 15, 2017.
</P>
<P align=justify>On November 9, 2017, we announced our filing of a new patent
application with the US Patent and Trademark Office (&#147;USPTO&#148;) utilizing the
Lexaria DehydraTECH<SUP>TM</SUP> technology for delivery of phosphodiesterase
type 5 (PDE5) inhibitors such as sildenafil and tadalafil, which are commonly
sold under the trade names Viagra<SUP>TM</SUP> and Cialis<SUP>TM</SUP>,
respectively.</P>
<P align=center><B>DESCRIPTION OF PROPERTY</B></P>
<P align=justify><B>Principal Offices</B> </P>
<P align=justify>The address of our principal executive office is 156 Valleyview
Rd., Kelowna, BC, Canada, V1X 3M4. We have 1,500 square feet of office space,
which includes four executive offices for a monthly rate of CAD$826. Our current
locations provide adequate office space for our purposes at this stage of our
development. Additional space may be required if/as the company decides it
requires additional personnel.</P>
<P align=center><B>LEGAL PROCEEDINGS </B></P>
<P align=justify>We know of no material pending legal proceedings to which our
company or our subsidiary is a party or of which any of our properties, or the
properties of our subsidiary, is the subject. In addition, we do not know of any
such proceedings contemplated by any governmental authorities.</P>
<P align=justify>We know of no material proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial stockholder
is a party adverse to our company or our subsidiary or has a material interest
adverse to our company or our subsidiary.</P>
<P align=center>52</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_57></A>
<P align=center><B>MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY
</B><BR><B>AND RELATED STOCKHOLDER MATTERS </B></P>
<P align=justify><B>Market for Securities </B></P>
<P align=justify>Our common stock is quoted on the OTCQX  under the name &#147;Lexaria
Bioscience Corp.&#148; and the symbol &#147;LXRP&#148;. </P>
<P align=justify>On October 28, 2009 our shares were listed for trading on the
Canadian Securities Exchange under the Symbol &#147;LXX&#148;.</P>
<P align=justify>The following table reflects the high and low bid information for our common stock for each fiscal quarter during the fiscal years ended August 31, 2017 and 2016, and during the three month period ended November 30, 2017. The bid information for our common stock on the OTCQX was obtained from the OTC Markets and the sales price information for our common stock on the Canadian Securities Exchange was obtained from TMXMoney.com. These prices reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions. </P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="80%" border=1>

  <TR vAlign=top>
    <TD vAlign=bottom align=center></TD>
    <TD vAlign=bottom align=center width="32%" colSpan=2><B>OTC QB</B>
      <BR><B>(US Dollars)</B> </TD>
    <TD vAlign=bottom align=center width="32%" colSpan=2><B>Canadian
      Securities</B> <BR><B>Exchange</B><B><SUP>(1)</SUP></B> <BR><B>(Canadian
      Dollars)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Quarter Ended</B> </TD>
    <TD align=center width="16%"><B>High</B> </TD>
    <TD align=center width="16%"><B>Low</B> </TD>
    <TD align=center width="16%"><B>High</B> </TD>
    <TD align=center width="16%"><B>Low</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left> November 30, 2017 </TD>
    <TD align=center> 1.01 </TD>
    <TD align=center> 0.33 </TD>
    <TD align=center> 1.25 </TD>
    <TD align=center> 0.42 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>August 31, 2017 </TD>
    <TD align=center width="16%">0.42 </TD>
    <TD align=center width="16%">0.28 </TD>
    <TD align=center width="16%">0.49 </TD>
    <TD align=center width="16%">0.38 </TD></TR>
  <TR vAlign=top>
    <TD align=left>May 31, 2017 </TD>
    <TD align=center width="16%">0.63 </TD>
    <TD align=center width="16%">0.30 </TD>
    <TD align=center width="16%">0.70 </TD>
    <TD align=center width="16%">0.40 </TD></TR>
  <TR vAlign=top>
    <TD align=left>February 28, 2017 </TD>
    <TD align=center width="16%">0.64 </TD>
    <TD align=center width="16%">0.20 </TD>
    <TD align=center width="16%">0.74 </TD>
    <TD align=center width="16%">0.29 </TD></TR>
  <TR vAlign=top>
    <TD align=left>November 30, 2016 </TD>
    <TD align=center width="16%">0.32 </TD>
    <TD align=center width="16%">0.11 </TD>
    <TD align=center width="16%">0.41 </TD>
    <TD align=center width="16%">0.15 </TD></TR>
  <TR vAlign=top>
    <TD align=left>August 31, 2016 </TD>
    <TD align=center width="16%">0.15 </TD>
    <TD align=center width="16%">0.09 </TD>
    <TD align=center width="16%">0.23 </TD>
    <TD align=center width="16%">0.10 </TD></TR>
  <TR vAlign=top>
    <TD align=left>May 31, 2016 </TD>
    <TD align=center width="16%">0.11 </TD>
    <TD align=center width="16%">0.08 </TD>
    <TD align=center width="16%">0.19 </TD>
    <TD align=center width="16%">0.10 </TD></TR>
  <TR vAlign=top>
    <TD align=left>February 28, 2016 </TD>
    <TD align=center width="16%">0.28 </TD>
    <TD align=center width="16%">0.08 </TD>
    <TD align=center width="16%">0.19 </TD>
    <TD align=center width="16%">0.11 </TD></TR>
  <TR vAlign=top>
    <TD align=left>November 30, 2015 </TD>
    <TD align=center width="16%">0.23 </TD>
    <TD align=center width="16%">0.11 </TD>
    <TD align=center width="16%">0.31 </TD>
    <TD align=center width="16%">0.18 </TD></TR></TABLE>
</DIV><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><SUP>(1)</SUP> </TD>
    <TD>
      <P align=justify>On October 28, 2009 our shares were listed for trading on
      the Canadian Securities Exchange under the Symbol
&#147;LXX&#148;.</P></TD></TR></TABLE>
<P align=justify>Our common stock is issued in registered form. Computershare
Investor Services Inc., 3rd Floor, 510 Burrard Street, Vancouver, British
Columbia V6C 3B9, Canada (Telephone: (604) 661-9400; Facsimile: (604) 661-9401).
We have no other exchangeable securities. </P>
<P align=justify><B>Holders of Our Common Stock </B></P>
<p align="justify">As of February 5, 2018,  there were 35   registered holders of record of our common stock.&nbsp; As of such date, 71,001,039    of our common  stock were issued and outstanding.</p>
<P align=justify>The continuation will not affect the amount and percentage of
present holdings of our common stock beneficially owned by any person who is the
beneficial owner of more than 5% of our common stock and each director and
nominee and all directors and officers as a group, and our present commitments
to such persons with respect to the issuance of shares of our common stock. </P>
<P align=justify><B>Dividends </B></P>
<P align=justify>We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Although there are
no restrictions that limit the ability to pay dividends on our common shares,
our intention is to retain future earnings for use in our operations and the
expansion of our business. </P>
<P align=center>53</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<p align="center"><b>FINANCIAL STATEMENTS</b> </p>
<p><b>Financial Statements for the Three Month Period Ended November 30, 2017</b></p>
<p> Consolidated Balance Sheets (unaudited)</p>
<p> Consolidated Statements of Operations and Comprehensive Loss (unaudited) </p>
<p>Consolidated Statement of Stockholders&rsquo; Equity (Deficit) and Comprehensive Income (Loss) (unaudited)</p>
<p> Consolidated Statements of Cash Flows (unaudited) </p>
<p>Notes to the Consolidated Financial Statements </p>
<p align="center">54</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_3></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR>
    <B>CONSOLIDATED BALANCE
      SHEETS </B><BR>
  <B>(Expressed in U.S. Dollars)</B><BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>November 30</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>August 31</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2017</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2017</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>(Unaudited)</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=left nowrap>&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>ASSETS</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Cash </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>2,209,703</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>2,533,337</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Accounts and other receivables (Note 7) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>71,923</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>45,293</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Inventory (Note 8) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>77,436</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>67,174</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Prepaid expenses and deposit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>58,140</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>149,691</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;<B>Total Current
      Assets</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>2,417,202</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>2,795,495</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Patents (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>78,321</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>62,827</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>1,702</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>1,856</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>80,023</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>64,683</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>TOTAL ASSETS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>2,497,225</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>2,860,178</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Accounts payable and
      accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>59,854</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>32,574</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Unearned revenue (Note 10) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>10,833</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>17,083</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Due to related parties
      (Note 14) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>25,018</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>42,690</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Total Current Liabilities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>95,705</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>92,347</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>TOTAL LIABILITIES</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>95,705</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>92,347</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>STOCKHOLDERS' EQUITY</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Share Capital</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left
      bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Authorized:&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;220,000,000
      common voting shares with a par value of $0.001 per
      share&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued and outstanding:
      69,435,198 common shares at November 30,
      2017&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 67,975,761 common shares
      at August 31, 2017 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>69,435</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>67,976</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Additional paid-in capital</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>16,080,737</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>16,108,270</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Deficit</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(13,748,652</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(13,169,939</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Equity attributable to shareholders of the Company</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>2,401,520</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>3,006,307</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Non-Controlling Interest</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(238,476</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Total Stockholders' Equity</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>2,401,520</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>2,767,831</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>2,497,225</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>2,860,178</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements. </P>
<P align=center>55</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_4></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR>
    <B>CONSOLIDATED STATEMENTS OF
      OPERATIONS AND COMPREHENSIVE LOSS (unaudited) </B><BR>
  <B>(Expressed in U.S.
    Dollars, except number of shares)</B><BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center nowrap><B>THREE MONTHS ENDED</B> </TD>
    <TD align=right width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>November 30</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>November 30</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2017</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2016</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Revenue (Note 13)</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>24,635 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>9,225 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Cost of Goods Sold</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(6,099</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(888</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Gross profit</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>18,536</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>8,337</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Expenses</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounting and
      audit </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">17,691 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">6,099 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depreciation and Amortization (Note 9) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>375 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>372 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Insurance </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4,645 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">5,180 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Advertising and promotions </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>188,999 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>11,928 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Bank charges and
      exchange loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">5,691 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">75 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Consulting (Note 16) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>142,166 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>296,267 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest expense </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1,355 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Investor relations </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>188 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>23,717 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Legal and
      professional </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">59,903 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">9,996 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Office and miscellaneous </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>35,820 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>23,376 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Research and
      development </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">110,392 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">7,261 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Travel </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>27,833 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>19,840 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Inventory
      write-off (Note 8) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">3,546 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">3,424 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>597,249</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>408,890</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Net loss and comprehensive loss for the period</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>(578,713</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>(400,553</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Net loss and comprehensive loss
      attributable to:</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>Common
      shareholders</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>(578,713</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>(395,445</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>Non-controlling interest </B>(Note 9) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>-</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>(5,108</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Basic and diluted loss per share</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>(0.01</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>(0.01</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Weighted average number of common
      shares</B> <B>outstanding</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>- Basic and diluted</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>68,635,596</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>51,690,855</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements. </P>
<P align=center>56</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_5></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR>
    <B>CONSOLIDATED STATEMENTS OF
      CASH FLOWS (unaudited) </B><BR>
  <B>(Expressed in U.S. Dollars)</B><BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center nowrap><B>THREE MONTHS ENDED</B> </TD>
    <TD align=right width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>November 30</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap><B>November 30</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2017</B> </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2016</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Cash flows used in operating activities</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Net loss for the period </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(578,713</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(400,553</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net
      loss to net cash used in operating activities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%"></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%"></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Stock based compensation </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>27,104 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Depreciation and
      amortization </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">375 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">372 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Inventory write-off </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>3,546 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>3,424 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Shares issued for
      services </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">43,760 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Warrants issued for services </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>107,803 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Change in working capital: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Accounts and other receivables </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(26,630</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>82,028 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Inventory </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(13,808</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(19,062</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Prepaid expenses and deposit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>91,551 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,032</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounts payable
      and accrued liabilities </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">27,280 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">898 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Due to related parties </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(17,672</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>46,621 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Unearned revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(6,250</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">8,650 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Net cash used in operating
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>(520,321</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>(100,987</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flows used in investing
      activities</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Investment in Poviva </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(70,000</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Patent </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(15,715</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(13,684</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Net cash used in investing activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>(85,715</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>(13,684</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Cash flows from financing activities</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Repayment of loan to a
      related party </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(4,500</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Proceeds from issuance of equity </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">282,402 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">150,008 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Net cash from financing activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>282,402</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>145,508</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Increase (decrease) in cash</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(323,634</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>30,837 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Cash, beginning of period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">2,533,337 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">93,409 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash, end of period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff><B>2,209,703</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff><B>124,246</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Supplemental information of cash flows:</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Interest paid in cash </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,355 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Subscription funds receivable </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>-</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">600,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Common shares issued to
      settle accounts payable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>17,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Stock based compensation recognized in
      prepaid expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>-</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">9,537 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Reclassification of NCI
      to additional paid in capital on acquisition </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>238,476 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements.<B> </B></P>
<P align=center>57</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_6></A>
<P align=center><B>LEXARIA</B><B> </B><B>BIOSCIENCE</B><B> </B><B>CORP.</B><BR>
    <B>CONSOLIDATED</B><B> </B><B>STATEMENTS</B><B> OF </B><B>STOCKHOLDERS'</B><B> </B><B>EQUITY</B><B> </B><BR>
    <B>(Expressed</B><B> in U.S. </B><B>Dollars)</B><BR>
</P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
      <TD colspan="4" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">COMMON STOCK </TD>
      <TD width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    </TR>
    <TR>
      <TD align=left >&nbsp;</TD>
      <TD align=center width="1%" >&nbsp;</TD>
      <TD width="8%" align=center nowrap >&nbsp;</TD>
      <TD width="2%" align=center nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap >&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap >&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap >&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap >&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap >&nbsp;</TD>
      <TD align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%" >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>ADDITIONAL </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>TOTAL </TD>
      <TD align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%" >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>PAID-IN </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=left nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>STOCKHOLDERS&#146; </TD>
      <TD align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%" >&nbsp;</TD>
      <TD width="8%" align=right nowrap>SHARES </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>AMOUNT </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>CAPITAL </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>DEFICIT </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>NCI </TD>
      <TD width="2%" align=left nowrap >&nbsp;</TD>
      <TD width="1%" align=left nowrap >&nbsp;</TD>
      <TD width="8%" align=right nowrap>EQUITY </TD>
      <TD align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
      <TD width="8%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
      <TD width="8%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff><B>Balance, August 31, 2016</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>51,288,477</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>51,288</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>11,515,419</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%"
    bgColor=#e6efff><B>(11,300,662</B></TD>
      <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%"
bgColor=#e6efff><B>(178,288</B></TD>
      <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>87,757</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Shares issued for services </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">939,354 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">938 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">223,722 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">224,660 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Non-controlling Interest </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(60,188</TD>
      <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(60,188</TD>
      <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Stock based compensation (Note 12) </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">93,968 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">93,968 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Private placement of shares, net of
        issuance cost </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,104,280 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,105 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,537,637 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,541,742 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Warrants issued for services </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">292,750 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">292,750 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Exercise of stock options </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,014,125 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,015 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>176,247 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>177,262 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Exercise of warrants </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">10,322,025 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">10,322 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">2,222,710 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">2,233,032 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Conversion of debt </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>307,500 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>308 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>45,817 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>46,125 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Net loss and comprehensive loss </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,869,277</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,869,277</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff><B>Balance August 31, 2017</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>67,975,761</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>67,976</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>16,108,270</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%"
    bgColor=#e6efff><B>(13,169,939</B></TD>
      <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%"
bgColor=#e6efff><B>(238,476</B></TD>
      <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>2,767,831</B> </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Non-controlling Interest (Note 9) </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">(308,476</TD>
      <TD vAlign=bottom align=left width="2%" >) </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">238,476 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">(70,000</TD>
      <TD vAlign=bottom align=left width="2%" >) </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Exercise of stock options </TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>55,000 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>55 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>12,446 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>12,501 </TD>
      <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Exercise of warrants </TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">1,404,437 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">1,404 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">268,497 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">- </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%">269,901 </TD>
      <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Net loss and comprehensive loss </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>(578,713</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>(578,713</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD>
    </TR>
    <TR>
      <TD align=left >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="8%" >&nbsp;</TD>
      <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff><B>Balance, November 30, 2017
        (Unaudited)</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>69,435,198</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>69,435</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>16,080,737</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>(13,748,652</B></TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff><B>)</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>-</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>2,401,520</B> </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    </TR>
  </TABLE>
</DIV>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements. </P>
<P align=center>58</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_7></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>November 30, 2017</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Unaudited)</B> </TD>
  </TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    >&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>1.</B> </TD>
    <TD><P align=justify><B>Basis of Presentation</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The unaudited interim consolidated financial statements
      for the three months ended November 30, 2017 included herein have been
      prepared pursuant to the rules and regulations of the Securities and
      Exchange Commission. Certain information and footnote disclosures normally
      included in annual financial statements prepared in accordance with United
      States generally accepted accounting principles have been condensed or
      omitted pursuant to such rules and regulations. In the opinion of
      management, all adjustments considered necessary for a fair presentation
      have been included.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>These unaudited interim consolidated financial statements
      should be read in conjunction with the August 31, 2017 audited annual
      financial statements and notes thereto.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>2.</B> </TD>
    <TD><P align=justify><B>Organization, Business and Going Concern</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Lexaria Biosciences Corp. (&#147;Lexaria&#148;, or the &#147;Company&#148;)
      Company was formed on December 9, 2004 under the laws of the State of
      Nevada as an independent oil and gas company engaged in the exploration,
      development and acquisition of oil and gas properties in the United States
      and Canada. In March of 2014, the Company began its entry into the
      bioscience and alternative health and wellness business and discontinued
      its involvement in the oil and gas business in November 2014. In May 2016,
      the Company also commenced out- licensing its patented technology for
      improved delivery of bioactive compounds that promotes healthy ingestion
      methods, lower overall dosing and higher effectiveness in active molecule
      delivery. The Company has its office in Kelowna, BC, Canada.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 2, 2017, the Company announced it acquired
      100% ownership interest in its majority owned subsidiary PoViva Tea, LLC.
      The Company previously owned a 51% interest in PoViva Tea, LLC and
      acquired the remaining 49% interest. Compensation was $70,000, a waiver on
      certain debts, and a 5%, 20-year royalty on net profits of ViPova<sup>TM </sup>      Teatea, coffee, and hot chocolate sales. No Lexaria stock or
      options were issued. The 20-year royalty was determined to have a $Nil
      fair value as PoViva operates at a loss and future profitability is
    uncertain.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company&#146;s unaudited interim consolidated financial
      statements have been prepared in accordance with accounting principles
      generally accepted in the United States applicable to a going concern,
      which contemplates the realization of assets and the satisfaction of
      liabilities and commitments in the normal course of business. The Company
      has a net loss of $578,713 for the three months ended November 30, 2017
      (2016: $400,553) and had a deficit accumulated since its inception of
      $13,748,652 (August 31, 2017: $13,169,939). The Company had a working
      capital balance of $2,321,497 as at November 30, 2017 with net cash used
      in operating activities of $520,321 during the three months ended November
      30, 2017.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company requires additional funds to maintain its
      operations and developments. Management&#146;s plans in this regard are to
      raise equity and debt financing as required, but there is no certainty
      that such financing will be available or that it will be available at
      acceptable terms. The outcome of these matters cannot be predicted at this
      time.</P></TD>
  </TR>
</TABLE>
<p align="center">59</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name="page_8"></A> <BR>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
  <TR>
    <TD width=5% valign=top><B>3.</B> </TD>
    <TD><P align="justify"><B>Business Risk and Liquidity</B></P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">The Company is subject to several categories of risk associated with its operating activities. The production and sale of alternative health products is an emerging industry in which business practices are not yet standardized and
      are subject to frequent scrutiny and evaluation by federal, state, provincial, and municipal authorities, academics, and media outlets, among others. Although we intend to develop our businesses in accordance with best ethical practices, we may
      suffer negative publicity if we, our partners, contractors, or customers are found to have engaged in any environmentally insensitive practices or other business practices that are viewed as unethical.</P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">Our operations may require licenses and permits from various governmental authorities. We believe that we will be able to obtain all necessary licenses and permits under applicable laws and regulations for our operations and
      believe we will be able to comply in all material respects with the terms of such licenses and permits. However, such licenses and permits are subject to change in various circumstances. There can be no guarantee that we will be able to obtain or
      maintain all necessary licenses and permits, and failing to obtain or retain required licenses could have a materially adverse effect on the Company.</P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">Lexaria and its subsidiaries are not involved directly or indirectly in the cultivation, processing, distribution, or utilization of Cannabis or Cannabis derived components. All of Lexaria&rsquo;s consumer products utilize legally
      sourced Hemp and Hemp components in their production. Lexaria does have an ancillary involvement risk via out-licensing of its patented technology to licensees that choose to utilize its technology to manufacture products that contain locally or
      state approved but federally regulated and controlled contents. There can be no guarantee that changes in the regulatory framework and environment will not occur and such changes could have a materially adverse effect on the Company. It is possible
      some jurisdictions may even interpret Lexaria&rsquo;s ancillary involvement as in contravention with regulations.</P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5% valign=top><B>4.</B> </TD>
    <TD><P align="justify"><B>Basis of Consolidation</B></P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">The unaudited interim consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiary, Lexaria CanPharm Corp. which was incorporated on April 4, 2014 under the laws of Canada, and
      wholly-owned subsidiary PoViva Tea, LLC (2017 - 51% owned) which was incorporated on December 12, 2014, under the laws of the State of Nevada, and the 50%-owned subsidiary Ambarii Trade Corporation, which has no assets or liabilities, that was
      incorporated on April 24, 2017 under the laws of the Province of British Columbia. All significant inter-company balances and transactions have been eliminated.</P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5% valign=top><B>5.</B> </TD>
    <TD><P align="justify"><B>Estimates and Judgments</B></P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">The preparation of financial statements in conformity with U.S GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. The estimates and the
      associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and
      liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.</P></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width=5%></TD>
    <TD><P align="justify">In preparing these unaudited interim consolidated financial statements, the significant judgments made by management in applying the Company&rsquo;s accounting policies and the key sources of estimation uncertainty were the same
      as those applied to the consolidated financial statements for the year ended August 31, 2017.</P></TD>
  </TR>
</TABLE>
<p align="center">60</p>
<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">
<A name=page_9></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>6.</B> </TD>
    <TD><P align=justify><B>Recent Accounting Guidance Not Yet
      Adopted</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>In May 2014, the Financial Accounting Standards Board
      (the &#147;FASB&#148;) issued a new standard related to the revenue recognition.
      Under the new standard, recognition of revenue occurs when a customer
      obtains control of promised goods or services in an amount that reflects
      the consideration which the entity expects to receive in exchange for
      those goods or services. In addition, the standard requires disclosure of
      the nature, amount, timing, and uncertainty of revenue and cash flows
      arising from contracts with customers. The FASB has recently issued
      several amendments to the standards, including clarification on the
      accounting for licenses of intellectual property and identifying
      performance obligations.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The guidance permits two methods of adoption:
      retrospectively to each prior reporting period presented (full
      retrospective method), or retrospectively with the cumulative effect of
      initially applying the guidance recognized at the date of initial
      application (the cumulative catch-up transition method). The Company will
      apply the full retrospective approach to adopt the standard but does not
      anticipate that this standard will have a material impact on its
      consolidated financial statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>In January 2016, FASB issued a new standard to amend
      certain aspects of recognition, measurement, presentation, and disclosure
      of financial instruments. Most prominent among the amendments is the
      requirement for changes in fair value of equity investments, with certain
      exceptions, to be recognized through profit or loss rather than other
      comprehensive income. The new standard will be effective for the Company
      beginning September 1, 2018. The standard is not expected to have any
      impact on the Company&#146;s financial statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>In February 2016 FASB issued ASU No. 2016-02, Leases
      (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and
      provides principles for the recognition, measurement, presentation, and
      disclosure of leases for both lessees and the lessors. The new standard
      requires the lessees to apply a dual approach, classifying leases as
      either finance or operating leases based on the principle of whether or
      not the lease is effectively a financed purchase by the lessee. The
      classification will determine whether lease expense is recognized based on
      an effective interest method or on a straight-line basis over the term of
      the lease, respectively. A lessee is also required to record a
      right-of-use asset and a lease liability for all leases with a term of
      greater than twelve months regardless of classification. Leases with a
      term of twelve months or less will be accounted for similar to existing
      guidance for operating leases. The standard is effective for annual and
      interim periods beginning after December 15, 2018, with early adoption
      permitted upon issuance. When adopted, the Company does not expect this
      guidance to have a material impact on its consolidated financial
      statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>In June 2016, the FASB issued a new standard to replace
      the incurred loss impairment methodology in current U.S. GAAP with a
      methodology that reflects expected credit losses and requires
      consideration of a broader range of reasonable and supportable
      information to inform credit loss credit loss estimates. For trade and
      other receivables, loans and other financial instruments, the Company will
      be required to use a forward-looking expected loss model rather than the
      incurred loss model for recognizing credit losses which reflects losses
      that are probable. Credit losses relating to available for sale debt
      securities will also be recorded through an allowance for credit losses
      rather than as a reduction in the amortized cost basis of the securities.
      The new standard will be effective for Lexaria beginning September 1,
      2020, with early adoption permitted. Application of the amendments is
      through a cumulative-effect adjustment to deficit as of the effective
      date. The Company is currently assessing the impact of the standard on its
      consolidated financial statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD><P align=justify><B>Accounts and Other
      Receivables</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD width="2%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">August
      31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Trade and deposits receivable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,553 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,778 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Territory License Fee receivable (Note 10) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">10,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Sales tax receivable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>60,370 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>43,515 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>71,923</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>45,293</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">61</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_10></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>8.</B> </TD>
    <TD><P align=justify><B>Inventory</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD width="2%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">August
      31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Raw materials </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>36,040 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>14,220 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Finished goods </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">30,708 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">42,266 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Work in progress </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>10,688 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>10,688 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>77,436</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>67,174</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During the three months ended November 30 2017, the
      Company wrote down $3,546 (2016 - $3,424) of inventory to reflect its net
      realizable value.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>9.</B> </TD>
    <TD><P align=justify><B>Alternative Health Products</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 12, 2014, the Company signed an agreement
      with Poppy&#146;s Teas LLC (&#147;PoViva&#148;) and acquired 51% of ViPova&#153;. On November
      2, 2017, Lexaria announced that it acquired a 100% ownership interest in
      PoViva Tea, LLC, via cash compensation of $70,000, a waiver on certain
      debts owed to Lexaria, and a 5%, 20- year royalty on net profits of ViPova
      Tea<SUP>TM </SUP>tea, coffee, and hot chocolate sales. No Lexaria stock or
      options were issued. The 20-year royalty was determined to have a $Nil
      fair value as PoViva operates at a loss and future profitability is
      uncertain.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On August 11, 2015, Lexaria signed a license agreement
      with PoViva Tea LLC for $10,000, granting Lexaria a 35-year non exclusive
      worldwide license to unencumbered use of PoViva Tea LLC&#146;s IP Rights,
      including rights of resale. This license agreement ensures Lexaria has
      full access to the underlying patent pending infusion
      Technology.</P></TD>
  </TR>
</TABLE>
<BR>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="90%" border=1>
    <TR vAlign=top>
      <TD align=center nowrap>Issued Patent # <BR></TD>
      <TD width="20%" align=center nowrap >Patent <BR>
        Issuance Date </TD>
      <TD width="50%" align=center nowrap >Patent Family <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>9474725 </TD>
      <TD align=center width="20%" >10/25/2016 </TD>
      <TD align=center width="50%" rowSpan=2 >Food and Beverage
        Compositions Infused With <BR>
        Lipophilic Active Agents and Methods of Use
        Thereof </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>US 9839612 B2 </TD>
      <TD align=center width="20%" >12/12/2017 </TD>
    </TR>
  </TABLE>
</DIV>
<P style="MARGIN-LEFT: 5%" align=justify>The patents are amortized over their
  legal life of 20 years.</P>
<P style="MARGIN-LEFT: 5%" align=justify><B>Patents </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD width="2%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">August
      31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance &#150; Beginning </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>62,827 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>53,997 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Additions </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">15,715 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">9,699 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Amortization </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(221</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(869</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left>Balance &#150; Ending </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>78,321</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%"><B>62,827</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>October 19, 2017, the Company received a new Notice of  Allowance from the United States Patent and Trademark Office (&ldquo;USPTO&rdquo;) for the  use of its technology as a delivery platform for all cannabinoids including  THC; fat soluble vitamins; non steroidal anti-inflammatory pain medications (&ldquo;NSAIDs&rdquo;);  and nicotine. Lexaria expects formal patent issuance within three to four  months which is expected to provide protection until at least 2035. The patent  application number is 15/225,799, &ldquo;Food and Beverage Compositions Infused With  Lipophilic Active Agents and Methods of Use Thereof&rdquo; and on December 12, 2017,  Lexaria received patent US 9839612 B2 for this application.&nbsp; </P>
<P style="MARGIN-LEFT: 0%" align=center>62</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_11></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD><P align=justify><B>Unearned Revenue</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On May 14, 2016, the Company entered into a licensing
      agreement (the &#147;Licensing Agreement&#148;) with an arm&#146;s length party (the
      &#147;Licensee&#148;) allowing the Licensee, for a two-year period, to utilize the
      Company&#146;s Technology to create, test, manufacture, and sell
      marijuana-infused consumable and/or topical products, in the state of
      Colorado, with an option of extending the terms of the Licensing Agreement
      to Washington, Oregon, and California (the &#147;Territorial License&#148;). In
      addition to the granting of the license, the Company is required to
      provide support services to the Licensee in connection with the use of the
      Company&#146;s Technology during the term of the Licensing Agreement.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company determined that the provision of the support
      services is a separate deliverable under the licensing agreement. As the
      support services will not be sold on a stand-alone basis, the Company is
      unable to establish a vendor-specific objective evidence of fair value of
      such services to be able to objectively allocate the Territory License fee
      receipts between the license and the support services. Accordingly, the
      Company recognizes revenue pro-rated basis over the term of the Licensing
      agreement. During the three months ended November 30, 2017, the Company
      recognized $16,250 (Note 13), $6,250 of pro-rated income and $10,000 of
      additional Licensing Fees. As at November 30, 2017, a total of $10,000 in
      License Fees are receivable from the Licensee (August 31, 2017 -
      $Nil).</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD width="2%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-TOP: #000000 2px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">August
      31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap >&nbsp;</TD>
    <TD width="1%" align=left nowrap >&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance &#150; Beginning </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>17,083 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>12,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Territorial License fees received </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">30,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Advance payments on product sales </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4,900 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Earned revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(6,250</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(30,317</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
      bgColor=#e6efff>Balance - Ending </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="12%"
    bgColor=#e6efff><B>10,833</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="12%"
    bgColor=#e6efff><B>17,083</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>11.</B> </TD>
    <TD><P align=justify><B>Common Shares and Warrants</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2018 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On September 22, 2017, the Company received $93,750 from
      the exercise of warrants previously granted. The warrants were exercised
      at the price of $0.15, for a total of 625,000 common shares being
      issued.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On October 27, 2017 the Company extended the expiration
      date of warrants originally issued on January 9, 2017, with a one-year
      expiration date. The warrant quantity and exercise price remain unchanged,
      500,000 warrants exercisable at $0.44, will now expire on January 9,
      2019.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 9, 2017, the Company received $69,736 from
      the exercise of 364,250 warrants at prices of $0.14, $0.42, and $0.60; and
      55,000 options were exercised at the price of $0.2273 for proceeds of
      $12,501; for a total of 419,250 common shares being issued. The Company
      also issued 875 compensation warrants with an exercise price of $0.60
      expiring April 3, 2019. These compensation warrants were valued at $347
      and recorded as a share issue cost and within additional paid in capital
      for a net effect of $Nil.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 22, 2017, the Company received $118,915 from
      the exercise of warrants and compensation warrants previously granted. The
      compensation warrant was exercised at the price of $0.42. The warrants
      were exercised at prices of $0.14, $0.273, and $0.60, for a total of
      415,187 common shares being issued. The Company also issued 20,156
      compensation warrants with an exercise price of $0.60 expiring April 3,
      2019. These compensation warrants were valued at $7,990 and recorded as a
      share issue cost and within additional paid in capital for a net effect of
      $Nil.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A continuity schedule for warrants is presented
      below:</P></TD>
  </TR>
</TABLE>
<p align="center">63</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_12></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap >&nbsp;</TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="15%" align=center nowrap >Weighted Average </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap >Number of </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="15%" align=center nowrap >Exercise Price </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >Warrants </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="15%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance, August 31, 2016 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff >12,136,241 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="15%" bgColor=#e6efff >0.18 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Cancelled/Expired </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%" >(1,004,150</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" >0.22 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Exercised </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff >(10,322,025</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="15%" bgColor=#e6efff >0.23 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    >8,034,440 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="15%"
    >0.36 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance, August 31, 2017 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff >8,844,506 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="15%" bgColor=#e6efff >0.29 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%" >(1,404,437</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" >0.19 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff >21,031 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="15%"
    bgColor=#e6efff >0.60 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left>Balance, November
      30, 2017 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    >7,461,100 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center width="15%"
    >0.30 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The fair value of warrants granted as
  compensation warrants was estimated as of the date of the grant by using the
  Black-Scholes option pricing model with the following assumptions: </P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="70%" border=0>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD width="30%" align=center nowrap >November 30 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
      <TD width="30%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >2017 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Expected volatility </TD>
      <TD align=center width="30%" bgColor=#e6efff >100% &#150; 101% </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Risk-free interest rate </TD>
      <TD align=center width="30%" >1.21% </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Expected life </TD>
      <TD align=center width="30%" bgColor=#e6efff >1.36 &#150; 2.00
        years </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Dividend yield </TD>
      <TD align=center width="30%" >0.00% </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left
      bgColor=#e6efff>Estimated fair value per warrant </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center width="30%"
    bgColor=#e6efff >$0.40 </TD>
    </TR>
  </TABLE>
</DIV>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of warrants outstanding as of
  November 30, 2017 is presented below: </P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="60%" border=0>
    <TR vAlign=top>
      <TD align=center nowrap># of Warrants </TD>
      <TD width="33%" align=center nowrap>Weighted </TD>
      <TD width="33%" align=center nowrap>Weighted </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap>&nbsp;</TD>
      <TD width="33%" align=center nowrap>Average </TD>
      <TD width="33%" align=center nowrap>Average </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap>&nbsp;</TD>
      <TD width="33%" align=center nowrap>Remaining </TD>
      <TD width="33%" align=center nowrap>Exercise Price </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD
      width="33%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Contractual Life </TD>
      <TD width="33%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">$ </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>180,400 </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.03 years </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.27 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>450,000 </TD>
      <TD align=center width="33%">0.70 years </TD>
      <TD align=center width="33%">0.14 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>500,000 </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.70 years </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.44 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>2,650,666 &nbsp;&nbsp;&nbsp;</TD>
      <TD align=center width="33%">0.75 years </TD>
      <TD align=center width="33%">0.14 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>500,000 </TD>
      <TD align=center width="33%" bgColor=#e6efff>1.11 years </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.23 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>1,984,796 &nbsp;&nbsp;&nbsp;</TD>
      <TD align=center width="33%">1.34 years </TD>
      <TD align=center width="33%">0.60 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>245,238 </TD>
      <TD align=center width="33%" bgColor=#e6efff>1.34 years </TD>
      <TD align=center width="33%" bgColor=#e6efff>0.42 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>200,000 </TD>
      <TD align=center width="33%">1.55 years </TD>
      <TD align=center width="33%">0.29 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      bgColor=#e6efff>750,000 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="33%"
    bgColor=#e6efff>3.86 years </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="33%"
    bgColor=#e6efff>0.14 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center>7,461,100 &nbsp;&nbsp;&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="33%">1.26 years </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="33%">0.30 </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>12.</B> </TD>
    <TD><P align=justify><B>Stock Options</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company has established its 2014 Stock Option Plan
      whereby the board of directors may, from time to time, grant up to
      3,850,000 stock options to directors, officers, employees, and
      consultants. Stock options granted must be exercised no later than five
      years from the date of grant or such lesser period as determined by the
      Company&#146;s board of directors. The exercise price of an option is equal to
      or greater than the closing market price of the Company&#146;s common shares on
      the day preceding the date of grant. The vesting terms of each grant are
      set by the board of directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2018 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No stock options were granted during the period ended
      November 30, 2017.</P></TD>
  </TR>
</TABLE>
<p align="center">64</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_13></A>
<P style="MARGIN-LEFT: 5%" align=justify>A continuity schedule for stock options
  is presented below: </P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="90%" border=0>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD width="17%" align=center nowrap>&nbsp;</TD>
      <TD width="2%" align=left nowrap>&nbsp;</TD>
      <TD width="1%" align=left nowrap>&nbsp;</TD>
      <TD width="17%" align=center nowrap>Weighted </TD>
      <TD align=left width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD width="17%" align=right nowrap>Options </TD>
      <TD width="2%" align=left nowrap>&nbsp;</TD>
      <TD width="1%" align=left nowrap>&nbsp;</TD>
      <TD width="17%" align=center nowrap>Average Exercise </TD>
      <TD align=left width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp;</TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD width="17%" align=right nowrap>Outstanding </TD>
      <TD width="2%" align=left nowrap>&nbsp;</TD>
      <TD width="1%" align=left nowrap>&nbsp;</TD>
      <TD width="17%" align=center nowrap>Price </TD>
      <TD align=left width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
      <TD
      width="17%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD
    width="2%" align=left nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD
    width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="17%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Balance, August 31, 2016 </TD>
      <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
      <TD align=right width="17%" bgColor=#e6efff>3,485,000 </TD>
      <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
      <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
      <TD align=center width="17%" bgColor=#e6efff>0.15 </TD>
      <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Exercised </TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD align=right width="17%">(1,014,125</TD>
      <TD align=left width="2%">) </TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD align=center width="17%">0.17 </TD>
      <TD align=left width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Granted </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="17%"
    bgColor=#e6efff>850,000 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD width="1%" align=left bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="17%" align=center bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">0.14 </TD>
      <TD width="2%" align=left bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Balance, August 31, 2017 </TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD align=right width="17%">3,320,875 </TD>
      <TD align=left width="2%">&nbsp;</TD>
      <TD align=left width="1%">&nbsp;</TD>
      <TD align=center width="17%">0.15 </TD>
      <TD align=left width="2%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Exercised </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="17%"
    bgColor=#e6efff>(55,000</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>) </TD>
      <TD width="1%" align=left bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD width="17%" align=center bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">0.23 </TD>
      <TD width="2%" align=left bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left>Balance, November
        30, 2017 </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="1%">&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="17%">3,265,875 </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="2%">&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="1%">&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="17%">0.15 </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="2%">&nbsp;</TD>
    </TR>
  </TABLE>
</DIV>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of the stock options as at
  November 30 2017, is presented below: </P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="90%" border=0>
    <TR vAlign=top>
      <TD align=center nowrap>Number of Stock </TD>
      <TD width="20%" align=center nowrap>Number of Stock </TD>
      <TD width="20%" align=center nowrap>Weighted </TD>
      <TD width="20%" align=center nowrap>Weighted </TD>
      <TD width="20%" align=center nowrap>Aggregate </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap>Options </TD>
      <TD width="20%" align=center nowrap>Options </TD>
      <TD width="20%" align=center nowrap>Average </TD>
      <TD width="20%" align=center nowrap>Average </TD>
      <TD width="20%" align=center nowrap>Intrinsic Value </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap>&nbsp;</TD>
      <TD width="20%" align=center nowrap>Exercisable </TD>
      <TD width="20%" align=center nowrap>Remaining </TD>
      <TD width="20%" align=center nowrap>Exercise Price </TD>
      <TD width="20%" align=center nowrap>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD
      width="20%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
      <TD
      width="20%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">Contractual Life </TD>
      <TD width="20%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
      <TD width="20%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">$ </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>247,500 </TD>
      <TD align=center width="20%" bgColor=#e6efff>247,500 </TD>
      <TD align=center width="20%" bgColor=#e6efff>0.55 years </TD>
      <TD align=center width="20%" bgColor=#e6efff>0.09 </TD>
      <TD align=center width="20%" bgColor=#e6efff>231,188 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>193,375 </TD>
      <TD align=center width="20%">193,375 </TD>
      <TD align=center width="20%">1.65 years </TD>
      <TD align=center width="20%">0.23 </TD>
      <TD align=center width="20%">154,261 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>990,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>990,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>2.06 years </TD>
      <TD align=center width="20%" bgColor=#e6efff>0.10 </TD>
      <TD align=center width="20%" bgColor=#e6efff>915,750 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>275,000 </TD>
      <TD align=center width="20%">275,000 </TD>
      <TD align=center width="20%">2.18 years </TD>
      <TD align=center width="20%">0.09 </TD>
      <TD align=center width="20%">256,875 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>550,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>550,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>2.32 years </TD>
      <TD align=center width="20%" bgColor=#e6efff>0.09 </TD>
      <TD align=center width="20%" bgColor=#e6efff>513,750 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>110,000 </TD>
      <TD align=center width="20%">110,000 </TD>
      <TD align=center width="20%">2.80 years </TD>
      <TD align=center width="20%">0.17 </TD>
      <TD align=center width="20%">&nbsp; 93,750 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center bgColor=#e6efff>300,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>300,000 </TD>
      <TD align=center width="20%" bgColor=#e6efff>3.38 years </TD>
      <TD align=center width="20%" bgColor=#e6efff>0.11 </TD>
      <TD align=center width="20%" bgColor=#e6efff>274,500 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>200,000 </TD>
      <TD align=center width="20%">200,000 </TD>
      <TD align=center width="20%">4.51 years </TD>
      <TD align=center width="20%">0.37 </TD>
      <TD align=center width="20%">131,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      bgColor=#e6efff>400,000 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>100,000 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>4.56 years </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>0.29 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>292,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 3px double"
      align=center>3,265,875&nbsp;&nbsp;&nbsp; </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">2,965,875&nbsp;&nbsp;&nbsp; </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">2.58 years </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">0.15 </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">2,863,073&nbsp;&nbsp; </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>13.</B> </TD>
    <TD><P align=justify><B>Revenues</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD colspan="4" align=center nowrap>Three Months Ended </TD>
    <TD align=right width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap>November 30 </TD>
    <TD width="2%" align=left nowrap>&nbsp;</TD>
    <TD width="1%" align=left nowrap>&nbsp;</TD>
    <TD width="12%" align=right nowrap>November 30 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap>&nbsp;</TD>
    <TD width="1%" align=left nowrap>&nbsp;</TD>
    <TD width="12%" align=right nowrap>2016 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD
    width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Product sales </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>8,008 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>864 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Licensing revenue (Note 10) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">16,250 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">8,250 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Freight revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>377 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>111 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>24,635</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>9,225</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="2%">&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company recognizes licensing
  revenue on a pro-rated basis over the term of the Licensing Agreement (Note 10)
  and additional licensing fees as they are earned. During the period ended
  November 30, 2017, the Company recognized $6,250 of the pre-defined $50,000
  Licensing fees previously received and $10,000 of additional Licensing fees. As
  of November 30, 2017, a total of $39,167 of the $50,000 previously received
  payments has been recognized as licensing revenue over the life of the contract. </P>
<p align="center">65</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_14></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>14.</B> </TD>
    <TD><P align=justify><B>Related Party Transactions</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>For the period ended November 30, 2017, the Company
      paid/accrued the following:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD width="2%" align=left nowrap style="BORDER-TOP: #000000 2px solid">&nbsp;</TD>
    <TD width="1%" align=left nowrap style="BORDER-TOP: #000000 2px solid">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-TOP: #000000 2px solid">November
      30 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" align=left
  width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap>2017 </TD>
    <TD width="2%" align=left nowrap>&nbsp;</TD>
    <TD width="1%" align=left nowrap>&nbsp;</TD>
    <TD width="12%" align=right nowrap>2016 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="1%">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD
    width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD
    width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Management, consulting and accounting
      services: </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp; &nbsp;C.A.B Financial Services
      (&#147;CAB&#148;)<SUP>(1)</SUP> </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">36,000 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">30,230 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;M&amp;E Services Ltd.
      (&#147;M&amp;E&#148;)<SUP>(1)</SUP> </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>18,822 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>11,089 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp; &nbsp;Docherty Management Limited (&#147;Docherty
      Management&#148;)<SUP>(1)</SUP> </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">35,292 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">70,166 </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Company controlled by a director &#150;
      consulting </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>12,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>12,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%">102,114 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="12%">123,485 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
    width="2%">&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><SUP>(1) </SUP>CAB is owned by the CEO of the Company,
      M&amp;E is owned by the CFO of the Company June 1, 2017, and Docherty
      Management Limited (&#147;Docherty Management&#148;) is owned by the President of
      the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><U>Due to related parties:</U></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>As at November 30, 2017, $25,018 (August 31, 2017 -
      $42,690) was payable to related parties included in due to related
      parties.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The related party transactions are recorded at the
      exchange amount established and agreed to between the related
      parties.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>15.</B> </TD>
    <TD><P align=justify><B>Segment Information</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company&#146;s operations involve the development and
      usage, including licensing, of its proprietary nutrient infusion
      Technology. Lexaria is centrally managed and its chief operating decision
      makers, being the president and the CEO, use the consolidated and other
      financial information supplemented by revenue information by category of
      alternative health consumer products and technology licensing to make
      operational decisions and to assess the performance of the Company. The
      Company has identified two reportable segments: Intellectual Property
      Licensing and Consumer Products. Licensing revenues are significantly
      concentrated on a single licensee.</P></TD>
  </TR>
</TABLE>
<BR>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="90%" border=0>
    <TR vAlign=top>
      <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD width="20%"
    align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>IP Licensing</B> </TD>
      <TD width="20%"
    align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>Consumer Products</B> </TD>
      <TD
      width="20%" align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>Corporate</B> </TD>
      <TD
      width="20%" align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>Consolidated Total</B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>External Revenue </TD>
      <TD align=center width="20%" bgColor=#e6efff>16,250 </TD>
      <TD align=center width="20%" bgColor=#e6efff>8,385 </TD>
      <TD align=center width="20%" bgColor=#e6efff>- </TD>
      <TD align=center width="20%" bgColor=#e6efff>24,635 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>CoGS </TD>
      <TD align=center width="20%">- </TD>
      <TD align=center width="20%">(6,099) </TD>
      <TD align=center width="20%">- </TD>
      <TD align=center width="20%">(6,099) </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgColor=#e6efff>Operating Expenses </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>(59,581) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>(45,556) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>(492,112) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="20%"
    bgColor=#e6efff>(597,249) </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Segment Loss </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">(43,331) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">(43,270) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">(492,112) </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">(578,713) </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
      bgColor=#e6efff>Total Assets </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="20%"
    bgColor=#e6efff>78,321 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="20%"
    bgColor=#e6efff>79,138 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="20%"
    bgColor=#e6efff>2,339,766 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="20%"
    bgColor=#e6efff>2,497,225 </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>16.</B> </TD>
    <TD><P align=justify><B>Commitments, Significant Contracts and
      Contingencies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Management Agreements</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>As at November 30, 2017, the Company is party to the
      following contractual commitments:</P></TD>
  </TR>
</TABLE>
<p align="center">66</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_15></A><BR>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="90%" border=0>
    <TR vAlign=top>
      <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left><B>Party</B> </TD>
      <TD width="25%"
    align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>Monthly Commitment</B> </TD>
      <TD width="25%"
    align=center nowrap style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"><B>Expiry Date</B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>C.A.B Financial Services (1) (2) </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>$12,000 </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>November 30,
        2018 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Docherty Management Ltd. (1) (2) </TD>
      <TD vAlign=bottom align=right width="25%">CAD $15,000 </TD>
      <TD vAlign=bottom align=right width="25%">March 1, 2019 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>M&amp;E Services Ltd. (1) </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>CAD&nbsp;
        &nbsp;$8,000 </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>June 1, 2018 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Corporate Development(3) (4) </TD>
      <TD vAlign=bottom align=right width="25%">CAD&nbsp; &nbsp;$4,000 </TD>
      <TD vAlign=bottom align=right width="25%">Month to Month </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Advisory Agreement </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>CAD&nbsp;
        &nbsp;$4,000 </TD>
      <TD vAlign=bottom align=right width="25%" bgColor=#e6efff>March 24, 2018 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Investor relations and communications &#150; Alex Blanchard
        Capital(1) </TD>
      <TD vAlign=top align=right width="25%">CAD&nbsp;&nbsp; $7,500 </TD>
      <TD vAlign=top align=right width="25%">December 19, 2017 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
      bgColor=#e6efff>Research &amp; Development </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="25%" bgColor=#e6efff>CAD&nbsp; &nbsp;$3,854 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="25%" bgColor=#e6efff>June 19, 2018 </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Revenue Incentive Milestones</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><SUP>(1) </SUP>100,000 common shares issuable upon the
      Company achieving non-refundable revenues of $200,000 to any single
      customer in any consecutive 60-day period for the first 12 months of the
      contract, plus a further 50,000 common shares issuable upon achieving
      non-refundable revenues of $200,000 to any single customer in any
      consecutive 60-day period, during the 13th - 24th months of the contract.
      If the Company achieves non- refundable revenues of $500,000 in any fiscal
      quarter, a further 200,000 common shares may be issuable during the first
      12 months of the contract and 100,000 common shares during the 13th - 24th
      months of the contract.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Intellectual Property Milestones</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><SUP>(2) </SUP>During the term of the agreement, for each
      provisional patent application substantively devised and successfully
      created, written, and filed with the U.S. Patent Office for the Company&#146;s
      Technology, 250,000 restricted common shares of the Company will be
      issuable.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Corporate Development Milestones</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><SUP>(3) </SUP>For new customers sourced by the
      Consultant until July 10, 2017; for combined Lexaria Energy and ViPova
      products and including all combined sales efforts and/or technology
      licensing revenues, achieving non- refundable revenues of $200,000 to any
      single customer in any consecutive 60-day period would result in a
      restricted common share award of 100,000 Company shares (not achieved);
      and, from July 11, 2017, until July 10, 2018; a restricted common share
      award of 50,000 Company shares may be achieved; this clause is limited to
      one payment per customer during the 12-month period, but payable on each
      customer that meets these sales/licensing thresholds.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><SUP>(4) </SUP>For new customers sourced by the
      Consultant until July 10, 2017; for combined Lexaria Energy and ViPova
      products and including all combined sales efforts and/or technology
      licensing revenues, achieving non- refundable revenues of $500,000 in any
      fiscal quarter would result in a restricted common share award of 200,000
      Company shares (not achieved); and, from July 11, 2017, until July 10,
      2018; for combined Lexaria Energy and ViPova products and including all
      sales efforts, achieving non-refundable revenues of $500,000 in any fiscal
      quarter would result in a restricted common share award of 100,000 Company
      shares; this clause is limited to one payment per fiscal
      quarter.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>17.</B> </TD>
    <TD><P align=justify><B>Subsequent Events</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD><P align=justify>On December 1, 2017, the company received $6,733 from the
      exercise of a compensation warrant previously granted. The compensation
      warrant was exercised at $0.42 and a total of 16,031 common shares were
      issued. The Company also issued 8,016 warrants with an exercise price of
      $0.60 and an expiration date of April 3, 2019, related to the compensation
      warrant. Lexaria also issued 14,634 restricted common shares at an
      issuance price of $0.82 per shares to settle $12,000 of debt to a director
      of the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD><P align=justify>On December 1, 2017, Lexaria granted 200,000 stock
      options with an exercise price of $0.83 and an expiration date of December
      1, 2022 to an officer of the Company, pursuant to an
      existing management contract. Lexaria awarded 250,000 stock
      warrants with an exercise price of $0.83 and an expiration date of
      December 1, 2019 to a manager of the Company, pursuant to a management
      contract.</P></TD>
  </TR>
</TABLE>
<p align="center">67</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_16></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">c) </TD>
    <TD><P align=justify>On December 1, 2017, Lexaria awarded a total of 209,056
      restricted common shares at an issuance price of $0.82 as required by
      intellectual property performance thresholds within an existing management
      consulting contract with the Company divided between three officers and
      three managers.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">d) </TD>
    <TD><P align=justify>On December 22, 2017, the Company announced it received
      $95,857.20 from the exercise of stock warrants and a compensation option
      certificate previously granted. The compensation option certificate was
      exercised at $0.42 and a total of 7,200 common shares were issued. This
      exercise is by a third party who is neither an officer nor a director of
      the Company. The Company also received for exercise a total of 230,062
      warrants previously granted; being 9,000 at $0.14; 125,400 at $0.273; and
      95,662 at $0.60.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">e) </TD>
    <TD><P align=justify>On January 10, 2018,  the Company announced it received
      $216,851 from the exercise of warrants and stock options previously
      granted. 33,375 stock options were exercised at $0.2273 and 50,000 were
      exercised at $0.295 and 324,191 warrants at
    $0.60.</P></TD>
  </TR>
</TABLE>
<p align="center">68</p>
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<P align=center><B>FINANCIAL STATEMENTS</B> </P>
<P align=justify><B>Financial Statements for the Years Ended August 31, 2017 and
2016 </B></P>
<P align=justify>Report of Independent Registered Public Accounting Firm </P>
<P align=justify>Consolidated Balance Sheets </P>
<P align=justify>Consolidated Statements of Operations </P>
<P align=justify>Consolidated Statement of Stockholders&#146; Equity (Deficit) and
Comprehensive Income (Loss) </P>
<P align=justify>Consolidated Statements of Cash Flows </P>
<P align=justify>Notes to the Consolidated Financial Statements </P>
<P align=center>69</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=center><IMG src="forms4x59x1.jpg" border=0 width="770" height="50"></P>
<P align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
</B></P>
<P align=justify>To the Shareholders and Directors of <BR>Lexaria Bioscience
Corp. </P>
<P align=justify>We have audited the accompanying consolidated financial
statements of Lexaria Bioscience Corp. (the &#147;Company&#148;), which comprise the
consolidated balance sheets as of August 31, 2017 and 2016, and the related
consolidated statements of operations and comprehensive loss, changes in cash
flows, and stockholders&#146; equity for the years ended August 31, 2017 and 2016.
These consolidated financial statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.</P>
<P align=justify>We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. </P>
<P align=justify>In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Lexaria Bioscience Corp. as of August 31, 2017 and 2016, and the results of its
operations and its cash flows for the years ended August 31, 2017 and 2016 in
conformity with accounting principles generally accepted in the United States of
America. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=right width="50%"><B>&#147;DAVIDSON &amp; COMPANY LLP&#148;</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD align=right width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=right width="50%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Vancouver, Canada </TD>
    <TD align=right width="50%">Chartered Professional Accountants </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=right width="50%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>November 22, 2017 </TD>
    <TD align=left width="50%">&nbsp; </TD></TR></TABLE>
<P align=center><IMG src="forms4x59x2.jpg" border=0 width="105" height="52"> </P>
<P align=center><IMG src="forms4x59x3.jpg" border=0 width="408" height="41"> </P>
<P align=center>70</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_60></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR><B>CONSOLIDATED BALANCE
SHEETS </B><BR><B>(Expressed in U.S. Dollars)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2017</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>ASSETS</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Cash </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff><B>$</B></TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>&nbsp;</B><B>2,533,337</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;93,409 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Accounts and other
      receivable (Note 6) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>45,293</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">131,083 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Inventory
      (Note 7) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>67,174</B>
</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>134,724 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Prepaid expenses and
      deposit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>149,691</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">150,950 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>2,795,495</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>510,166 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Patent (Note 8) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>62,827</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">53,997 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Equipment
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>1,856</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>2,475 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>64,683</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">56,472 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>TOTAL ASSETS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>&nbsp;</B><B>2,860,178</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;566,638 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Accounts
      payable and accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff><B>$</B></TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>&nbsp;</B><B>32,574</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;90,010 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Unearned revenue (Note 9)
    </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>17,083</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">12,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Due to
      related parties (Note 14) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>42,690</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>331,371 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Total Current Liabilities</B> </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>92,347</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">433,881 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Convertible debenture (Note 10)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">45,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>TOTAL LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>92,347</B>
</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>478,881 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>STOCKHOLDERS' EQUITY</B>
    </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Share Capital (Note 11)</B> </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left
      bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Authorized:&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;220,000,000
      common voting shares with a par value of $0.001 per
      share&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued and outstanding:
      67,975,761 common shares at August 31,
      2017&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 51,288,477 common shares
      at August 31, 2016 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>67,976</B>
</TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>51,288 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff></TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Additional paid-in capital (Note 11)</B>
    </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>16,108,270</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">11,515,419 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Deficit</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(13,169,939</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(11,300,662</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Equity attributable to shareholders of the
      Company</B> </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>3,006,307</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">266,045 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Non-Controlling Interest
      (Note 8)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(238,476</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(178,288</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Total Stockholders' Equity</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>2,767,831</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">87,757 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>&nbsp;</B><B>2,860,178</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;566,638 </TD>
    <TD vAlign=bottom align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral party of these
consolidated financial statements.</P>
<P align=center>71</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_61></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR><B>CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS </B><BR><B>(Expressed in U.S. Dollars, except
number of shares)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="27%" colSpan=4><B>YEAR
      ENDED</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2017</B> </TD>
    <TD vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2016</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Revenue</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Sales (Note
      13) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">&nbsp;<B>63,639</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">&nbsp;40,718 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cost of Goods Sold</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Cost of
      goods sold </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>29,750</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">45,615 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Gross Profit / (Loss)</B>
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>33,889</B>
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(4,897</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Expenses</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounting
      and audit </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>74,087</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">95,921 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depreciation and Amortization (Note 8) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>1,488</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>619 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Insurance
    </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>19,652</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">17,237 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Advertising and promotions </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>209,034</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>185,459 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Bank
      charges and exchange loss </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(6,415</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">15,382 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Consulting (Note 12, 16) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>1,130,916</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>657,813 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest
      expense (Note 10) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>6,015</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2,250 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Investor relations (Note 12) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>91,681</B>
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>61,574 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Legal and
      professional </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>136,210</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">37,939 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Office and miscellaneous </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>118,863</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>97,077 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Research
      and development </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>54,185</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">9,024 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Taxes </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>(2,374</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>3,983 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Travel </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>61,401</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">44,034 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Inventory write-off (Note 7) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>68,611</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>44,040 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>1,963,354</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">1,272,352 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Net loss and comprehensive
      loss for the year</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>(1,929,465</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
    bgColor=#e6efff>&nbsp;(1,277,249</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Net loss and comprehensive loss
      attributable to:</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>Common shareholders</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>(1,869,277</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
    bgColor=#e6efff>&nbsp;(1,214,773</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>Non-controlling interest (Note 8)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(60,188</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;(62,476</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Basic and diluted loss per share</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;<B>(0.03</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;(0.03</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Weighted average number of
      common shares outstanding</B> <BR><B>- Basic and diluted</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>58,765,806</B> </TD>
    <TD vAlign=bottom align=right width="2%"  bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="1%"  bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>43,840,378</B> </TD>
    <TD vAlign=bottom align=left width="2%"
  bgColor=#e6efff></TD></TR></TABLE>
<P align=center>The accompanying notes are an integral party of these
consolidated financial statements.</P>
<P align=center>72</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_62></A>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B><BR><B>CONSOLIDATED STATEMENTS OF
CASH FLOWS </B><BR><B>(Expressed in U.S. Dollars)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="27%" colSpan=4><B>YEAR
      ENDED</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2017</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2016</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cash flows used in
      operating activities</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Net loss and
      comprehensive loss for the year </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(1,929,465</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;(1,277,249</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left
      bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net
      loss and comprehensive loss to net
      cash&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;used
      in operating activities: </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="2%"
  bgColor=#e6efff></TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Stock based compensation </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>113,044</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">122,015 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Depreciation and amortization </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>1,488</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>619 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Inventory write-off </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>68,611</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">44,040 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Common shares issued for interest (Note 10) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>1,125</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Common shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>207,660</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">79,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Warrants issued for services </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>292,750</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>32,252 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Change in working
      capital: </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts and other receivable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>(7,710</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(6,201</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Inventory </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(1,061</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(10,778</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Prepaid expenses and deposit </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
bgColor=#e6efff><B>(17,817</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>26,190 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Accounts payable and accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(40,436</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">56,937 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Due to related parties </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
    bgColor=#e6efff><B>(238,681</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>259,319 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Unearned revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>4,583</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">12,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Net cash used in operating
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(1,545,909</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(660,856</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cash flows used in
      investing activities</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Patent </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(9,699</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(17,008</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp;
      &nbsp;Acquisition of equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(3,094</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Net cash used in investing activities</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>(9,699</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(20,102</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Cash flows from financing activities</B>
    </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds
      from (Payments of) loans/convertible debentures </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
bgColor=#e6efff><B>(50,000</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>95,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Proceeds from issuance of
      equity </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>4,045,536</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">419,292 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Net cash from financing
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>3,995,536</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>514,292 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Change in cash</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>2,439,928</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(166,666</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Cash, beginning of year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>93,409</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">260,075 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cash, end of year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>2,533,337</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;93,409 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Supplemental information of cash
      flows:</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Interest
      paid in cash </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>4,890</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;2,250 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Income taxes paid in cash
    </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Shares
      issued to convert convertible debt </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>45,000</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Subscription funds
      receivable </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;93,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Stock
      based compensation recognized from prepaid expense </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>19,076</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;38,150 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Shares issued for
      services in accounts payable and accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>17,000</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these
consolidated financial statements.<B> </B></P>
<P align=center>73</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_63></A>
<P align=center><B>LEXARIA</B><B> </B><B>BIOSCIENCE</B><B>
</B><B>CORP.</B><BR><B></B><B>CONSOLIDATED</B><B> </B><B>STATEMENTS</B><B> OF
</B><B>STOCKHOLDERS'</B><B> </B><B>EQUITY</B><B>
</B><BR><B></B><B>(Expressed</B><B> in U.S. </B><B>Dollars)</B></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD width="1%" align=left vAlign=bottom noWrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center vAlign=bottom noWrap style="BORDER-BOTTOM: #000000 1px solid">COMMON STOCK
    </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">ADDITIONAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">PAID-IN </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">TOTAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">SHARES </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">AMOUNT </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">CAPITAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">DEFICIT </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">NCI </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">EQUITY </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="8%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD>
    <TD vAlign=bottom width="1%">&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp; </TD>
    <TD vAlign=bottom width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Balance, August 31,
      2015</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>43,838,286</B>
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>43,838</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>10,814,460</B>
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"
    bgColor=#e6efff><B>(10,085,889</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"
bgColor=#e6efff><B>(115,812</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>656,597</B>
</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">625,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">625 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">78,875 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">79,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Non-controlling Interest </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(62,476</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(62,476</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Stock based compensation (Note 12) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">83,865 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">83,865 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Private placement of shares,
      net of issuance cost </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>5,266,858 </TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>5,267 </TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>414,025 </TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=right width="2%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="1%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>419,292 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff></TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Private placement subscription receivable </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">1,558,333 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">1,558 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">91,942 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">93,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Warrants to be issued for
      services </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>32,252 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>32,252 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,214,773</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,214,773</TD>
    <TD vAlign=bottom align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Balance, August 31,
      2016</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>51,288,477</B>
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>51,288</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>11,515,419</B>
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"
    bgColor=#e6efff><B>(11,300,662</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"
bgColor=#e6efff><B>(178,288</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff><B>87,757</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">939,354 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">938 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">223,722 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">224,660 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Non-controlling Interest </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(60,188</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(60,188</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Stock based compensation (Note 12) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">93,968 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">93,968 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Private placement of shares,
      net of issuance cost </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,104,280 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,105 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,537,637 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,541,742 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Warrants issued for services </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">292,750 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">292,750 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Exercise of stock options </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,014,125 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,015 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>176,247 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>177,262 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Exercise of warrants </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">10,322,025 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">10,322 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">2,222,710 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">2,233,032 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Conversion of debt </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>307,500 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>308 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>45,817 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>46,125 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,869,277</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,869,277</TD>
    <TD vAlign=bottom align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Balance, August 31,
      2017</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>67,975,761</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>67,976</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>16,108,270</B> </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>(13,169,939</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>(238,476</B></TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%" bgColor=#e6efff><B>2,767,831</B> </TD>
<TD vAlign=bottom align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE></DIV>
<P align=center>The accompanying notes are an integral part of these
consolidated financial statements. </P>
<P align=center>74</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_64></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
  </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>August 31, 2017</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    >&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>1.</B> </TD>
    <TD>
      <P align=justify><B>Organization, Business and Going
  Concern</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Lexaria Biosciences Corp. (&#147;Lexaria&#148;,
or the &#147;Company&#148;) Company was formed on December 9, 2004 under the laws of the
State of Nevada as an independent oil and gas company engaged in the
exploration, development and acquisition of oil and gas properties in the United
States and Canada. In March of 2014, the Company began its entry into the
bioscience and alternative health and wellness business and discontinued its
involvement in the oil and gas business in November 2014. In May 2016, the
Company also commenced out-licensing its patented technology for improved
delivery of bioactive compounds that promotes healthy ingestion methods, lower
overall dosing and higher effectiveness in active molecule delivery. The Company
has its office in Kelowna, BC, Canada. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States (U.S. GAAP) applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. The Company has a net loss
attributable to its common shareholders of $1,869,277 for the year ended August
31, 2017 (2016: $1,214,773) and at August 31, 2017 had a deficit accumulated
since its inception of $13,169,939 (2016: $11,300,662). </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has a working capital
balance of $2,703,148 as at August 31, 2017 (2016: $76,285). The Company
requires additional funds to maintain its operations and developments.
Management&#146;s plans in this regard are to raise equity and debt financing as
required, but there is no certainty that such financing will be available or
that it will be available at acceptable terms. The outcome of these matters
cannot be predicted at this time.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>2.</B> </TD>
    <TD>
      <P align=justify><B>Business Risk and
Liquidity</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company is subject to several
categories of risk associated with its operating activities. The production and
sale of alternative health products is an emerging industry in which business
practices are not yet standardized and are subject to frequent scrutiny and
evaluation by federal, state, provincial, and municipal authorities, academics,
and media outlets, among others. Although we intend to develop our businesses in
accordance with best ethical practices, we may suffer negative publicity if we,
our partners, contractors, or customers are found to have engaged in any
environmentally insensitive practices or other business practices that are
viewed as unethical.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Our operations may require licenses and
permits from various governmental authorities. We believe that we will be able
to obtain all necessary licenses and permits under applicable laws and
regulations for our operations and believe we will be able to comply in all
material respects with the terms of such licenses and permits. However, such
licenses and permits are subject to change in various circumstances. There can
be no guarantee that we will be able to obtain or maintain all necessary
licenses and permits, and failing to obtain or retain required licenses could
have a materially adverse effect on the Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Lexaria and its subsidiaries are not
involved directly or indirectly in the cultivation, processing, distribution, or
utilization of Cannabis or Cannabis derived components. All of Lexaria&#146;s
consumer products utilize legally sourced Hemp and Hemp components in their
production. Lexaria does have an ancillary involvement risk via out-licensing of
its patented technology to licensees that choose to utilize its technology to
manufacture products that contain locally or state approved but federally
regulated and controlled contents. There can be no guarantee that changes in the
regulatory framework and environment will not occur and such changes could have
a materially adverse effect on the Company. It is possible some jurisdictions
may even interpret Lexaria&#146;s ancillary involvement as in contravention with
regulations. </P>
<P style="MARGIN-LEFT: 0%" align=center>75</P>
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  <TR>
    <TD vAlign=top width="5%"><B>3.</B> </TD>
    <TD>
      <P align=justify><B>Significant Accounting
Policies</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>a)</B> </TD>
    <TD>
      <P align=justify><B>Accounting Principles</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>These consolidated financial statements have been prepared
      in conformity with generally accepted accounting principles of the United
      States of America. All amounts, unless otherwise stated, are in United
      States dollars. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>b)</B> </TD>
    <TD>
      <P align=justify><B>Basis of Presentation</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>On December 16, 2015, the Company
completed a forward stock split of our authorized and issued and outstanding
shares of common stock on a basis of 1 old share of common stock for 1.1 new
shares of common stock. The forward stock split affected all the issued and
outstanding common shares, stock options, and warrants at the effective date and
increased authorized capital to 220,000,000, par value of $0.001. All common
shares numbers, numbers of stock options, and warrants and related per share
amounts disclosed in these consolidated financial statements have been
retroactively adjusted to reflect the forward stock split. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>c)</B> </TD>
    <TD>
      <P align=justify><B>Basis of Consolidation</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>These consolidated financial
statements include the financial statements of the Company, its wholly-owned
subsidiary, Lexaria CanPharm Corp. which was incorporated on April 4, 2014,
under the laws of Canada, 51%-owned subsidiary PoViva Tea, LLC which was
incorporated on December 12, 2014, under the laws of the State of Nevada, and
the 50%-owned subsidiary Ambarii Trade Corporation, which has no assets or
liabilities, that was incorporated on April 24, 2017 under the laws of the
Province of British Columbia. All significant inter-company balances and
transactions have been eliminated. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>d)</B> </TD>
    <TD>
      <P align=justify><B>Revenue Recognition</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Revenue from the sale of health
products is generally recognized when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable, and
collectability is reasonably assured. In most cases, these conditions are met
when the product is shipped to the customer. The Company reports its sales net
of the amount of actual sales returns and the amount of reserves established for
anticipated sales returns based upon historical return rates. Sales tax
collected from customers is excluded from net sales. </P>
<P style="MARGIN-LEFT: 10%" align=justify>Lexaria also enters into agreements to
license out its patented technology that can include various combinations of
services. Where elements are delivered over different periods of time, and when
allowed under U.S. GAAP, revenue is allocated to the respective elements based
on their relative selling prices at the inception of the arrangement, and
revenue is recognized as each element is delivered. The Company uses a hierarchy
to determine the fair value to be used for allocating revenue to elements: (i)
vendor-specific objective evidence of fair value (&#147;VSOE&#148;), (ii) third-party
evidence and (iii) best estimate of selling price (&#147;ESP&#148;). Generally VSOE is the
price charged when the deliverable is sold separately or the price established
by management for a product that is not yet sold if it is probable that the
price will not change before introduction into the marketplace. ESPs are
established as best estimates of what the selling prices would be if the
deliverables were sold regularly on a stand-alone basis. Given Lexaria&#146;s early
stage of such line of revenue, the Company&#146;s process for determining the VSOE
and ESP requires judgment and considers multiple factors that may vary overtime
depending upon the unique facts and circumstances related to each
deliverable.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>e)</B> </TD>
    <TD>
      <P align=justify><B>Inventory and Cost of
Sales</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company&#146;s inventory consists of
finished goods, work in progress, and raw materials. In all classes, inventory
is valued at the lower of cost or market. Cost is determined on a first-in,
first-out basis.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Cost of sales includes all
expenditures incurred in bringing the goods to the point of sale. Inventory
costs and costs of sales include direct costs of the raw material, inbound
freight charges, warehousing costs, handling costs (receiving and purchasing)
and utilities and overhead expenses related to the Company&#146;s manufacturing and
processing facilities. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>f)</B> </TD>
    <TD>
      <P align=justify><B>Cash and Cash Equivalents</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Cash equivalents comprise certain
highly liquid instruments with a maturity of three months or less when
purchased. As of August 31, 2017, and August 31, 2016, The Company held cash
only. <B></B></P>
<p align="center">76</p>
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  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>g)</B> </TD>
    <TD>
      <P align=justify><B>Equipment</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Equipment is stated at cost less
accumulated depreciation, and depreciated using the straight-line method over
its useful life of five years. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>h)</B> </TD>
    <TD>
      <P align=justify><B>Patents</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Capitalized patent costs represent
legal costs incurred to establish patents. When patents reach a mature stage,
any associated legal costs are comprised mostly of maintenance fees and are
expensed as incurred. Capitalized patent costs are amortized on a straight-line
basis over the remaining life of the patent. The Company was granted its first
patent on October 25, 2016 (Note 8), with a legal life of 20 years.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>i)</B> </TD>
    <TD>
      <P align=justify><B>Stock-Based Compensation</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Company accounts for its stock-based
compensation awards in accordance with ASC Topic 718, Compensation&#151;Stock
Compensation (&#147;ASC 718&#148;). ASC 718 requires all stock-based payments to
employees, including grants of employee stock options, to be recognized as
expense in the statements of operations based on their grant date fair values.
For stock options granted to employees and to members of the Board of Directors
for their services on the Board of Directors, the Company estimates the grant
date fair value of each option award 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 life of the option,
risk-free interest rates and expected dividend yields of the common stock.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Stock-based payments issued to
non-employees are recorded at their fair values, and are periodically revalued
as the equity instruments vest and are recognized as expense over the related
service period in accordance with the provisions of ASC 718 and ASC Topic 505,
Equity. For equity instruments granted to non-employees, the Company recognizes
stock-based compensation expense on vesting. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>j)</B> </TD>
    <TD>
      <P align=justify><B>Loss Per Share</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company applies the guidance in
ASC 260 Earnings Per Share. Loss per share is computed using the weighted
average number of shares outstanding during the period. Diluted loss per share
is equivalent to basic loss per share because the potential exercise of the
equity-based financial instruments was anti-dilutive.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>k)</B> </TD>
    <TD>
      <P align=justify><B>Foreign Currency
Translation</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company's operations are located
in the United States of America and Canada, and it has offices in Canada. The
Company maintains its accounting records in U.S. Dollars, as follows: </P>
<P style="MARGIN-LEFT: 10%" align=justify>At the transaction date, each asset,
liability, revenue and expense that was acquired or incurred in a foreign
currency is translated into U.S. dollars by the using of the exchange rate in
effect at that date. At the period end, monetary assets and liabilities are
translated at the exchange rate in effect at that date. The resulting foreign
exchange gains and losses are included in profit or loss. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>l)</B> </TD>
    <TD>
      <P align=justify><B>Financial Instruments</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>ASC 820 Fair Value Measurements and
Disclosures, requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 820
establishes a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A financial
instrument&#146;s categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. ASC 820
prioritizes the inputs into three levels that may be used to measure fair value: </P>
<P style="MARGIN-LEFT: 10%" align=justify>Level 1 - Quoted prices in active
markets for identical assets or liabilities; </P>
<P style="MARGIN-LEFT: 10%" align=justify>Level 2 - Inputs other than quoted
prices included within Level 1 that are either directly or indirectly
observable; and</P>
<p align="center">77</p>
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<P style="MARGIN-LEFT: 10%" align=justify>Level 3 - Unobservable inputs that are
supported by little or no market activity, therefore requiring an entity to
develop its own assumptions about the assumptions that market participants would
use in pricing.</P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company&#146;s financial instruments
consist primarily of cash, accounts and other receivable, accounts payable and
accrued liabilities, due to related parties, and convertible debenture. The
carrying amounts of cash, accounts and other receivable, accounts payable and
accrued liabilities, and due to related parties approximate their fair values
due to their short maturities. The carrying value of the Company&#146;s convertible
debenture approximates its fair value based on comparison of the interest rate
and terms of such debt to the rates and terms of debt currently available to the
Company. </P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company is located in Canada,
which results in exposure to market risks from changes in foreign currency
rates. The foreign currency exchange risk is the financial risk to the Company&#146;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 Company does
not hold a significant position in foreign currencies, such as the Canadian
dollar, and the impact of a change in a few basis points for USD/CAD is not
expected to be material.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>m)</B> </TD>
    <TD>
      <P align=justify><B>Income Taxes</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company applies the guidance in
ASC 740, Income Taxes, which requires the Company to recognize deferred tax
liabilities and assets for the expected future tax consequences of events that
have been recognized in the Company&#146;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.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>n)</B> </TD>
    <TD>
      <P align=justify><B>Impairment of Long-Lived
Assets</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Long-lived assets, including
equipment, and intangible assets, such as the Company&#146;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
recovered. 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 the 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. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>o)</B> </TD>
    <TD>
      <P align=justify><B>Comprehensive Income</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company applies ASC 220,
Comprehensive Income, which establishes standards for reporting and presentation
of comprehensive income, its components and accumulated balances. The Company
discloses this information on its Statement of Stockholders&#146; Equity.
Comprehensive income comprises equity changes except those transactions
resulting from investments by owners and distributions to owners.<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>p)</B> </TD>
    <TD>
      <P align=justify><B>Credit Risk and Receivable
  Concentration</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company places its cash with a
high credit quality financial institution. As of August 31, 2017, the Company
had approximately $2,533,000 in the bank (August 31, 2016: $93,000).</P>
<P style="MARGIN-LEFT: 10%" align=justify>As at August 31, 2017, the Company had
$43,515 (2016 - $27,583) in sales tax receivable (Note 6). The Company considers
its credit risk to be low for such receivable. </P>
<p align="center">78</p>
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  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>q)</B> </TD>
    <TD>
      <P align=justify><B>Convertible Debenture</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company accounts for its
convertible debt instruments that may be settled in cash upon conversion
according to ASC 470-20-30-22 which requires the proceeds from the issuance of
such convertible debt instruments to be allocated between debt and equity
components so that debt is discounted to reflect the Company&#146;s non-convertible
debt borrowing rate. </P>
<P style="MARGIN-LEFT: 10%" align=justify>Further, the Company applies ASC
470-20-35-13 which requires the debt discount to be amortized over the period
the convertible debt is expected to be outstanding as additional non-cash
interest expense. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>r)</B> </TD>
    <TD>
      <P align=justify><B>Commitments and
Contingencies</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>In accordance with ASC 450-20,
Accounting for Contingencies, the Company records accruals for such 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. Historically, the
Company has not experienced any material claims.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>s)</B> </TD>
    <TD>
      <P align=justify><B>Research and Development</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Research and development costs are
expensed as incurred. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>t)</B> </TD>
    <TD>
      <P align=justify><B>Advertising</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company expenses advertising costs
as they are incurred. The advertising expenses were $209,034 and $185,459 for
the years ended August 31, 2017 and 2016, respectively. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>4.</B> </TD>
    <TD>
      <P align=justify><B>Estimates and Judgments</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The preparation of financial statements
in conformity with U.S GAAP requires us to make certain estimates, judgments and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Some
of the Company&#146;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.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company reviews these estimates,
judgments and assumptions periodically and reflect the effects of 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 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Significant accounting estimates and assumptions are used for, but not
  limited to:<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>a)</B> </TD>
    <TD>
      <P align=justify><B>The Valuation of Deferred Tax
  Assets</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Judgement 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&#146;s history of losses, deferred tax assets have not
be recognized by Lexaria. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>b)</B> </TD>
    <TD>
      <P align=justify><B>Convertible Debenture</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company entered into a convertible
debenture agreement on March 8, 2016 (Note 10) and evaluated the terms of the
various conversion options to assess if separate accounting is required for such
embedded features, which are adjusted to fair value through earnings at each
reporting period. The Company determined that the embedded features within the debenture do not meet the net
settlement provision characteristic of a derivative and as a result, did not
apply the bifurcation requirements for such conversion options. </P>
<p align="center">79</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>c)</B> </TD>
    <TD>
      <P align=justify><B>Revenue Recognition of
Licenses</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>Pursuant to the license agreement for
the Company&#146;s lipid infusion technology (the &#147;Technology&#148;) (Note 9), the
licensee acquired territorial licenses for an upfront fee. The Company is also
required to provide support services in connection with the licensee&#146;s use of
the Technology over the term of the license. As the support services will not be
sold on a stand-alone basis, the Company is unable to establish VSOE of their
fair value to be able to allocate the proceeds objectively to such services and
the license. Accordingly, the up-front fee is being recognized ratably over the
term of the license, which is initially for two years.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>d)</B> </TD>
    <TD>
      <P align=justify><B>Value of Stock Options</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>The Company provides compensation
benefits to its employees, directors, officers, 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 is based on the historical volatility of the
Company&#146;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 life determination could have a material impact on the Company&#146;s profit
and loss for the periods presented. All estimates used in the model are based on
historical data which may not be representative of future results. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>5.</B> </TD>
    <TD>
      <P align=justify><B>New Accounting
Pronouncements</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>In May 2014, the Financial Accounting
Standards Board (the &#147;FASB&#148;) issued a new standard related to the revenue
recognition. Under the new standard, recognition of revenue occurs when a
customer obtains control of promised goods or services in an amount that
reflects the consideration which the entity expects to receive in exchange for
those goods or services. In addition, the standard requires disclosure of the
nature, amount, timing, and uncertainty of revenue and cash flows arising from
contracts with customers. The FASB has recently issued several amendments to the
standards, including clarification on the accounting for licenses of
intellectual property and identifying performance obligations. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The guidance permits two methods of
adoption: retrospectively to each prior reporting period presented (full
retrospective method), or retrospectively with the cumulative effect of
initially applying the guidance recognized at the date of initial application
(the cumulative catch-up transition method). The Company will apply the full
retrospective approach to adopt the standard but does not anticipate that this
standard will have a material impact on its consolidated financial
statements.</P>
<P style="MARGIN-LEFT: 5%" align=justify>In July 2015, FASB issued ASU 2015-11,
Simplifying the Measurement of Inventory (&#147;ASU 2015-11&#148;). ASU 2015-11 requires
that an entity measure inventory at the lower of cost and net realizable value.
This ASU does not apply to inventory measured using last-in, first-out
methodology. ASU 2015-11 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that reporting period.
The Company does not expect the new standard to have a significant impact on its
consolidated financial position, results of operations or cash flows. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In November 2015, the FASB issued
guidance that requires companies to classify all deferred tax assets or
liabilities as noncurrent on the balance sheet rather than separately disclosing
deferred taxes as current and noncurrent. This standard is effective for the
Company beginning on September 1, 2017 and can be applied either prospectively
or retrospectively to all periods presented upon adoption. The standard is not
expected to have any impact on the Company&#146;s financial statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In January 2016, FASB issued a new
standard to amend certain aspects of recognition, measurement, presentation, and
disclosure of financial instruments. Most prominent among the amendments is the
requirement for changes in fair value of equity investments, with certain
exceptions, to be recognized through profit or loss rather than other
comprehensive income. The new standard will be effective for the Company
beginning September 1, 2018. The standard is not expected to have any
impact on the Company&#146;s financial statements. </P>
<p align="center">80</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P style="MARGIN-LEFT: 5%" align=justify>In February 2016 FASB issued ASU No.
2016-02, Leases <I>(Topic 842)</I> which supersedes FASB ASC Topic 840, Leases
(Topic 840) and provides principles for the recognition, measurement,
presentation, and disclosure of leases for both lessees and the lessors. The new
standard requires the lessees to apply a dual approach, classifying leases as
either finance or operating leases based on the principle of whether or not the
lease is effectively a financed purchase by the lessee. The classification will
determine whether lease expense is recognized based on an effective interest
method or on a straight-line basis over the term of the lease, respectively. A
lessee is also required to record a right-of-use asset and a lease liability for
all leases with a term of greater than twelve months regardless of
classification. Leases with a term of twelve months or less will be accounted
for similar to existing guidance for operating leases. The standard is effective
for annual and interim periods beginning after December 15, 2018, with early
adoption permitted upon issuance. When adopted, the Company does not expect this
guidance to have a material impact on its consolidated financial statements.
</P>
<P style="MARGIN-LEFT: 5%" align=justify>In March 2016, the FASB issued ASU
2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee
Share-Based Payment Accounting. Under ASU 2016-09, companies will no longer
record excess tax benefits and certain tax deficiencies in additional paid in
capital (&#147;APIC&#148;). Instead, they will record all excess tax benefits and tax
deficiencies as income tax expense or benefit in the income statement and the
APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the
requirement that excess tax benefits be realized before companies can recognize
them. ASU 2016-09 also requires companies to present excess tax benefits as an
operating activity on the statement of cash flows rather than as a financing
activity. Furthermore, ASU 2016-09 will increase the amount an employer can
withhold to cover income taxes on awards and still qualify for the exception to
liability classification for shares used to satisfy the employer&#146;s statutory
income tax withholding obligation. An employer with a statutory income tax
withholding obligation will now be allowed to withhold shares with the fair
value up to the amount of taxes owed using the maximum statutory rate in the
employee&#146;s applicable jurisdiction(s). ASU 2016-09 requires a company to
classify the cash paid to a tax authority when shares are withheld to satisfy
its statutory income tax withholding obligation as a financing activity on the
statement of cash flows. Under current U.S. GAAP, it is not specified how these
cash flows should be classified. In addition, companies will now have to elect
whether to account for forfeitures on share-based payments by (1) recognizing
forfeiture awards as they occur or (2) estimating the number of awards expected
to be forfeited and adjusting the estimate when it is likely to change, as is
currently required. The amendments of this ASU are effective for reporting
periods beginning after December 15, 2016, with early adoption permitted but all
of the guidance must be adopted in the same period. The Company does not expect
this guidance to have a material impact on its consolidated financial
statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In June 2016, the FASB issued a new
standard to replace the incurred loss impairment methodology in current U.S.
GAAP with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to
inform credit loss credit loss estimates. For trade and other receivables, loans
and other financial instruments, the Company will be required to use a
forward-looking expected loss model rather than the incurred loss model for
recognizing credit losses which reflects losses that are probable. Credit losses
relating to available for sale debt securities will also be recorded through an
allowance for credit losses rather than as a reduction in the amortized cost
basis of the securities. The new standard will be effective for Lexaria
beginning September 1, 2020, with early adoption permitted. Application of the
amendments is through a cumulative-effect adjustment to deficit as of the
effective date. The Company is currently assessing the impact of the standard on
its consolidated financial statements. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>6.</B> </TD>
    <TD>
      <P align=justify><B>Accounts and Other
Receivable</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Trade and deposits receivable
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,778 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Territory License Fee receivable (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">10,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Sales tax receivable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>43,515 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>27,583 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Private placement receivable (Note 11) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">93,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>45,293 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>131,083 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<p align="center">81</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_71></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD>
      <P align=justify><B>Inventory</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Raw materials </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>14,220 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>27,358 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Finished goods </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">42,266 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">94,349 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Work in progress </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>10,688 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>13,017 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">67,174 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">134,724 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended August 31, 2017,
the Company wrote down $68,611 (2016 - $44,040) of inventory to reflect its net
realizable value. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>8.</B> </TD>
    <TD>
      <P align=justify><B>Alternative Health
Products</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>On November 12, 2014, the Company
signed an agreement with Poppy&#146;s Teas LLC. (&#147;PoViva&#148;) acquired 51% of ViPova&#153;.
The Company had the option to acquire an additional 24% interest in PoViva.
Lexaria acquired 100% ownership interest in PoViva Tea, LLC subsequent to August
31, 2017 via compensation of $70,000, a waiver on certain debts owed to Lexaria,
and a 5%, 20-year royalty on net profits of ViPova Tea<SUP>TM</SUP> tea, coffee,
and hot chocolate sales. No Lexaria stock or options were issued. </P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2017, the Company&#146;s
granted patent has a priority date of June 10, 2014, a publish date of October
25, 2016, and protects the Company&#146;s technology for twenty years. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 11, 2015, Lexaria signed a
license agreement with PoViva Tea LLC for $10,000, granting Lexaria a 35-year
non exclusive worldwide license to unencumbered use of PoViva Tea LLC&#146;s IP
Rights, including rights of resale. This license agreement ensures Lexaria has
full access to the underlying patent pending infusion Technology. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left><B>Patents</B> </TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 0px solid; BORDER-BOTTOM: #000000 2px solid"
    vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">August 31 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">August 31 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2017 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2016 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance &#150; Beginning </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>53,997 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>36,989 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Additions </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">9,699 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">17,008 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Amortization </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(869</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>Balance &#150; Ending </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">62,827 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">53,997 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>October 19, 2017, the Company received
a new Notice of Allowance from the United States Patent and Trademark Office
(&#147;USPTO&#148;) for the use of its technology as a delivery platform for all
cannabinoids including THC; fat soluble vitamins; non steroidal
anti-inflammatory pain medications (&#147;NSAIDs&#148;); and nicotine. Lexaria expects
formal patent issuance within three to four months which is expected to provide
protection until at least 2035. The patent application number is 15/225,799,
&#147;Food and Beverage Compositions Infused With Lipophilic Active Agents and
Methods of Use Thereof&#148;. </P>
<TABLE

style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>9.</B> </TD>
    <TD>
      <P align=justify><B>Unearned Revenue</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>On May 14, 2016, the Company entered
into a licensing agreement (the &#147;Licensing Agreement&#148;) with an arm&#146;s length
party (the &#147;Licensee&#148;) allowing the Licensee, for a two-year period, to utilize
the Company&#146;s Technology to create, test, manufacture, and sell
marijuana-infused consumable and/or topical products, in the state of Colorado,
with an option of extending the terms
of the Licensing Agreement to Washington, Oregon, and California (the
&#147;Territorial License&#148;). In addition to the granting of the license, the Company
is required to provide support services to the Licensee in connection with the
use of the Company&#146;s Technology during the term of the Licensing Agreement. </P>
<p align="center">82</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P style="MARGIN-LEFT: 5%" align=justify>The Company determined that the
provision of the support services is a separate deliverable under the Licensing
Agreement. As the support services will not be sold on a stand-alone basis, the
Company is unable to establish a vendor-specific objective evidence of fair
value of such services to be able to objectively allocate the Territorial
License fee receipts between the license and the support services. Accordingly,
the Company recognizes revenue ratably over the term of the Licensing Agreement.
As of August 31, 2017, the Company had received the full $50,000 of the
Territory License Fee. During the year ended August 31, 2017, $25,417 was
recognized as revenue (Note 13) with the remaining $17,083 deferred for
recognition in future periods. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance &#150; Beginning </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>12,500 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Territorial License fees received/receivable
      (Note 6) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">30,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">20,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Advance payments on product
      sales </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>4,900 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Earned revenue (Note 13) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(30,317</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(7,500</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Balance &#150; Ending </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>17,083 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>12,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD>
      <P align=justify><B>Convertible Debenture</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>On March 8, 2016, the Company closed a
private placement offering of a convertible debenture in the aggregate amount of
$45,000. The convertible debenture was to mature on August 31, 2020, with an
interest rate of 10% per annum (on a simple basis) and was convertible at
varying prices over time.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company determined that the
conversion options did not qualify as derivatives as they did not meet the net
settlement provision characteristics. The proceeds from the convertible
debenture therefore were not bifurcated on the balance sheet. </P>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended August 31, 2017,
the Company paid interest of $4,500 (2016 - $2,250) in connection with the
convertible debenture.</P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2017, the convertible
debenture was converted into common shares for the amount of $45,000 at $0.15
per share for 300,000 common shares plus the accrued interest of $1,125 for
7,500 shares for a total of 307,500 common shares issued on conversion.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>11.</B> </TD>
    <TD>
      <P align=justify><B>Common Shares and Warrants</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Fiscal 2017 Activity </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>During September and October 2017 the
Company received $93,500 of private placement receivable (Note 6) as at August
31, 2016. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 11, 2016, pursuant to its
agreement with Docherty Management Ltd. (Note 16), the Company issued 252,000
common shares with a value of $35,760. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 11, 2016, pursuant to the
Advisory Agreement, the Company issued 750,000 warrants with an exercise price
of $0.14 per share and term of five years, in return for consulting services.
The Company recognized the fair value of $32,252 from 250,000 of such warrants
for services received during the year ended August 31, 2016, and further
recognized $59,490 for the remaining 500,000 warrants issued in return for
consulting services received during the year ended August 31, 2017. </P>
<p align="center">83</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P style="MARGIN-LEFT: 5%" align=justify>The Company reached an agreement with a
director to settle the outstanding amount pursuant to an advisory agreement
(Note 14), through issuance of common shares of the Company.</P>
<DIV align=right>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="95%" border=1>

  <TR vAlign=top>
    <TD noWrap align=center ><B>Part 1 Date</B> </TD>
    <TD noWrap align=center width="20%"><B>Part
      2 Amount</B><B><SUP>(2)</SUP></B> </TD>
    <TD noWrap align=center width="20%"><B>Part 3 Shares</B> </TD>
    <TD noWrap align=center width="20%"><B>Part 4 Price</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >Part 5 October 31, 2016<SUP>(1)</SUP> </TD>
    <TD align=right width="20%">Part 6 $16,000 </TD>
    <TD align=center width="20%">Part 7 114,286 </TD>
    <TD align=right width="20%">Part 8 $0.14 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Part 9 February 27, 2017 </TD>
    <TD align=right width="20%">Part 10 $16,000 </TD>
    <TD align=center width="20%">Part 11 29,091 </TD>
    <TD align=right width="20%">Part 12 $0.55 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Part 13 May 31, 2017 </TD>
    <TD align=right width="20%">Part 14 $12,000 </TD>
    <TD align=center width="20%">Part 15 35,294 </TD>
    <TD align=right width="20%">Part 16 $0.34 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Part 17 August 25, 2017 </TD>
    <TD align=right width="20%">Part 18 $12,000 </TD>
    <TD align=center width="20%">Part 19 32,433 </TD>
    <TD align=right width="20%">Part 20 $0.37 </TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify>(1) A Total of $8,000 of the $16,000
was recognized as consulting fees during the year ended August 31, 2016. <BR>(2)
There was a $NIL difference between the fair value of the shares issued and the
carrying value of the debt. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On November 1, 2016, the Company issued
56,250 shares of its common stock for services amounting to $9,000, recognized
within accounts payable and accrued liabilities as at August 31, 2016.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On November 1, 2016, the Company issued
500,000 warrants to a consultant. Each warrant entitles the consultant to
purchase one common share of the Company at a price of $0.31 per share with a
term expiring on May 31, 2017. The Company recognized $48,313, representing the
fair value of such warrants. </P>
<P style="MARGIN-LEFT: 5%" align=justify>During November, 2016, the Company
provided to its warrant holders, an incentive for early exercise of their
previously held warrants. Upon exercise of each warrant, in addition to the
common shares of the Company, the warrant holders received a second warrant with
identical terms to purchase one additional common share of the Company. The
Company raised $737,508 from this early exercise warrant incentive program. A
total of 3,245,000 warrants were exercised at a weighted average exercise price
of $0.23 and the Company issued 3,245,000 common shares as well as 3,245,000
additional warrants to purchase common shares with an exercise price of $0.23
per share, expiring on May 14, 2017. The fair value of these additional warrants
was determined to be $298,777, and is recorded within additional paid-in capital
with a net effect of $nil.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On January 10, 2017, the Company issued
500,000 warrants to a consultant. Each warrant entitles the consultant to
purchase one common share of the Company at a price of $0.44 per share with a
term expiring on January 9, 2018. The Company recognized $112,725, representing
the fair value of such warrants. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On April 3, 2017, the Company closed
its brokered private placement of 4,104,280 units at a price per Unit of $0.42
for total gross proceeds of $1,723,798. Each Unit consists of one common share
and one-half of one Share purchase warrant (2,052,140). Each whole Warrant
entitles the holder to acquire one common share of the Company at a price of
$0.60 per Share for a period of 24 months. The Agents received a cash commission
of seven percent ($120,666) of the gross proceeds and 287,300 compensation units
exercisable for a period of 24 months at an exercise price of $0.42 consisting
of one common share and one half share purchase warrant. Each whole compensation
warrant is exercisable for one common share at an exercise price of $0.60 for a
period of 24 months following closing. The fair value of these compensation
units was determined to be $64,162. There was $61,390 of other share issuance
costs. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 19, 2017, pursuant to the
agreement with Alex Blanchard Capital (Note 16) the Company issued 200,000
warrants exercisable at $0.29 for two years. The Company recognized $37,878,
representing the fair value of such warrants. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 22, 2017, pursuant to the
agreement with Mr. Chris Bunka (Note 16), the Company issued 210,000 common
shares at $0.295 per share for $61,950, for services rendered as the Chief
Executive Officer of the Company. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 22, 2017, pursuant to the
agreement with Mr. John Docherty (Note 16), the Company issued 210,000 common
shares at $0.295 per share for $61,950, for services rendered as the President
of the Company. </P>
<p align="center">84</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P style="MARGIN-LEFT: 5%" align=justify>On August 15, 2017, the Company issued
500,000 warrants to a consultant. Each warrant entitles the consultant to
purchase one common share of the Company at a price of $0.44 per share with a
term expiring on August 14, 2018. The Company recognized $34,344, representing
the fair value of such warrants. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 25, 2017, the Company issued
307,500 shares at $0.15 per share of its common stock for the conversion of the
convertible debt of $45,000 plus accrued interest of $1,125 (Note 10). </P>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended August 31, 2017,
a total of 1,014,125 incentive stock options were exercised for proceeds of
$177,262. A total of 10,322,025 warrants were exercised for proceeds of
$2,233,032, of which 3,245,000 warrants related to the early exercise warrant
incentive program. </P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Fiscal 2016 Activity </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On September 16, 2015, the Company&#146;s
Board appointed Ted McKechnie as a Director of the Company. Mr. McKechnie was
issued 110,000 common shares of the Company valued at $19,000. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On December 10, 2015, Lexaria closed a
private placement by issuing 550,000 units for gross proceeds of $90,000. Each
unit consisted of one common share of the Company and one half transferable
share purchase warrant. Each full warrant is exercisable into one further share
at a price of $0.27 per share for a period of 24 months. A cash finders&#146; fee for
$2,520 was paid to Leede Financial Markets Ltd.; and 15,400 broker warrants with
an exercise price of $0.27 for a period of twenty-four months were also issued
to Leede Financial Markets Ltd. The fair value of these broker warrants was
determined to be $2,903. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On December 14, 2015, Lexaria signed an
investor relations contract with Radius Consulting Inc. for a fee of $2,500 and
55,000 common shares of Company valued at $9,500. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On April 15, 2016, pursuant to the
agreement with Mr. John Docherty (Note 16), the Company issued 210,000 common
shares valued at $21,000, for services rendered as the President of the Company.
</P>
<P style="MARGIN-LEFT: 5%" align=justify>On April 15, 2016, the Company closed a
private placement of 750,000 units at a price of $0.08 per unit for gross
proceeds of $60,000. Each unit consisted of one common share of the Company and
one non-transferrable share purchase warrant, entitling the holder to purchase
one additional common share in the capital of the Company for a period of 18
months at an exercise price of $0.15 per share. The Company also issued 8,750
broker warrants to Haywood Securities Ltd. The broker warrants have a term of 18
months and are each exercisable into one common share of the Company at a price
of $0.15. The fair value of these broker warrants was determined to be $805.
</P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 6, 2016, the Company closed a
private placement of 700,000 units priced at $0.11 per unit for gross proceeds
of $77,000. Each unit consisted of one common share of the Company and one-half
of a non-transferrable share purchase warrant with each warrant entitling the
holder to purchase one additional common share of the Company for a period of
three years at an exercise price of $0.14 per share. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 28, 2016, pursuant to an
agreement, in return for marketing, branding, and investor relations advisory
services, the Company issued 250,000 common shares of the Company valued at
$0.12 per share (Note 16). </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 10, 2016, the Company closed
a private placement by issuing 1,558,525 units at a price of $0.06 per unit for
gross proceeds of $93,512. Each unit consisted of one common share of the
Company and one non-transferable share purchase warrant entitling the holder to
purchase one additional common share in the capital of the Company for a period
of 24 months at an exercise price of $0.14 per share. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 31, 2016, the Company
completed a private placement by issuing 3,266,666 units at a price of $0.06 per
unit for gross proceeds of $196,000, of which $93,500 was collected during
September and October 2016. Each unit consisted of one common share of the
Company and one transferable share purchase warrant. Each full warrant is
exercisable into one further share at a price of $0.14 per share for a period of
24 months. A cash finders&#146; fee for $1,200 was paid and 50,000 broker warrants
with an exercise price of $0.14 for a period of twenty-four months were also
issued. The fair value of these broker warrants was determined to be $5,397.
</P>
<P style="MARGIN-LEFT: 5%" align=justify>A continuity schedule for warrants is
presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Weighted Average </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Number of </TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Exercise Price </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">Warrants </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2015 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>19,840,186 </TD>
    <TD vAlign=bottom align=right width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.23 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Expired </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(13,978,286</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.22 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>6,274,341 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.15 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Balance, August 31, 2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">12,136,241 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">0.18 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Cancelled/Expired </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(1,004,150</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.22 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Exercised </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(10,322,025</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.23 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>8,034,440 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.36 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>Balance, August 31, 2017 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">8,844,506 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">0.29 </TD>
<TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR></TR></TABLE>
<p align="center">85</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_75></A>
<P style="MARGIN-LEFT: 5%" align=justify>The fair value of share purchase
warrants granted as broker warrants, compensation units, and compensatory
warrants, was estimated as of the date of the grant by using the Black-Scholes
option pricing model with the following assumptions:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2017 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected volatility </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>102% - 138% </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>237% - 240% </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Risk-free interest rate </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.65% - 1.27% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.74% - 0.95% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected life </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>0.46 - 2 years
    </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>1.5 &#150; 2 years
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Dividend yield </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Estimated fair value per option </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>$0.09 - $0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=center
    width="1%" bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>$0.09 - $0.19 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of warrants outstanding as of
August 31, 2017 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center># of Warrants </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Weighted </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Weighted </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Average </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Average </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Remaining </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Exercise Price </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="33%">Contractual Life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="33%">$ </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>625,000 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.04 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.15 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>290,400 </TD>
    <TD vAlign=bottom align=center width="33%">0.28 years </TD>
    <TD vAlign=bottom align=center width="33%">0.27 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>500,000 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.36 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.23 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>450,000 </TD>
    <TD vAlign=bottom align=center width="33%">0.95 years </TD>
    <TD vAlign=bottom align=center width="33%">0.14 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>2,839,666 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>1.00 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.14 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>2,052,140 </TD>
    <TD vAlign=bottom align=center width="33%">1.59 years </TD>
    <TD vAlign=bottom align=center width="33%">0.60 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>287,300 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>1.59 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.42 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>350,000 </TD>
    <TD vAlign=bottom align=center width="33%">1.76 years </TD>
    <TD vAlign=bottom align=center width="33%">0.14 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>750,000 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>4.11 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.14 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>200,000 </TD>
    <TD vAlign=bottom align=center width="33%">1.80 years </TD>
    <TD vAlign=bottom align=center width="33%">0.29 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    bgColor=#e6efff>500,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="33%" bgColor=#e6efff>0.95 years </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="33%" bgColor=#e6efff>0.44 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom
      align=right>8,844,506 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="33%">1.34 years </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="33%">0.29 </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>12.</B> </TD>
    <TD>
      <P align=justify><B>Stock Options</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has established its 2014
Stock Option Plan whereby the board of directors may, from time to time, grant
up to 3,850,000 (post forward stock split) stock options to directors, officers,
employees, and consultants. Stock options granted must be exercised no later
than five years from the date of grant or such lesser period as determined by
the Company&#146;s board of directors. The exercise price of an option is equal to or
greater than the closing market price of the Company&#146;s common shares on the day
preceding the date of grant. The vesting terms of each grant are set by the
board of directors. <B><I></I></B></P>

<p align="center">86</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_76></A>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Fiscal 2017 Activity </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 10, 2016, the Company
granted 250,000 stock options to a consultant for business advisory services.
The exercise price of the stock options is $0.14 per share, vesting immediately
and expiring on October 10, 2018. On June 2, 2017, the Company granted 200,000
stock options to an officer of the Company. The exercise price of the stock
options is $0.37 per share, vesting immediately and expiring five years from the
date of grant. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 21, 2017, the Company granted
300,000 stock options to a consultant, 100,000 vesting annually for 3 years,
with an exercise price of $0.295 and expiring five years from the date of grant.
The company also granted 100,000 options to consultants vesting immediately with
an exercise price of $0.295 and expiring five years from the date of grant. </P>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended August 31, 2017,
the Company also recorded $113,044 of stock based compensation in Consulting on
the Income Statement of which $93,969 pertained to the stock options granted
during the period and $19,075 being the recognition of expense from previous
grants amortized from prepaid expenses. In 2016 the Company recorded $92,270 of
stock based compensation in Consulting and $29,745 in Investor Relations on the
Income Statement.</P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Fiscal 2016 Activity </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On September 16, 2015, the Company
granted 110,000 stock options to a director of the Company. The exercise price
of the stock options is $0.17, vesting immediately and expiring on September 16,
2020. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On April 15, 2016, the Company granted
300,000 to an officer of the Company. The exercise price of the stock options is
$0.11 per share, vesting immediately and expiring on April 15, 2021. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 3, 2016, the Company granted
325,000 stock options to a consultant, vesting immediately, with an exercise
price of $0.14 and expiring five years from the date of grant.</P>
<P style="MARGIN-LEFT: 5%" align=justify>A continuity schedule for stock options
is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Weighted Average </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Number of Options </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Exercise Price </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2015
      (vested and outstanding) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>4,070,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.15 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Expired </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(385,000</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.32 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Cancelled </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(935,000</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.16 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Granted </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">735,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">0.13 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2016
      (vested and outstanding) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>3,485,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.15 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Exercised </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(1,014,125</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.17 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Granted </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>850,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.14 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Balance, August 31, 2017 (outstanding) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">3,320,875 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">0.15 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Balance, August 31, 2017 (exercisable) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>3,020,875 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.14 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>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:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2017 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected volatility </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>98% - 108% </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>240% - 241% </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Risk-free interest rate </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.83% - 1.78% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">1.22% - 1.62% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected life </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>2 - 5 years </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>5 years </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Dividend yield </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Estimated fair value per option </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>$0.07 - $0.27 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="1%" bgColor=#e6efff></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>$0.11 - $0.19 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%">A summary of the Company&#146;s vested and outstanding
stock options as at August 31, 2017 is presented below: </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=center>Number of </TD>
    <TD noWrap align=center width="20%">Number of Stock </TD>
    <TD noWrap align=center width="20%">Weighted </TD>
    <TD noWrap align=center width="20%">Weighted </TD>
    <TD noWrap align=center width="20%">Aggregate </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center>Stock
      Options </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">Options </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">Average </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">Average </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">Intrinsic Value </TD>  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=center>&nbsp; </TD>
    <TD noWrap align=center width="20%">Exercisable </TD>
    <TD noWrap align=center width="20%">Remaining </TD>
    <TD noWrap align=center width="20%">Exercise Price </TD>
    <TD noWrap align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center>&nbsp;
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">Contractual Life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">$ </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%">$ </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center bgcolor="#e6efff">247,500 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">247,500 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">0.80 years </TD>
    <TD width="20%" align=center bgcolor="#e6efff">0.09 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">64,125 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center>248,375 </TD>
    <TD align=center width="20%">248,375 </TD>
    <TD align=center width="20%">1.90 years </TD>
    <TD align=center width="20%">0.23 </TD>
    <TD align=center width="20%">30,482 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center bgcolor="#e6efff">990,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">990,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">2.31 years </TD>
    <TD width="20%" align=center bgcolor="#e6efff">0.10 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">247,500 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center>275,000 </TD>
    <TD align=center width="20%">275,000 </TD>
    <TD align=center width="20%">2.43 years </TD>
    <TD align=center width="20%">0.09 </TD>
    <TD align=center width="20%">71,250 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center bgcolor="#e6efff">550,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">550,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">2.57 years </TD>
    <TD width="20%" align=center bgcolor="#e6efff">0.09 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">142,500 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center>110,000 </TD>
    <TD align=center width="20%">110,000 </TD>
    <TD align=center width="20%">3.05 years </TD>
    <TD align=center width="20%">0.17 </TD>
    <TD align=center width="20%">19,500 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center bgcolor="#e6efff">300,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">300,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">3.62 years </TD>
    <TD width="20%" align=center bgcolor="#e6efff">0.11 </TD>
    <TD width="20%" align=center bgcolor="#e6efff">72,000 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center>200,000 </TD>
    <TD align=center width="20%">200,000 </TD>
    <TD align=center width="20%">4.76 years </TD>
    <TD align=center width="20%">0.37 </TD>
    <TD align=center width="20%">(4,000) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=center bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">400,000 </TD>
    <TD
      width="20%" align=center bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">100,000 </TD>
    <TD width="20%" align=center bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">4.81
      years </TD>
    <TD width="20%" align=center bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">0.30
    </TD>
    <TD
      width="20%" align=center bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">22,000 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center>3,320,875 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">3,020,875 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">2.81 years </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">0.15 </TD>
<TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="20%">665,357 </TD></TR></TR></TABLE></DIV>
<p align="center">87</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_77></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>13.</B> </TD>
    <TD>
      <P align=justify><B>Revenues</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left>&nbsp;
    </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2017 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2016 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Product sales </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>16,866 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>31,743 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Licensing revenue (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">45,809 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">7,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Freight revenue </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>964 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,149 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Other revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">326 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>63,639 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>40,718 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company recognizes licensing
revenue on a pro-rated basis over the term of the Licensing Agreement (Note 9)
and additional licensing fees as they are earned. As of August 31 2017 the
company had received all of the predefined Licensing payments to August 31 2017
for cash receipts of $50,000 of Licensing fees and $20,392 of additional fees.
During the year ended August 31, 2017, $25,417 of the $50,000 was included (2016
$7,500) on a pro-rated basis and $20,392 (2016 $NIL) of additional fees as
licensing revenue. <B></B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>14.</B> </TD>
    <TD>
      <P align=justify><B>Related Party Transactions</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>For the year ended August 31, 2017, the
Company paid/accrued the following:<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left>&nbsp;
    </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2017 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">2016 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Management, consulting and accounting
      services: </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;C.A.B
      Financial Services (&#147;CAB&#148;)<SUP>(1)</SUP> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>136,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>120,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;M&amp;E Services Ltd.
      (&#147;M&amp;E&#148;)<SUP>(1)</SUP> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">54,963 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">30,794 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Docherty
      Management Limited (&#147;Docherty Management&#148;)<SUP>(1)</SUP> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>125,394 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>117,213 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Company controlled by a
      director &#150; consulting </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">48,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">8,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;BKB
      Management Ltd. (former CFO) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>44,767 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>&nbsp; &nbsp; &nbsp;Senior Vice President &#150; Executive
      management consulting </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">18,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>364,357 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>338,431 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(1) </SUP>CAB is owned by the CEO
of the Company, M&amp;E is owned by the CFO of the Company, appointed June
1<SUP>st</SUP> 2017, and Docherty Management Limited (&#147;Docherty Management&#148;) is
owned by the President of the Company.</P>
<p align="center">88</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_78></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="10%">Common shares </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="10%">Fair value </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="10%">Cash </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp;
      Docherty Management (Note 11,16) <SUP>(1) </SUP></TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>252,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>35,760 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>6,240 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>&nbsp;&nbsp;&nbsp;&nbsp; Docherty Management
      (Note 11,16) <SUP>(2) </SUP></TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">210,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="10%">61,950 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="10%">11,800 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp; CAB (Note 11,16) <SUP>(2)
    </SUP></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>210,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>61,950 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>11,800 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(1) </SUP>Issued in lieu of
issuance of 300,000 common shares, as mutually agreed to between the
parties.<SUP><BR></SUP><SUP>(2) </SUP>Issued in lieu of issuance of 250,000
common shares, as mutually agreed to between the parties. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Other transactions with related
parties: </U></P>
<P style="MARGIN-LEFT: 5%" align=justify>a) On July 25, 2016, the Company
entered into a loan agreement with CAB for a principal amount of $50,000. During
the year ended August 31, 2017, the Company repaid the full $50,000 principal to
CAB and also paid $1,515 in interest. </P>
<P style="MARGIN-LEFT: 5%" align=justify>b) During the year ended August 31,
2017, the Company sold $5,058 (2016 $NIL) of products to a director and an
officer of the company and paid $1,341 in rent to an officer of the company.</P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Due to related parties: </U></P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2017, $42,690 (August
31, 2016 - $331,371) was payable to related parties included in due to related
parties.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The related party transactions are
recorded at the exchange amount established and agreed to between the related
parties. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>15. </B></TD>
    <TD>
      <P align=justify><B>Segment Information</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s operations involve the
development and usage, including licensing, of its proprietary nutrient infusion
Technology. Lexaria is centrally managed and its chief operating decision
makers, being the president and the CEO, use the consolidated and other
financial information supplemented by revenue information by category of
alternative health consumer products and technology licensing to make
operational decisions and to assess the performance of the Company. The company
has identified two reportable segments: Intellectual Property Licensing and
Consumer Products. Licensing revenues are significantly concentrated on a single
licensee. </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%"><B>IP Licensing </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%"><B>Consumer Products </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%"><B>Corporate </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%"><B>Consolidated Total
</B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left bgColor=#e6efff>External Revenue </TD>
    <TD vAlign=bottom noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%" bgColor=#e6efff>45,809
</TD>
    <TD vAlign=bottom noWrap align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%" bgColor=#e6efff>17,830
</TD>
    <TD vAlign=bottom noWrap align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom noWrap align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%" bgColor=#e6efff>63,639
</TD>
    <TD vAlign=bottom noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>CoGS </TD>
    <TD vAlign=bottom noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%">- </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%">29,750 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%">- </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="10%">29,750 </TD>
    <TD vAlign=bottom noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    bgColor=#e6efff>Operating Expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>360,256 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>120,935 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>1,482,162 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>1,963,354 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>Segment Loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%">(314,447)</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%">(132,856)</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%">(1,482,162)</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="2%"> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="10%">(1,929,465)</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=left
    bgColor=#e6efff>Total Assets </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>62,827 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>69,030 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>2,728,321 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=center
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap
    align=center width="10%" bgColor=#e6efff>2,860,178 </TD>
<TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>16. </B></TD>
    <TD>
      <P align=justify><B>Commitments, Significant Contracts and
      Contingencies</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><STRONG><EM>Management and Service
Agreements </EM></STRONG></P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2017, the Company is
party to the following contractual commitments: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=left><B>Party </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="11%"><B>Monthly Commitment </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="11%"><B>Expiry Date </B></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>C.A.B Financial Services
      <SUP>(1) </SUP>(2) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>$12,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>November 30,
      2018 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Docherty Management Ltd. <SUP>(1) </SUP>(2)
    </TD>
    <TD vAlign=bottom align=left width="1%" ></TD>
    <TD vAlign=bottom align=right width="11%" >CAD $15,000 </TD>
    <TD vAlign=bottom align=left width="2%" ></TD>
    <TD vAlign=bottom align=left width="1%" ></TD>
    <TD vAlign=bottom align=right width="11%">March 1, 2018 </TD>
    <TD vAlign=bottom align=left width="2%" ></TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>M&amp;E Services Ltd.
      <SUP>(1) </SUP></TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>CAD $8,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>June 1, 2018 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Corporate Development<SUP>(3) </SUP>(4) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">CAD $4,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">Month to Month </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Advisory Agreement </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">CAD $4,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">March 24, 2018 </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD>  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Investor relations and
      communications &#150; Alex Blanchard Capital<SUP>(1)</SUP> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>CAD $7,500 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>December 19,
      2017 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>Research &amp; Development </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">CAD $3,854 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">June 19, 2018 </TD>
<TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR></TR></TABLE>
<p align="center">89</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_79></A>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Revenue Incentive Milestones
</I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(1) </SUP>100,000 common shares
issuable upon the Company achieving non-refundable revenues of $200,000 to any
single customer in any consecutive 60-day period for the first 12 months of the
contract, plus a further 50,000 common shares issuable upon achieving
non-refundable revenues of $200,000 to any single customer in any consecutive
60-day period, during the 13th - 24th months of the contract. If the Company
achieves non-refundable revenues of $500,000 in any fiscal quarter, a further
200,000 common shares may be issuable during the first 12 months of the contract
and 100,000 common shares during the 13th - 24th months of the contract. </P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Intellectual Property Milestones
</I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(2) </SUP>During the term of the
agreement, for each provisional patent application substantively devised and
successfully created, written, and filed with the U.S. Patent Office for the
Company&#146;s Technology, 250,000 restricted common shares of the Company will be
issuable. </P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Corporate Development
Milestones</I></B> </P>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(3) </SUP>For new customers
sourced by the Consultant until July 10, 2017; for combined Lexaria Energy and
ViPova products and including all combined sales efforts and/or technology
licensing revenues, achieving non-refundable revenues of $200,000 to any single
customer in any consecutive 60-day period would result in a restricted common
share award of 100,000 Company shares (not achieved); and, from July 11, 2017,
until July 10, 2018; a restricted common share award of 50,000 Company shares
may be achieved; this clause is limited to one payment per customer during the
12-month period, but payable on each customer that meets these sales/licensing
thresholds. </P>
<P style="MARGIN-LEFT: 5%" align=justify><SUP>(4) </SUP>For new customers
sourced by the Consultant until July 10, 2017; for combined Lexaria Energy and
ViPova products and including all combined sales efforts and/or technology
licensing revenues, achieving non-refundable revenues of $500,000 in any fiscal
quarter would result in a restricted common share award of 200,000 Company
shares (not achieved); and, from July 11, 2017, until July 10, 2018; for
combined Lexaria Energy and ViPova products and including all sales efforts,
achieving non-refundable revenues of $500,000 in any fiscal quarter would result
in a restricted common share award of 100,000 Company shares; this clause is
limited to one payment per fiscal quarter. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>17.</B> </TD>
    <TD>
      <P align=justify><B>Income Tax</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The following table reconciles the
income tax benefit at the U.S. Federal statutory rate to income tax benefit at
the Company&#146;s effective tax rates as at August 31, 2017 and 2016: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=right>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right>&nbsp; </TD>
    <TD vAlign=bottom noWrap align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=right width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Loss before taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(1,933,473</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>(1,277,249</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Expected income tax recovery </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(676,716</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(447,037</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Non-deductible items </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>242,716 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>101,040 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Change in estimates </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(174,135</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(897,713</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Change in valuation allowance </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>608,216 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>1,243,710 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>Total income taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>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, 2017 and
2016 are comprised of the following: </P>
<p align="center">90</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="30%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="30%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="30%">2017 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="30%">2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="2%" >&nbsp;</TD>  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=left width="1%"></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=right width="12%">$</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=left width="1%"></TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=right width="12%">$</TD>
    <TD style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Non-capital losses </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>4,567,920 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>3,959,704 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Valuation allowance </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(4, 567,920</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(3,959,704</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Net deferred tax assets recognized </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
<TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has net operating loss
carryforwards of approximately $13,051,000 which may be carried forward to apply
against future year income tax for U.S. tax purposes. </P>
<DIV align=left>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>Year </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">Amount </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2025 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>76,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2026 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">508,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2027 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,056,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2028 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">720,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2029 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>753,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2030 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">552,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2031 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>538,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2032 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">252,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2033 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>344,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2034 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">3,257,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>2035 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>2,268,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD vAlign=bottom align=left>2036 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">989,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>2037 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>1,738,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom
      align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">13,051,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD></TR></TABLE></DIV>
<p align="center">91</p>
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noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>18.</B> </TD>
    <TD>
      <P align=justify><B>Subsequent Events</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>On September 15th, 2017, the Company issued 625,000

      shares of its common stock from the exercise of warrants previously
      granted for proceeds of $93,750. All warrants were exercised by third
      parties who are neither officers nor directors of the Company.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>On October 31st, 2017, the Company announced it received
      a Notice of Allowance from the United States Patent and Trademark Office
      (&#147;USPTO&#148;) for the use of its technology as a delivery platform for all
      cannabinoids including THC; fat soluble vitamins; non steroidal
      anti-inflammatory pain medications (&#147;NSAIDs&#148;); and nicotine. The patent
      application number is 15/225,799, &#147;Food and Beverage Compositions Infused
      With Lipophilic Active Agents and Methods of Use Thereof&#148;.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">c) </TD>
    <TD>
      <P align=justify>On November 2nd, 2017, the Company announced it acquired
      100% ownership interest in its majority owned subsidiary PoViva Tea, LLC.
      The Company previously owned a 51% interest in PoViva Tea, LLC and
      acquired the remaining 49% interest. Compensation was US$70,000, a waiver
      on certain debts, and a 5%, 20- year royalty on net profits of ViPova
      Tea<SUP>TM </SUP>tea, coffee, and hot chocolate sales. No Lexaria stock or
      options were issued.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">d) </TD>
    <TD>
      <P align=justify>On November 8th, 2017, the Company issued 419,250 shares
      of its common stock from the exercise of options and warrants previously
      granted for proceeds of $69,736. All options and warrants were exercised
      by third parties who are neither officers nor directors of the
    Company.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">e) </TD>
    <TD>
      <P align=justify>On November 22nd, 2017, the Company issued 427,687 shares
      of its common stock from the exercise of warrants previously granted for
      proceeds of $129,416. All options and warrants were exercised by third
  parties who are neither officers nor directors of the Company. </P></TD></TR></TABLE>
<p align="center">92</p>
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<A name=page_82></A>
<P align=center><B>FINANCIAL STATEMENTS</B> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>Financial Statements for the Years Ended August 31, 2016
      and 2015</B> </TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_83">Report
      of Independent Registered Public Accounting Firm </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_85">Consolidated
      Balance Sheets </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_86">Consolidated
      Statements of Operations </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_88">Consolidated
      Statement of Stockholders&#146; Equity (Deficit) and Comprehensive Income
      (Loss) </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_87">Consolidated
      Statements of Cash Flows </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_89">Notes
      to the Consolidated Financial Statements </A></TD>
  </TR>
</TABLE>
<p align="center">93</p>
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<A name=page_83></A>
<P align=center><IMG
src="forms4x83x1.jpg"
border=0 width="762" height="54"></P>
<P align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </B></P>
<P align=justify>To the Shareholders and Directors of </P>
<P align=justify>Lexaria Bioscience Corp. </P>
<P align=justify>We have audited the accompanying consolidated financial
  statements of Lexaria Bioscience Corp. (the &#147;Company&#148;), which comprise the
  consolidated balance sheet as of August 31, 2016, and the related consolidated
  statements of operations and comprehensive loss, changes in stockholders&#146; equity
  and cash flows for the year ended August 31, 2016. These consolidated financial
  statements are the responsibility of the Company&#146;s management. Our
  responsibility is to express an opinion on these consolidated financial
  statements based on our audit. </P>
<P align=justify>We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the consolidated financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the consolidated financial statements. An audit also includes
  assessing the accounting principles used and significant estimates made by
  management, as well as evaluating the overall consolidated financial statement
  presentation. We believe that our audit provides a reasonable basis for our
  opinion. </P>
<P align=justify>In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Lexaria Bioscience Corp. as of August 31, 2016, and the results of its
  operations and its cash flows for the year ended August 31, 2016, in conformity
  with accounting principles generally accepted in the United States of America. </P>
<P align=justify>The accompanying consolidated financial statements have been
  prepared assuming that Lexaria Bioscience Corp. will continue as a going
  concern. As discussed in Note 1 to the consolidated financial statements, the
  Lexaria Bioscience Corp. has suffered recurring losses from operations. This
  matter, along with the other matters set forth in Note 1, indicate the existence
  of material uncertainties that raises 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 consolidated financial statements do not include
  any adjustments that might result from the outcome of this uncertainty. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=right width="50%"><B>&#147;DAVIDSON &amp; COMPANY LLP&#148;</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=right width="50%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Vancouver, Canada </TD>
    <TD align=right width="50%">Chartered Professional Accountants </TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="50%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>November 24, 2016 </TD>
    <TD align=right width="50%">&nbsp;</TD>
  </TR>
</TABLE>
<P align=center><IMG src="forms4x83x2.jpg" border=0 width="421" height="104"> </P>
<P align=center>94</P>
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<A name=page_84></A>
<P align=right><IMG src="forms4x84x1.jpg" border=0 width="158" height="65"> </P>
<P align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </B></P>
<P align=justify>To the Board of Directors and Stockholders of</P>
<P align=justify><B>LEXARIA CORP. </B></P>
<P align=justify>We have audited the balance sheets of Lexaria Corp. (the
  &#147;Company&#148;) as at August 31, 2015 and October 31, 2014 and the related statements
  of stockholders&#146; equity and comprehensive income, operations and cash flows for
  the years then ended August 31, 2015 and the ten-month period ended August 31,
  2014. These financial statements are the responsibility of the Company&#146;s
  management. Our responsibility is to express an opinion on these financial
  statements based on our audits.</P>
<P align=justify>We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform an audit to obtain reasonable assurance whether
  the financial statements are free of material misstatement. The Company is not
  required to have, nor were we engaged to perform, an audit of its internal
  control over financial reporting. Our audits included consideration of internal
  control over financial reporting as a basis for designing audit procedures that
  are appropriate in the circumstance, but not for the purpose of expressing an
  opinion on the effectiveness of the company&#146;s internal control over financial
  reporting. Accordingly, we express no such opinion. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the
  financial statements. An audit also includes assessing the accounting principles
  used and significant estimates made by management, as well as evaluating the
  overall financial statement presentation. We believe that our audits provide a
  reasonable basis for our opinion. </P>
<P align=justify>In our opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of the Company
  as at August 31, 2015 and August 31, 2014 and the result of its operations and
  its cash flows for the year then ended August 31, 2015 and the ten- month period
  ended August 31, 2014 in conformity with accounting principles generally
  accepted in the United States of America. </P>
<P align=justify>The accompanying financial statements refer to above have been
  prepared assuming the Company will continue as a going concern. As discussed in
  Note 1 to the financial statements, the Company had recurring losses and
  requires additional funds to maintain its planned operations. These factors
  raise substantial doubt about its ability to continue as a going concern.
  Management&#146;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. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>Vancouver, Canada </TD>
    <TD align=center width="50%"><IMG src="forms4x84x2.jpg" border=0 width="157" height="49"></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>November 24, 2015 </TD>
    <TD align=center width="50%">Chartered Accountants </TD>
  </TR>
</TABLE>
<P align=center> <IMG
src="forms4x84x3.jpg"
border=0 width="711" height="105"></P>
<P align=center>95</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_85></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>CONSOLIDATED BALANCE SHEETS</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2016</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>ASSETS</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Cash </TD>
    <TD vAlign=bottom align=left width="1%"
      bgColor=#e6efff><B>$</B></TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>&nbsp;93,409</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;260,075 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Accounts and other
      receivable (Note 6) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>131,083</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">31,382 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Inventory
      (Note 7) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>134,724</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>167,986 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Prepaid expenses and
      deposit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>150,950</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">215,290 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>510,166</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>674,733 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Patent (Note 8) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>53,997</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">36,989 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>2,475</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>56,472</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">36,989 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>TOTAL ASSETS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>&nbsp;566,638</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;711,722 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Current</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Accounts
      payable and accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%"
      bgColor=#e6efff><B>$</B></TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>&nbsp;90,010</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;33,073 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Unearned revenue (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>12,500</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Due to
      related parties (Note 15) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>331,371</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>22,052 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Total Current Liabilities</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>433,881</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">55,125 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Convertible debenture
      (Note 10)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>45,000</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>TOTAL LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>478,881</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">55,125 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>STOCKHOLDERS' EQUITY</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Share Capital</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom
      align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Authorized:&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;220,000,000
      common voting shares with a par value of $0.001 per
      share&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued and outstanding:
      51,288,477 common shares at August 31,
      2016&nbsp;<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 43,838,282 common shares
      at August 31, 2015 </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>51,288</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">43,838 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Additional paid-in
      capital</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff><B>11,515,419</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>10,814,460 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Deficit</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>(11,300,662</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(10,085,889</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Equity attributable to
      shareholders of the Company</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>266,045</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>772,409 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Non-Controlling Interest</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>(178,288</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(115,812</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Total Stockholders'
      Equity</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>87,757</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>656,597 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%"><B>&nbsp;566,638</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">&nbsp;711,722 </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral party of these
  consolidated financial statements.</P>
<P align=center>96</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_86></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND
      COMPREHENSIVE LOSS</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars, except number of
      shares)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="27%" colSpan=4><B>YEAR
      ENDED</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2016</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2015</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Revenue</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Sales (Note
      13) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">&nbsp;<B>40,718</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">&nbsp;14,702 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cost of Goods Sold</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Cost of
      goods sold </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>45,615</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">29,883 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Gross loss</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>(4,897</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(15,181</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Expenses</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounting
      and audit </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>95,921</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">52,823 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depreciation </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>619</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Insurance </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>17,237</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">10,095 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Advertising and promotions </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>185,459</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>276,560 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Bank
      charges and exchange loss </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>15,382</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">850 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Stock based compensation (Note 12) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Consulting
      (Note 15) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>657,813</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">1,091,706 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Fees and dues </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest
      expense from loan payable (Note 15) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>2,250</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">31,544 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Investor relation </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>61,574</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>18,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Legal and
      professional </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>37,939</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">45,928 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Office and miscellaneous </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>97,077</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>166,692 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Research
      and development </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>9,024</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">146,466 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Rent </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Telephone </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">-</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Taxes </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>3,983</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>3,578 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Travel </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>44,034</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">101,183 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;MMJ expense </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>22,664 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Inventory
      write-off (Note 7) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>44,040</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>1,272,352</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>1,968,089 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Loss for the year before other income</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(1,277,249</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(1,983,270</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Income from discontinued operations (Note 14) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>48,918 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Net loss and comprehensive loss for the
      year</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(1,277,249</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;(1,934,352</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Net loss and comprehensive
      loss attributable to:</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>Common
      shareholders</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(1,214,773</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(1,770,500</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>Non-controlling interest</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>(62,476</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
bgColor=#e6efff>&nbsp;(163,852</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Basic and diluted loss per
      share from continuing operations</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>(0.03</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;(0.04</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Basic and diluted earnings
      per share from discontinued operations</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>0.00</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;0.00 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Weighted average number of common shares
      outstanding</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>- Basic and diluted</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>43,840,378</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>39,700,841 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral party of these
  consolidated financial statements.</P>
<P align=center>97</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_87></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>CONSOLIDATED STATEMENT OF CASH FLOWS</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="27%" colSpan=4><B>YEAR
      ENDED</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%"><B>August 31</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2016</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%"><B>2015</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cash flows used in
      operating activities</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Net loss for the year </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>(1,277,249</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;(1,983,270</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Income
      loss from discontinued operations </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>48,918 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Net loss from operations </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(1,277,249</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(1,934,352</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left
      bgColor=#e6efff>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net
      loss to net cash used in operating activities: </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff></TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Stock based compensation </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>122,015</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">256,051 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Depreciation </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>619</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Inventory write-off </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>44,040</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Research and development </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>73,040 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;MMJ
      Joint Venture </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">22,662 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Common shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>79,500</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>127,300 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Warrants to be issued for services </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>32,252</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Change in
      working capital: </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Accounts and other receivable </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(6,201</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">65,620 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Inventory </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
bgColor=#e6efff><B>(10,778</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(167,985</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Prepaid expenses and deposit </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>26,190</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">96,834 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts payable and accrued liabilities </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>56,937</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(60,480</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Due
      to related parties </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>259,319</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">20,283 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Unearned revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>12,500</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Net cash used in operating activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>(660,856</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(1,501,027</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Cash flows used in investing
      activities</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds
      from sale of oil and gas property </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>721,806 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Patent </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"><B>(17,008</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(36,989</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp;
      &nbsp;Acquisition of equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>(3,094</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Net cash provided by (used in) investing
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>(20,102</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">684,817 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Cash flows from financing activities</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds
      from (Payments of) loans/convertible debentures </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff><B>95,000</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(98,742</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Proceeds from issuance of
      equity </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>419,292</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">471,997 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Net cash from financing
      Activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff><B>514,292</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>373,255 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Decrease in cash</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%"
    bgColor=#e6efff><B>(166,666</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(442,955</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Cash, beginning of year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%"><B>260,075</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">703,030 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Cash, end of year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;<B>93,409</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>&nbsp;260,075 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Supplemental information of cash
      flows:</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="12%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Interest
      paid in cash </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>2,250</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;98,742 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Income taxes paid in cash </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>&nbsp; &nbsp;
      &nbsp;Subscription funds receivable </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%"
      bgColor=#e6efff>&nbsp;<B>93,500</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; &nbsp; &nbsp;Stock based compensation
      recognized from prepaid expense </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;<B>38,150</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="12%">&nbsp;55,317 </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements.<B> </B></P>
<P align=center>98</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_88></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="19%" colSpan=4>COMMON STOCK </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">ADDITIONAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">PAID-IN </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">SHARES TO </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">TOTAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">SHARES </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">AMOUNT </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">CAPITAL </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">BE ret/issued </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">DEFICIT </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">NCI </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="8%">EQUITY </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="8%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="8%">$</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="8%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2014 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>37,674,659 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>37,674 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>10,030,013 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(35,200</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>(8,315,389</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,717,098 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Shares Cancelled </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(671,000</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(671</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(79,529</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">35,200 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(45,000</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Shares issued for private
      placement </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>5,835,720 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>5,836 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>507,044 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>512,880 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Non-controlling Interest </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(115,812</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(115,812</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>998,903 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>999 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>155,033 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>156,032 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Stock based compensation </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">197,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">197,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Return of commission from
      previous private placement </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,899 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>4,899 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,770,500</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%">(1,770,500</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="8%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Balance, August 31, 2015</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>43,838,286</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>43,838</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>10,814,460</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>(10,085,889</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>(115,812</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%"><B>656,597</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Shares issued for services </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>625,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>625 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>78,875 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>79,500 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Non-controlling Interest </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(62,476</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">(62,476</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Stock based compensation </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>83,865 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>83,865 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Private placement of shares, net of issuance
      cost </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">5,266,858 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">5,267 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">414,025 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">419,292 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Private placement
      subscription receivable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,558,333 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>1,558 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>91,942 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%" bgColor=#e6efff>93,500 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Warrants to be issued for services </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">32,252 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="8%">32,252 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>(1,214,773</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="8%" bgColor=#e6efff>(1,214,773</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Balance, August 31, 2016</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>51,288,477</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>51,288</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>11,515,419</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>-</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>(11,300,662</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>(178,288</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="8%"><B>87,757</B> </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>The accompanying notes are an integral part of these
  consolidated financial statements </P>
<P align=center>99</P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>August 31, 2016</B> </TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"><STRONG>1. </STRONG></TD>
    <TD><P align=justify><B>Organization, Business and Going Concern</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Lexaria Biosciences Corp. (&#147;Lexaria&#148;, or the &#147;Company&#148;)
      Company was formed on December 9, 2004 under the laws of the State of
      Nevada as an independent oil and gas company engaged in the exploration,
      development and acquisition of oil and gas properties in the United States
      and Canada. In March of 2014, the Company began its entry into the
      medicinal marijuana and alternative health and wellness business and
      discontinued its involvement in the oil and gas business in November 2014.
      In May 2016, the Company also commenced out- licensing its patented
      technology for the purpose of entering into the U.S. regulated medical and
      adult use cannabis edibles marketplace. The Company has offices in
      Vancouver and Kelowna, BC, Canada.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 24, 2015, our board of directors approved a
      forward stock split of our authorized and issued and outstanding shares of
      common stock on a basis of 1 old share of common stock for 1.1 new shares
      of common stock. Upon effect of the forward stock split our authorized
      capital increased to 220,000,000 shares of common stock, par value $0.001
      and our issued and outstanding shares increased from 39,952,984 to
      43,948,282 shares of common stock, with a par value of $0.001. The forward
      stock split has been reviewed by the Financial Industry Regulatory
      Authority ("FINRA") and the Canadian Securities Exchange ("CSE") and was
      approved for filing with an effective date of December 16, 2015. The
      forward split became effective with the OTC Markets at the opening of
      trading on December 16, 2015. Our new CUSIP number is 52886N307.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company&#146;s consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in
      the United States (U.S. GAAP) applicable to a going concern, which
      contemplates the realization of assets and the satisfaction of liabilities
      and commitments in the normal course of business. The Company has a net
      loss attributable to its common shareholders of $1,214,773 for the year
      ended August 31, 2016 (2015: $1,770,500) and at August 31, 2016 had a
      deficit accumulated since its inception of $11,300,662 (2015:
      $10,085,889). The Company has a working capital balance of $76,285 as at
      August 31, 2016 (2015: $619,608). The Company requires additional funds to
      maintain its operations and developments. These conditions raise
      substantial doubt about the Company&#146;s ability to continue as a going
      concern. Management&#146;s plans in this regard are to raise equity and debt
      financing as required, but there is no certainty that such financing will
      be available or that it will be available at acceptable terms. The outcome
      of these matters cannot be predicted at this time and the financing
      environment continues to be difficult.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>These consolidated financial statements do not include
      any adjustments to reflect the future effects on the recoverability and
      classification of assets or the amounts and classification of liabilities
      that might result from the outcome of this uncertainty.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>2.</B> </TD>
    <TD><P align=justify><B>Business Risk and Liquidity</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company is subject to several categories of risk
      associated with its operating activities. The production and sale of
      alternative health products is an emerging industry in which business
      practices are not yet standardized and are subject to frequent scrutiny
      and evaluation by federal, state, provincial, and municipal authorities,
      academics, and media outlets, among others. Although we intend to develop
      our businesses in accordance with best ethical practices, we may suffer
      negative publicity if we, our partners, contractors, or customers are
      found to have engaged in any environmentally insensitive practices or
      other business practices that are viewed as unethical.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Our operations may require licenses and permits from
      various governmental authorities. We believe that we will be able to
      obtain all necessary licenses and permits under applicable laws and
      regulations for our operations and believe we will be able to comply in
      all material respects with the terms of such licenses and permits.
      However, such licenses and permits are subject to change in various
      circumstances. There can be no guarantee that we will be able to obtain or
      maintain all necessary licenses and permits, and failing to obtain or
      retain required licenses could have a materially adverse effect on the
      Company.</P></TD>
  </TR>
</TABLE>
<p align="center">100</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>3.</B> </TD>
    <TD><P align=justify><B>Significant Accounting
      Policies</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>u)</B> </TD>
    <TD><P align=justify><B>Accounting Principles</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>These consolidated financial statements
  have been prepared in conformity with generally accepted accounting principles
  of the United States of America. All amounts, unless otherwise stated, are in
  United States dollars. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>v)</B> </TD>
    <TD><P align=justify><B>Basis of Presentation</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>On December 16, 2015, the Company
  completed a forward stock split of our authorized and issued and outstanding
  shares of common stock on a basis of 1 old share of common stock for 1.1 new
  shares of common stock. The forward stock split affected all the issued and
  outstanding common shares, stock options, and warrants at the effective date.
  All common shares numbers, numbers of stock options, and warrants and related
  per share amounts disclosed in these consolidated financial statements have been
  retroactively adjusted to reflect the forward stock split. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>w)</B> </TD>
    <TD><P align=justify><B>Basis of Consolidation</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>These consolidated financial statements
  include the financial statements of the Company, its wholly-owned subsidiary,
  Lexaria CanPharm Corp. which was incorporated on April 4, 2014 under the laws of
  Canada, and 51%-owned subsidiary PoViva Tea, LLC which was incorporated on
  December 12, 2014, under the laws of the State of Nevada. All significant
  inter-company balances and transactions have been eliminated. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>x)</B> </TD>
    <TD><P align=justify><B>Revenue Recognition</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Revenue from the sale of health
  products is generally recognized when persuasive evidence of an arrangement
  exists, delivery has occurred, the sales price is fixed or determinable, and
  collectability is reasonably assured. In most cases, these conditions are met
  when the product is shipped to the customer. The Company reports its sales net
  of the amount of actual sales returns and the amount of reserves established for
  anticipated sales returns based upon historical return rates. Sales tax
  collected from customers is excluded from net sales. </P>
<P style="MARGIN-LEFT: 5%" align=justify>Lexaria also enters into agreements to
  license out its patented technology that can include various combinations of
  services. Where elements are delivered over different periods of time, and when
  allowed under U.S. GAAP, revenue is allocated to the respective elements based
  on their relative selling prices at the inception of the arrangement, and
  revenue is recognized as each element is delivered. The Company uses a hierarchy
  to determine the fair value to be used for allocating revenue to elements: (i)
  vendor-specific objective evidence of fair value (&#147;VSOE&#148;), (ii) third-party
  evidence and (iii) best estimate of selling price (&#147;ESP&#148;). Generally VSOE is the
  price charged when the deliverable is sold separately or the price established
  by management for a product that is not yet sold if it is probable that the
  price will not change before introduction into the marketplace. ESPs are
  established as best estimates of what the selling prices would be if the
  deliverables were sold regularly on a stand-alone basis. Given Lexaria&#146;s early
  stage of such line of revenue, the Company&#146;s process for determining the VSOE
  and ESP requires judgment and considers multiple factors that may vary overtime
  depending upon the unique facts and circumstances related to each
  deliverable.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>y)</B> </TD>
    <TD><P align=justify><B>Inventory and Cost of
      Sales</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s inventory consists of
  finished goods, work in progress, and raw materials. In all classes, inventory
  is valued at the lower of cost or market. Cost is determined on a first-in,
  first-out basis.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Cost of sales includes all expenditures
  incurred in bringing the goods to the point of sale. Inventory costs and costs
  of sales include direct costs of the raw material, inbound freight charges,
  warehousing costs, handling costs (receiving and purchasing) and utilities and
  overhead expenses related to the Company&#146;s manufacturing and processing facilities. </P>
<p align="center">101</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>z)</B> </TD>
    <TD><P align=justify><B>Cash and Cash Equivalents</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Cash equivalents comprise certain
  highly liquid instruments with a maturity of three months or less when
  purchased. As of August 31, 2016, and August 31, 2015, cash and cash equivalents
  consist of cash only. <B></B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>aa)</B> </TD>
    <TD><P align=justify><B>Equipment</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Equipment is stated at cost less
  accumulated depreciation, and depreciated using the straight-line method over
  its useful life of five years. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>bb)</B> </TD>
    <TD><P align=justify><B>Patents</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Capitalized patent costs represent
  legal costs incurred to establish patents. When patents reach a mature stage,
  any associated legal costs are comprised mostly of maintenance fees and are
  expensed as incurred. Capitalized patent costs are amortized on a straight-line
  basis over the remaining life of the patent. The Company was granted its first
  patent subsequent to the year ended August 31, 2016, with legal life of 20
  years.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>cc)</B> </TD>
    <TD><P align=justify><B>Stock-Based Compensation</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Company accounts for its stock-based
  compensation awards in accordance with ASC Topic 718, Compensation&#151;Stock
  Compensation (&#147;ASC 718&#148;). ASC 718 requires all stock-based payments to
  employees, including grants of employee stock options, to be recognized as
  expense in the statements of operations based on their grant date fair values.
  For stock options granted to employees and to members of the Board of Directors
  for their services on the Board of Directors, the Company estimates the grant
  date fair value of each option award 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 life of the option,
  risk-free interest rates and expected dividend yields of the common stock.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Stock-based payments issued to
  non-employees are recorded at their fair values, and are periodically revalued
  as the equity instruments vest and are recognized as expense over the related
  service period in accordance with the provisions of ASC 718 and ASC Topic 505,
  Equity. For equity instruments granted to non-employees, the Company recognizes
  stock-based compensation expense on a straight-line basis. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>dd)</B> </TD>
    <TD><P align=justify><B>Loss Per Share</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company applies the guidance in ASC
  220 Earnings Per Share. Loss per share is computed using the weighted average
  number of shares outstanding during the period. Diluted loss per share is
  equivalent to basic loss per share because the potential exercise of the
  equity-based financial instruments was anti-dilutive.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>ee)</B> </TD>
    <TD><P align=justify><B>Foreign Currency
      Translation</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s operations are located in
  the United States of America and Canada, and it has offices in Canada. The
  Company maintains its accounting records in U.S. Dollars, as follows: </P>
<P style="MARGIN-LEFT: 5%" align=justify>At the transaction date, each asset,
  liability, revenue and expense that was acquired or incurred in a foreign
  currency is translated into U.S. dollars by the using of the exchange rate in
  effect at that date. At the period end, monetary assets and liabilities are
  translated at the exchange rate in effect at that date. The resulting foreign
  exchange gains and losses are included in profit or loss. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>ff)</B> </TD>
    <TD><P align=justify><B>Financial Instruments</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>ASC 820 Fair Value Measurements and
  Disclosures, requires an entity to maximize the use of observable inputs and
  minimize the use of unobservable inputs when measuring fair value. ASC 820
  establishes a fair value hierarchy based on the level of independent, objective
  evidence surrounding the inputs used to measure fair value. A financial
  instrument&#146;s categorization within the fair value hierarchy is based upon the
  lowest level of input that is significant to the fair value measurement. ASC 820
  prioritizes the inputs into three levels that may be used to measure fair value: </P>
<p align="center">102</p>
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<P style="MARGIN-LEFT: 5%" align=justify>Level 1 - Quoted prices in active
  markets for identical assets or liabilities; </P>
<P style="MARGIN-LEFT: 5%" align=justify>Level 2 - Inputs other than quoted
  prices included within Level 1 that are either directly or indirectly
  observable; and </P>
<P style="MARGIN-LEFT: 5%" align=justify>Level 3 - Unobservable inputs that are
  supported by little or no market activity, therefore requiring an entity to
  develop its own assumptions about the assumptions that market participants would
  use in pricing. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s financial instruments
  consist primarily of cash, accounts and other receivable, accounts payable and
  accrued liabilities, due to related parties, and convertible debenture. The
  carrying amounts of cash, accounts and other receivable, accounts payable and
  accrued liabilities, and due to related parties approximate their fair values
  due to their short maturities. The carrying value of the Company&#145;s convertible
  debenture approximates its fair values (using Level 3 inputs) based upon a
  comparison of the interest rate and terms of such debt to the rates and terms of
  debt currently available to the Company. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company is located in Canada, which
  results in exposure to market risks from changes in foreign currency rates. The
  foreign currency exchange risk is the financial risk to the Company&#146;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 Company does
  not hold a significant position in foreign currencies, such as the Canadian
  dollars, and the impact of a change in a few basis points for USD/CAD is not
  expected to be material.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>gg)</B> </TD>
    <TD><P align=justify><B>Income Taxes</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company applies the guidance in ASC
  740, Income Taxes, which requires the Company to recognize deferred tax
  liabilities and assets for the expected future tax consequences of events that
  have been recognized in the Company&#146;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.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>hh)</B> </TD>
    <TD><P align=justify><B>Impairment of Long-Lived
      Assets</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Long-lived assets, including equipment,
  and intangible assets, such as the Company&#146;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 recovered. 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 the
  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. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>ii)</B> </TD>
    <TD><P align=justify><B>Comprehensive Income</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company applies ASC 220,
  Comprehensive Income, which establishes standards for reporting and display of
  comprehensive income, its components and accumulated balances. The Company
  discloses this information on its Statement of Stockholders&#146; Equity.
  Comprehensive income comprises equity changes except those transactions
  resulting from investments by owners and distributions to owners.<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>jj)</B> </TD>
    <TD><P align=justify><B>Credit Risk and Receivable
      Concentration</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company places its cash with high
  credit quality financial institution. As of August 31, 2016, the Company had approximately $93,000 in the bank (August 31, 2015:
  $260,000).</P>
<p align="center">103</p>
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<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2016, the Company also
  has $93,500 in private placement subscriptions receivable from five share
  subscriptions from arm&#146;s length parties (which were all received in September
  2016), and a further $27,583 (2015 - $31,382) in sales tax receivable. An
  additional $10,000 was receivable as at August 31, 2016 in relation to the
  Company&#146;s licensing agreement (Note 9), which was also received subsequent to
  the year-end. The Company considers its credit risk to be low for such
  receivable. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>kk)</B> </TD>
    <TD><P align=justify><B>Convertible Debenture</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company accounts for its
  convertible debt instruments that may be settled in cash upon conversion
  according to ASC 470-20-30-22 which requires the proceeds from the issuance of
  such convertible debt instruments to be allocated between debt and equity
  components so that debt is discounted to reflect the Company&#146;s non-convertible
  debt borrowing rate. </P>
<P style="MARGIN-LEFT: 5%" align=justify>Further, the Company applies ASC
  470-20-35-13 which requires the debt discount to be amortized over the period
  the convertible debt is expected to be outstanding as additional non-cash
  interest expense. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>ll)</B> </TD>
    <TD><P align=justify><B>Commitments and
      Contingencies</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>In accordance with ASC 450-20,
  Accounting for Contingencies, the Company records accruals for such 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. Historically, the
  Company has not experienced any material claims.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>mm)</B> </TD>
    <TD><P align=justify><B>Research and Development</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Research and development costs are
  expensed as incurred. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>nn)</B> </TD>
    <TD><P align=justify><B>Advertising</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company expenses advertising costs
  as they are incurred. The advertising expenses were $185,459 and $276,560 for
  the years ended August 31, 2016 and 2015, respectively. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>oo)</B> </TD>
    <TD><P align=justify><B>Discontinued Operations</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The results of discontinued operations
  are presented separately, net of tax, from the results of ongoing operations for
  all periods presented. The expenses included in the results of discontinued
  operations are the direct operating expenses incurred by the disposed components
  that may be reasonably segregated from the costs of the ongoing operations of
  the Company. Lexaria disposed of its oil and gas interests during the year ended
  August 31, 2015 (Note 14) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>4.</B> </TD>
    <TD><P align=justify><B>Estimates and Judgments</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The preparation of financial statements in conformity
      with U.S GAAP requires us to make certain estimates, judgments and
      assumptions that affect the reported amounts of assets and liabilities,
      the disclosure of contingent liabilities at the date of the financial
      statements and the reported amounts of revenue and expenses during the
      reporting period. Some of the Company&#146;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.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company reviews these estimates, judgments and
      assumptions periodically and reflect the effects
      of 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:<b> </b></P></TD>
  </TR>
</TABLE>
<p align="center">104</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>e)</B> </TD>
    <TD><P align=justify><B>The Valuation of Deferred Tax Assets</B></P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD><P align=justify>Judgement 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&#146;s history of losses, deferred tax assets have
      not been recognized by Lexaria.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>f)</B> </TD>
    <TD><P align=justify><B>Convertible Debenture</B></P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company entered into a convertible debenture
      agreement on March 8, 2016 (Note 10) and evaluated the terms of the
      various conversion options to assess if separate accounting is required
      for such embedded features, which are adjusted to fair value through
      earnings at each reporting period. The Company determined that the
      embedded features within the debenture do not meet the net settlement
      provision characteristic of a derivative and as a result, did not apply
      the bifurcation requirements for such conversion options.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>g)</B> </TD>
    <TD><P align=justify><B>Revenue Recognition of Licenses</B></P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD><P align=justify>Pursuant to the license agreement for the Company&#146;s lipid
      infusion technology (the &#147;Technology&#148;) (Note 9), the licensee acquired
      territorial licenses for an upfront fee. The Company is also required to
      provide support services in connection with the licensee&#146;s use of the
      Technology over the term of the license. As the support services will not
      be sold on a stand-alone basis, the Company is unable to establish VSOE of
      their fair value to be able to allocate the proceeds objectively to such
      services and the license. Accordingly, the up-front fee is being
      recognized ratably over the term of the license, which is initially for
      two years.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>h)</B> </TD>
    <TD><P align=justify><B>Value of Stock Options</B></P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company provides compensation benefits to its
      employees, directors, officers, 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
      assumption used in the model is based on the historical volatility of the
      Company&#146;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 life determination could have a material
      impact on the Company&#146;s profit and loss for the periods presented. All
      estimates used in the model are based on historical data which may not be
      representative of future results.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>5.</B> </TD>
    <TD><P align=justify><B>New Accounting Pronouncements</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>In May 2014, the Financial Accounting Standards Board
      (the &#147;FASB&#148;) issued a new standard related to the revenue recognition.
      Under the new standard, recognition of revenue occurs when a customer
      obtains control of promised goods or services in an amount that reflects
      the consideration which the entity expects to receive in exchange for
      those goods or services. In addition, the standard requires disclosure of
      the nature, amount, timing, and uncertainty of revenue and cash flows
      arising from contracts with customers. The FASB has recently issued
      several amendments to the standards, including clarification on the
      accounting for licenses of intellectual property and identifying
      performance obligations.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The guidance permits two methods of adoption:
      retrospectively to each prior reporting period presented (full
      retrospective method), or retrospectively with the cumulative effect of
      initially applying the guidance recognized at the date of initial
      application (the cumulative catch-up transition method). The Company will
      apply the full retrospective approach to adopt the standard but does not
      anticipate that this standard will have a material impact on its
      consolidated financial statements.</P></TD>
  </TR>
</TABLE>
<p align="center">105</p>
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<P style="MARGIN-LEFT: 5%" align=justify>In August 2014, the FASB issued new
  guidance on determining when and how to disclose going concern uncertainties in
  the financial statements. The new guidance requires management to perform
  interim and annual assessments of an entity&#146;s ability to continue as a going
  concern within one year of the date the financial statements are issued. An
  entity must provide certain disclosures if conditions or events raise
  substantial doubt about its ability to continue as a going concern. The guidance
  is effective for annual periods ending after December 15, 2016 and interim
  periods thereafter. Early adoption is permitted. Upon adoption, the Company does
  not believe this guidance will have a material impact on its consolidated
  results of operations or financial position. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In January 2015, the FASB issued ASU
  2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20),
  Simplifying Income Statement Presentation by Eliminating the Concept of
  Extraordinary Items, which eliminates the concept of extraordinary items. Under
  this new guidance, entities will no longer be required to separately classify,
  present and disclose extraordinary events and transactions. The amendments in
  this update are effective for annual and interim periods beginning after
  December 15, 2015. The Company is evaluating the impact of ASU 2015-01 but does
  not believe that it will have a material impact on its consolidated financial
  statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In February 2015, the FASB issued ASU
  No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis
  ("ASU 2015-02"). ASU 2015-02 makes several modifications to the consolidation
  guidance for variable interest entities ("VIEs") and general partners'
  investments in limited partnerships, as well as modifications to the evaluation
  of whether limited partnerships are VIEs or voting interest entities. It is
  effective for annual and interim periods beginning after December 15, 2015. The
  Company is currently evaluating the impact of this standard but does not believe
  that it will have a material impact on its consolidated financial statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In April 2015, FASB issued ASU 2015-03,
  Simplifying the Presentation of Debt Issuance Costs (&#147;ASU 2015-03&#148;). In August
  2015, FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt
  Issuance Costs Associated with Line-of-Credit Arrangements (&#147;ASU 2015-15&#148;). ASU
  2015-03 requires that debt issuance costs be presented in the balance sheet as a
  deduction from the carrying amount of the debt. ASU 2015-15 allows an entity to
  present debt issuance costs associated with a revolving line of credit
  arrangement as an asset, regardless of whether a balance is outstanding. The
  recognition and measurement guidance for debt issuance costs are not affected by
  ASU 2015-03 or ASU 2015-15. These ASU&#146;s are effective for annual reporting
  periods beginning after December 15, 2015, including interim periods within that
  reporting period. The new standard will not affect the Company&#146;s financial
  statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In April 2015, FASB issued ASU 2015-04,
  Practical Expedient for the Measurement Date of an Employer&#146;s Defined Benefit
  Obligation and Plan Assets (&#147;ASU 2015-04&#148;). ASU 2015-04 allows employers with a
  fiscal year end that does not coincide with a calendar month end to make an
  accounting policy election to measure defined benefit plan assets and
  obligations as of the end of the month closest to their fiscal year end. ASU
  2015-04 is effective for annual reporting periods beginning after December 15,
  2015, including interim periods within that reporting period. Prospective
  application is required. The Company does not anticipate that the new guidance
  will have any impact on its consolidated financial statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In July 2015, FASB issued ASU 2015-11,
  Simplifying the Measurement of Inventory (&#147;ASU 2015-11&#148;). ASU 2015-11 requires
  that an entity measure inventory at the lower of cost and net realizable value.
  This ASU does not apply to inventory measured using last-in, first-out
  methodology. ASU 2015-11 is effective for annual reporting periods beginning
  after December 15, 2016, including interim periods within that reporting period.
  The Company does not expect the new standard to have a significant impact on its
  consolidated financial position, results of operations or cash flows. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In November 2015, the FASB issued ASU
  2015-17, Balance Sheet Classification of Deferred Taxes (&#147;ASU 2015-17&#148;). ASU
  2015-17 requires companies to classify all deferred tax assets or liabilities as
  noncurrent on the balance sheet rather than separately disclosing deferred taxes
  as current and noncurrent. This standard is effective for the Company beginning
  on September 1, 2017 and can be applied either prospectively or retrospectively
  to all periods presented upon adoption. The standard is not expected to have any
  impact on the Company&#146;s financial statements. </P>
<p align="center">106</p>
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<P style="MARGIN-LEFT: 5%" align=justify>In January 2016, FASB issued a new
  standard to amend certain aspects of recognition, measurement, presentation, and
  disclosure of financial instruments. Most prominent among the amendments is the
  requirement for changes in fair value of equity investments, with certain
  exceptions, to be recognized through profit or loss rather than other
  comprehensive income. The new standard will be effective for the Company
  beginning September 1, 2018. The standard is not expected to have any impact on
  the Company&#146;s financial statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In February 2016 FASB issued ASU No.
  2016-02, Leases <I>(Topic 842)</I> which supersedes FASB ASC Topic 840, Leases
  (Topic 840) and provides principles for the recognition, measurement,
  presentation, and disclosure of leases for both lessees and the lessors. The new
  standard requires the lessees to apply a dual approach, classifying leases as
  either finance or operating leases based on the principle of whether or not the
  lease is effectively a financed purchase by the lessee. The classification will
  determine whether lease expense is recognized based on an effective interest
  method or on a straight-line basis over the term of the lease, respectively. A
  lessee is also required to record a right-of-use asset and a lease liability for
  all leases with a term of greater than twelve months regardless of
  classification. Leases with a term of twelve months or less will be accounted
  for similar to existing guidance for operating leases. The standard is effective
  for annual and interim periods beginning after December 15, 2018, with early
  adoption permitted upon issuance. When adopted, the Company does not expect this
  guidance to have a material impact on its consolidated financial statements. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In March 2016, the FASB issued ASU
  2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee
  Share-Based Payment Accounting. Under ASU 2016-09, companies will no longer
  record excess tax benefits and certain tax deficiencies in additional paid in
  capital (&#147;APIC&#148;). Instead, they will record all excess tax benefits and tax
  deficiencies as income tax expense or benefit in the income statement and the
  APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the
  requirement that excess tax benefits be realized before companies can recognize
  them. ASU 2016-09 also requires companies to present excess tax benefits as an
  operating activity on the statement of cash flows rather than as a financing
  activity. Furthermore, ASU 2016-09 will increase the amount an employer can
  withhold to cover income taxes on awards and still qualify for the exception to
  liability classification for shares used to satisfy the employer&#146;s statutory
  income tax withholding obligation. An employer with a statutory income tax
  withholding obligation will now be allowed to withhold shares with the fair
  value up to the amount of taxes owed using the maximum statutory rate in the
  employee&#146;s applicable jurisdiction(s). ASU 2016-09 requires a company to
  classify the cash paid to a tax authority when shares are withheld to satisfy
  its statutory income tax withholding obligation as a financing activity on the
  statement of cash flows. Under current U.S. GAAP, it is not specified how these
  cash flows should be classified. In addition, companies will now have to elect
  whether to account for forfeitures on share-based payments by (1) recognizing
  forfeiture awards as they occur or (2) estimating the number of awards expected
  to be forfeited and adjusting the estimate when it is likely to change, as in
  currently required. The amendments of this ASU are effective for reporting
  periods beginning after December 15, 2016, with early adoption permitted but all
  of the guidance must be adopted in the same period. The Company is currently
  assessing the impact the standard will have on its consolidated financial
  statements.<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>6.</B> </TD>
    <TD><P align=justify><B>Accounts and Other
      Receivable</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Territory License Fee
      receivable (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>10,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Sales tax receivable </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">27,583 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">31,382 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Private Placement receivable (Note 11) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>93,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">131,083 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">31,382 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">107</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_97></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD><P align=justify><B>Inventory</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Raw materials </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>27,358 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Finished goods </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">94,349 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">119,944 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Work in progress </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>13,017 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>48,042 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">134,724 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%">167,986 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During the year ended August 31, 2016, Company wrote down
      $44,040 (2015 - $nil) of inventory to reflect its net realizable
    value.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>8.</B> </TD>
    <TD><P align=justify><B>Alternative Health Products</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 12, 2014, the Company signed an agreement
      with Poppy&#146;s Teas LLC. (&#147;PoViva&#148;) to acquire 51% of ViPova&#153; by satisfying
      the following requirements:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="10%"  >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Pay an initial consideration of $50,000 (paid); </TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Spend $75,000 over one year for product
      marketing and operations (spent); </TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Extend to the founders of ViPova&#153; (&#147;Founders&#148;)
      $25,000 worth of Lexaria common shares (issued); </TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Pay one of the Founders $2,000 a month for
      production consulting for a period of 12 months (paid); </TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Pay one of the Founders $2,000 a month for
      marketing consulting for a period of 12 months (paid); </TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>Provide to the Founders a cash bonus in the amount of
      $50,000 should the company generate $300,000 in sales within 8 months of
      the execution of this agreement (N/A); and </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>Agree for the Founders to be automatically granted a
      lifetime license to personally produce products covered by various
      patents. </P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company also spent the required
  minimum additional $100,000 on sales and marketing &#147;ViPova&#153; by Lexaria&#148; brand to
  enable qualification to purchase additional interest in PoViva. The Company has
  the option to acquire an additional 24% interest in PoViva (for a total interest
  of 75%) by paying PoViva or its Founders 2.5 times trailing 12 months PoViva
  revenue (pro-rata) calculated from the date that this option is exercised.
  PoViva can receive up to 50% of this payment in the Company&#146;s common stock at
  PoViva&#146;s discretion. </P>
<P style="MARGIN-LEFT: 5%" align=justify>PoViva has a right of first refusal to
  produce under &#147;white-label&#148;, additional cannabinoid based products on behalf of
  the Company but the Company reserves the right to engage other producers should
  it believe PoViva to be uncompetitive to supply the products requested by
  Lexaria. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The acquisition of PoViva was treated
  as an acquisition of assets rather than a business combination because PoViva
  did not constitute a business. $48,039 acquired In-Process Research and
  Development was expensed at the acquisition date in accordance with ASC
  730-10-25-1. </P>
<P style="MARGIN-LEFT: 5%" align=justify>In June 2015, the Company
  simultaneously filed a U.S. utility patent application and an International
  patent application under the Patent Cooperation Treaty (&#147;PCT&#148;) procedure, both
  at the U.S. Patent and Trademark Office. These applications follow the Company&#146;s
  2014 and 2015 family of provisional patent application filings in the U.S. and
  serve two additional broad purposes. Firstly, these filings served to expand
  potential intellectual property protection outside of the USA. Filing under the
  PCT allows the Company to elect to pursue patent protection in up to 148 nations around the world. The second
  purpose was to broaden the number of molecules for which intellectual property
  protection is sought. Under the original patents pending application, only the
  THC and CBD molecules, infused within a unique lipid-formulation technology,
  were pursued. Under the newer patent applications, the list of molecules for a
  unique delivery system was broadened to include THC, CBC, Nicotine,
  Non-Steroidal Anti-Inflammatory Drugs, and certain Vitamins.</P>
<p align="center">108</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P style="MARGIN-LEFT: 5%" align=justify>In December 2015, the Company filed two
  further provisional patent applications in the U.S. These new applications
  served to further broaden the variety and applicability of base compounds that
  can be used when formulating the Company&#146;s lipid based technology. The first of
  these applications identify compounds like edible starches (e.g., tapioca
  starch) that are commonly used in food products today and could, therefore,
  serve as a base for formulating and incorporating the Company&#146;s Technology into
  a wide variety of every day food products. The second of these applications
  identify emulsifier compounds like gum Arabic that are commonly used in beverage
  products today in order to facilitate similar flexibility for formulating the
  Company&#146;s Technology in every day, shelf-stable beverages.</P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2016, the Company had
  capitalized $53,997 for patent application. The Company was granted its first
  patent subsequent to the year-end. The granted patent has a priority date of
  June 10, 2014, a publish date of October 27, 2016, and protects the Company&#146;s
  technology for twenty years. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 11, 2015, Lexaria signed a
  license agreement with PoViva Tea LLC for $10,000, granting Lexaria a 35-year
  non exclusive worldwide license to unencumbered use of PoViva Tea LLC&#146;s IP
  Rights, including rights of resale. This license agreement ensures Lexaria has
  full access to the underlying patent pending infusion Technology.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>9.</B> </TD>
    <TD><P align=justify><B>Unearned Revenue</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On May 14, 2016, the Company entered into a licensing
      agreement (the &#147;Licensing Agreement&#148;) with an arm&#146;s length party (the
      &#147;Licensee&#148;) allowing the Licensee, for a two-year period, to utilize the
      Company&#146;s Technology to create, test, manufacture, and sell
      marijuana-infused consumable and/or topical products, in the state of
      Colorado, with an option of extending the terms of the Licensing Agreement
      to Washington, Oregon, and California (the &#147;Territorial License&#148;). In
      addition to the granting of the license, the Company is required to
      provide support services to the Licensee in connection with the use of the
      Company&#146;s Technology during the term of the Licensing Agreement.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company determined that the provision of the support
      services is a separate deliverable under the Licensing Agreement. As the
      support services will not be sold on a stand-alone basis, the Company is
      unable to establish a vendor-specific objective evidence of fair value of
      such services to be able to objectively allocate the Territory License fee
      receipts between the license and the support services. Accordingly, the
      Company recognizes revenue ratably over the term of the Licensing
      Agreement. As of August 31, 2016, the Company received $10,000 as first
      installment of the Territory License Fee and recorded as receivable of a
      further $10,000 for its second installment, which was received subsequent
      to the year-end. During the year ended August 31, 2016, $7,500 was
      recognized as revenue with the remaining $12,500 deferred for recognition
      in future periods.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD><P align=justify><B>Convertible Debenture</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On March 8, 2016, the Company closed a private placement
      offering of a convertible debenture in the aggregate amount of $45,000.
      The convertible debenture matures on August 31, 2020 with an interest rate
      of 10% per annum (on a simple basis) and is convertible at (i) $0.12 per
      share at any time prior to August 31, 2016 (ii) $0.15 per share at any
      time prior to August 31, 2017; (iii) $0.20 per share at any time prior to
      August 31, 2018 or, at the sole option of the holder, a price equal to a
      20% discount to the 10-day average closing price of the shares prior to
      the date of conversion (the &#147;Average Price&#148;) provided that the Average
      Price is less than $0.20 and provided further that the conversion price
      shall not be less than $0.15; (iv) $0.25 per share at any time prior to
      August 31, 2019 or, at the sole option of the holder, the Average Price
      provided that the Average Price is less than $0.25 and provided further
      that the conversion price shall not be less than $0.15; and (v) $0.30 per
      share at any time prior to August 31, 2020 or, at the sole option of the
      holder, the Average Price provided that the Average Price is less than
      $0.30 and provided further that the conversion price shall not be less
      than $0.15.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company determined that the conversion options did
      not qualify as derivatives as they did not meet the net settlement
      provision characteristics. The proceeds from the convertible debenture
      therefore were not bifurcated on the balance sheet. </P></TD>
  </TR>
</TABLE>
<p align="center">109</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_99></A>
<P style="MARGIN-LEFT: 5%" align=justify>During the year ended August 31, 2016,
  the Company paid interest of $2,250 in connection with the convertible
  debenture.<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>11.</B> </TD>
    <TD><P align=justify><B>Common Shares and Warrants</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2015 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On July 14, 2014, the Company accepted Mr. Chris
      Hornung&#146;s resignation with respect to his contract dated, April 24, 2014,
      whereby the Company had entered into a one year consulting contract with
      2342878 Ontario Inc., a wholly owned company by Chris Hornung as Assistant
      Manager. Upon signing of the contract of acceptance the Company had issued
      121,000 common shares valued at $35,200. The Company&#146;s 121,000 restricted
      common shares that were issued were cancelled and returned back to
      treasury.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On September 26, 2014, the Company raised gross proceeds
      of $45,780 for private placement of 335,720 common shares of the Company
      and 335,720 warrants with exercise price of $0.23 and expiry date of March
      26, 2016.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On December 12, 2014, the Company issued 261,903 common
      shares of the Company at a value of $25,000 in connection with the terms
      of the ViPova&#153; agreement (Note 8).</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On May 14, 2015, the Company closed a private placement
      by issuing 5,500,000 units for gross proceeds of $500,000. Each unit
      consisted of one common share of the Company and one share purchase
      warrant, exercisable into one further common share at a price of $0.23 per
      share and expiring on May 14, 2017. A cash finders&#146; fee for $32,900 was
      paid to GMP Securities, Mackie Research and Peter Przygoda.; and 361,900
      broker warrants with an exercise price of $0.23 for a period of
      twenty-four months were issued to GMP, Mackie Research and Peter Przygoda.
      Cash finders&#146; fee in the amount of $4,899 from Peter Przygoda was returned
      in August, 2015.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On June 8, 2015, the Company issued 275,000 common shares
      valued at $47,500 to Ron Keleher and Scott Urquart with respect to
      agreements signed on April 2, 2015 and May 27, 2015.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On June 11, 2015, 550,000 restricted shares of the
      Company issued previously in connection with the Company&#146;s joint venture
      agreement were cancelled as joint venture agreement was
      terminated.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On August 17, 2015, the Company issued 462,000 common
      shares of the Company valued at $83,532 to Docherty Management Limited as
      per the terms of the consulting agreement (Note 17).</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>As at August 31, 2015, the Company had 43,838,282 shares
      issued and outstanding and 19,840,186 warrants issued and
      outstanding.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2016 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On September 16, 2015, the Company&#146;s Board appointed Ted
      McKechnie as a Director of the Company. Mr. McKechnie was issued 110,000
      common shares of the Company valued at $19,000.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On December 10, 2015, Lexaria closed a private placement
      by issuing 550,000 units for gross proceeds of $90,000. Each unit
      consisted of one common share of the Company and one half transferable
      share purchase warrant. Each full warrant is exercisable into one further
      share at a price of $0.27 per share for a period of 24 months. A cash
      finders&#146; fee for $2,520 was paid to Leede Financial Markets Ltd.; and
      15,400 broker warrants with an exercise price of $0.27 for a period of
      twenty-four months were also issued to Leede Financial Markets Ltd. The
      fair value of these broker warrants was determined to be $2,903.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On December 14, 2015, Lexaria signed an investor
      relations contract with Radius Consulting Inc. for a fee of $2,500 and
      55,000 common shares of Company valued at $9,500.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On April 15, 2016, pursuant to the agreement with Mr.
      John Docherty (Note 17), the Company issued 210,000 common shares valued
      at $21,000, for services rendered as the President of the
      Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On April 15, 2016, the Company closed a private placement
      of 750,000 units at a price of $0.08 per unit for gross proceeds of
      $60,000. Each unit consisted of one common share of the Company and one
      non-transferrable share purchase warrant, entitling the holder to purchase
      one additional common share in the capital of the Company for a period of
      18 months at an exercise price of $0.15 per share. The Company also issued
      8,750 broker warrants to Haywood Securities Ltd. The broker warrants have
      a term of 18 months and are each exercisable into one common share of the Company at a price of
      $0.15. The fair value of these broker warrants was determined to be $805. </P></TD>
  </TR>
</TABLE>
<p align="center">110</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_100></A>
<P style="MARGIN-LEFT: 5%" align=justify>On June 6, 2016, the Company closed a
  private placement of 700,000 units priced at $0.11 per unit for gross proceeds
  of $77,000. Each unit consisted of one common share of the Company and one-half
  of a non-transferrable share purchase warrant with each warrant entitling the
  holder to purchase one additional common share of the Company for a period of
  three years at an exercise price of $0.14 per share. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 28, 2016, pursuant to an
  agreement, in return for marketing, branding, and investor relations advisory
  services, the Company issued 250,000 common shares of the Company valued at
  $0.12 per share (Note 17). </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 10, 2016, the Company closed
  a private placement by issuing 1,558,525 units at a price of $0.06 per unit for
  gross proceeds of $93,512. Each unit consisted of one common share of the
  Company and one non-transferable share purchase warrant entitling the holder to
  purchase one additional common share in the capital of the Company for a period
  of 24 months at an exercise price of $0.14 per share. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 31, 2016, the Company
  completed a private placement by issuing 3,266,666 units at a price of $0.06 per
  unit for gross proceeds of $196,000, of which $93,500 was collected during
  September and October 2016. Each unit consisted of one common share of the
  Company and one transferable share purchase warrant. Each full warrant is
  exercisable into one further share at a price of $0.14 per share for a period of
  24 months. A cash finders&#146; fee for $1,200 was paid and 50,000 broker warrants
  with an exercise price of $0.14 for a period of twenty-four months were also
  issued. The fair value of these broker warrants was determined to be $5,397. </P>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2016, Lexaria had
  51,288,473 common shares issued and outstanding and 12,136,241 warrants issued
  and outstanding. </P>
<P style="MARGIN-LEFT: 5%" align=justify>A continuity schedule for warrants is
  presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Weighted Average </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Number of </TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Exercise Price </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">Warrants </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2014 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>14,250,184 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>0.23 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Expired </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(607,618</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.36 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>6,197,620 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>0.23 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Balance, August 31, 2015 </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">19,840,186 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.23 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expired </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(13,978,286</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>0.22 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">6,274,341 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="12%">0.15 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Balance, August 31, 2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>12,136,241 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>0.18 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The fair value of share purchase
  warrants granted to the brokers was estimated as of the date of the grant by
  using the Black-Scholes option pricing model with the following assumptions:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2015 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected volatility </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>237% - 240% </TD>
    <TD vAlign=bottom align=center width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>N/A </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Risk-free interest rate </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.74% - 0.95% </TD>
    <TD vAlign=bottom align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">N/A </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected life </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>1.5 &#150; 2 years </TD>
    <TD vAlign=bottom align=center width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>N/A </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Dividend yield </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">N/A </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Estimated fair value per option </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>0.09 - $0.19 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>N/A </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">111</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_101></A>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of warrants outstanding as of
  August 31, 2016 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right># of Warrants </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Weighted </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Weighted </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="33%">Average </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Average </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="33%">Remaining </TD>
    <TD vAlign=bottom noWrap align=center width="33%">Exercise Price </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="33%">Contractual Life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="33%">$ </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>5,500,000 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.70 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.23 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right>361,900 </TD>
    <TD vAlign=bottom align=center width="33%">0.70 years </TD>
    <TD vAlign=bottom align=center width="33%">0.18 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>758,750 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>1.04 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.15 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right>290,400 </TD>
    <TD vAlign=bottom align=center width="33%">1.28 years </TD>
    <TD vAlign=bottom align=center width="33%">0.27 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>1,558,525 </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>1.95 years </TD>
    <TD vAlign=bottom align=center width="33%" bgColor=#e6efff>0.14 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=right>3,316,666 </TD>
    <TD vAlign=bottom align=center width="33%">2.00 years </TD>
    <TD vAlign=bottom align=center width="33%">0.14 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    bgColor=#e6efff>350,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="33%" bgColor=#e6efff>2.76 years </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="33%" bgColor=#e6efff>0.14 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom
      align=right>12,136,241 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="33%">1.31 years </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="33%">0.18 </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>As at August 31, 2016, the Company was obligated to
      issue, for the month of August 2016, 250,000 warrants pursuant to
      marketing, branding and investor relations advisory agreement (Note 17).
      Such warrants were issued subsequent to the year-end (Note 19). The fair
      value of such warrants was estimated using the Black- Scholes option
      pricing model and determined to be $32,252. Assumptions used as inputs to
      the model were consistent as the ones used for the calculation of stock
      options granted during the year (Note 12).</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>12.</B> </TD>
    <TD><P align=justify><B>Stock Options</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company has established its 2014 Stock Option Plan
      whereby the board of directors may, from time to time, grant up to
      3,850,000 (post forward stock split) stock options to directors, officers,
      employees, and consultants. Stock options granted must be exercised no
      later than five years from the date of grant or such lesser period as
      determined by the Company&#146;s board of directors. The exercise price of an
      option is equal to or greater than the closing market price of the
      Company&#146;s common shares on the day preceding the date of grant. The
      vesting terms of each grant are set by the board of directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2015 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On December 22, 2014, the Company granted 1,567,500 stock
      options to certain directors, officers and consultants, with 1,347,500
      vesting immediately, 110,000 vesting in six months, and 110,000 vesting in
      12 months. The options have an exercise price of $0.10 per share and
      expire on December 22, 2019.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On February 4, 2015, the Company granted 275,000 stock
      options to consultants with an exercise price of $0.09, vesting
      immediately, expiring February 3, 2020.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On March 26, 2015, the Company granted 550,000 stock
      options to an officer of the Company. The exercise price of the stock
      options is $0.09, vesting immediately and expiring on March 26,
      2020.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Fiscal 2016 Activity</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On September 16, 2015, the Company granted 110,000 stock
      options to a director of the Company. The exercise price of the stock
      options is $0.17, vesting immediately and expiring on September 16,
      2020.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On April 15, 2016, the Company granted 300,000 to an
      officer of the Company. The exercise price of the stock options is $0.11
      per share, vesting immediately and expiring on April 15, 2021.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On June 3, 2016, the Company granted 325,000 stock
      options to a consultant, vesting immediately, with an exercise price of
      $0.14 and expiring five years from the date of grant.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During the year ended August 31, 2016, the Company
      recorded a total $122,015 (2015&#150; $256,051) as stock based compensation
      expense of which $83,865 (2015 - $200,734) pertained to the stock options
      granted during the year with the remaining being the recognition of
      expense from previous grants.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A continuity schedule for stock options is presented
      below:</P></TD>
  </TR>
</TABLE>
<p align="center">112</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_102></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Weighted </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Number of </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Average Exercise </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Option </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">Price </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Balance, August 31, 2014
      (vested and outstanding) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>2,887,500 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.22 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Expired </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(1,210,000</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.21 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Granted </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>2,392,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.10 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Balance, August 31, 2015 (vested and
      outstanding) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">4,070,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.15 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expired </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(385,000</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>0.32 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Cancelled </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(935,000</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">0.16 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Granted </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>735,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>0.13 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom
      align=left>Balance, August 31, 2016 (vested and outstanding) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">3,485,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">0.13 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>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:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2016 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="12%">2015 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected volatility </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>240% - 241% </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>243% - 249% </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Risk-free interest rate </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">1.22% - 1.62% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">1.47% - 1.66% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected life </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>5.00 years </TD>
    <TD vAlign=bottom align=center width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%" bgColor=#e6efff>5.00 years </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=left>Dividend yield </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="12%">0.00% </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Estimated fair value per option </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>0.11 - $0.19 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="1%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="12%" bgColor=#e6efff>0.08 - $0.10 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of the Company&#146;s vested and
  outstanding stock options as at August 31, 2016 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center># of Stock </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Weighted </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Weighted </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Aggregate </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>Options </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Average </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Average </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Intrinsic Value </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="23%">Remaining </TD>
    <TD vAlign=bottom noWrap align=center width="23%">Exercise Price </TD>
    <TD vAlign=bottom noWrap align=center width="23%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="23%">Contractual Life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="23%">$ </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="23%">$ </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>247,500 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>1.80 years </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>0.09 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>4,950 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>660,000 </TD>
    <TD vAlign=bottom align=center width="23%">2.90 years </TD>
    <TD vAlign=bottom align=center width="23%">0.23 </TD>
    <TD vAlign=bottom align=center width="23%">(85,800) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>1,017,500 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>3.31 years </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>0.10 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>10,175 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>275,000 </TD>
    <TD vAlign=bottom align=center width="23%">3.43 years </TD>
    <TD vAlign=bottom align=center width="23%">0.09 </TD>
    <TD vAlign=bottom align=center width="23%">5,500 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>550,000 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>3.57 years </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>0.09 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>11,000 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right>110,000 </TD>
    <TD vAlign=bottom align=center width="23%">4.05 years </TD>
    <TD vAlign=bottom align=center width="23%">0.17 </TD>
    <TD vAlign=bottom align=center width="23%">(7,700) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD vAlign=bottom align=right bgColor=#e6efff>300,000 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>4.62 years </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>0.11 </TD>
    <TD vAlign=bottom align=center width="23%" bgColor=#e6efff>3,000 </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=right>325,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="23%">4.76 years </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="23%">0.14 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="23%">(6,500) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    bgColor=#e6efff>3,485,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="23%" bgColor=#e6efff>3.45 years </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="23%" bgColor=#e6efff>0.13 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=center
    width="23%" bgColor=#e6efff>(65,375) </TD>
  </TR>
</TABLE>
<p align="center">113</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_103></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>13.</B> </TD>
    <TD><P align=justify><B>Revenues</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Product sales </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>31,743 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>14,702 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Licensing revenue (Note 9) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">7,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Freight revenue </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>1,149 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Other revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">326 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>40,718 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>14,702 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>14.</B> </TD>
    <TD><P align=justify><B>Discontinued Operations</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On November 26, 2014, a Purchase and Sale Agreement was
      executed between Lexaria and Cloudstream Belmont Lake, LP for the purchase
      and sale of oil and gas working interests, net revenue interests and other
      interests in Belmont Lake, Mississippi for total consideration of
      $1,400,000. A total net amount of $721,806 was paid to the Company after
      all short-term debts were paid out from the sale.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Accordingly, the results of the Company&#146;s former oil and
      gas business were reported as discontinued operations during fiscal
      2015.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Income from discontinued operations were comprised
      of:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Revenue </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>59,715 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left>Cost </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(10,797</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>48,918 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>15.</B> </TD>
    <TD><P align=justify><B>Related Party Transactions</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>For the year ended August 31, 2016, the Company
      paid/accrued $120,000 to C.A.B Financial Services (&#147;CAB&#148;) (2015 -
      $119,700); to BKB Management Ltd. (&#147;BKB&#148;) $44,767 (2015 - $69,543) for
      management, consulting and accounting services; to a senior vice president
      $18,000 (2015 - $42,000) for executive management consulting; and to
      Docherty Management Limited $117,213 (2015 - $60,965). All fees incurred
      were included as consulting on the Company&#146;s statement of operations. CAB
      is owned by the CEO of the Company, BKB is owned by the former CFO of the
      Company and Docherty Management Limited (&#147;Docherty Management&#148;) is owned
      by the President of the Company. The CFO of the Company resigned effective
      April 29, 2016.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During the year ended August 31, 2016, the Company also
      granted 210,000 (2015 &#150; 462,000) restricted common shares with a value of
      $21,000 (2015 &#150; $83,532) per share to Mr. Docherty for his
      services.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company granted a total of 410,000 (2015 &#150; 1,870,000)
      incentive stock options to the directors and officers of the Company with
      a fair value of $51,642 (2015 - $159,082) (Note 11).</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>On July 25, 2016, the Company entered into a loan
      agreement with CAB for a principal amount of $50,000. The term of the loan
      agreement is 15 months, with an interest free period for the first three
      months. For the final 12 months, Lexaria will pay simple interest at the
      rate of 8% per annum.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During fiscal 2015, outstanding loans to Company&#146;s
      related parties were repaid from the total consideration from the sale of
      Lexaria&#146;s oil and gas working interest (Note 14). Total interest expense
      incurred on such loans during the year ended August 31, 2015 amounted to
      CAD$24,720 and $10,333.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During July 2016, the Company entered into a marketing
      agreement with a Company controlled by a
      director for compensation of $4,000 per month. During the year ended
      August 31, 2016, the Company paid $8,000 in such fees.</P></TD>
  </TR>
</TABLE>
<p align="center">114</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_104></A>
<P style="MARGIN-LEFT: 5%" align=justify>As at August 31, 2016, $331,371,
  inclusive of loan noted above, was payable to the related parties (August 31,
  2015 - $22,052).</P>
<P style="MARGIN-LEFT: 5%" align=justify>The related party transactions are
  recorded at the exchange amount established and agreed to between the related
  parties. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>16.</B> </TD>
    <TD><P align=justify><B>Segment Information</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company&#146;s operations involve the development and
      usage, including licensing, of its proprietary nutrient infusion
      Technology. Lexaria is centrally managed and its chief operating decision
      makers, being the president and the CEO, use the consolidated and other
      financial information supplemented by revenue information by category of
      alternative health products as well as licensing, as a whole, to make
      operational decisions and to assess the performance of the Company.
      Accordingly, the Company operates in a single segment.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>During the year ended August 31, 2015, the Company&#146;s
      operating segments were the oil and gas exploration and the alternative
      health products, which were managed separately based on fundamental
      differences in the nature of such operations.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Summarized financial information concerning Lexaria&#146;s
      reportable segment as at and during the year ended August 31, 2015 was as
      follows:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="10%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%">Alternative </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="10%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="10%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%">Oil and Gas </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%">Health Products </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%">Corporate </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%">Total </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Revenue </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>48,918 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>14,702 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>63,620 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Operation expenses </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">349,093 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">1,618,996 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">1,968,089 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Total assets </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>214,632 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>497,090 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%" bgColor=#e6efff>711,722 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>17.</B> </TD>
    <TD><P align=justify><B>Commitments, Significant Contracts and
      Contingencies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify><B><I>Management Agreements</I></B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>As at August 31, 2016, the Company is party to the
      following contractual commitments with
      management.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>Party </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="14%">Monthly Commitment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>C.A.B Financial Services </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="14%" bgColor=#e6efff>10,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Docherty Management </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="14%">CAD$12,500 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Ltd. </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="14%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The Company appointed Mr. John Docherty
  as President of Lexaria effective April 15, 2015. The Company executed a
  twenty-four month consulting contract with Docherty Management Limited, solely
  owned by Mr. John Docherty with monthly compensation of CAD$12,500 and shall
  increase to a total of CAD$15,000 per month effective at that time when the
  Company has $1,000,000 or more in cash in its bank accounts, and continue at
  CAD$15,000 per month from that moment until the termination or completion of the
  contract. The Company may also pay Mr. Docherty a bonus from time to time, at
  its sole discretion. Mr. Docherty will be entitled to receive common stock based
  and stock option based bonuses upon achieving certain milestones during the time
  of his consultancy with the Company. These milestones are: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="10%"  ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>Upon signing: A grant of 550,000 stock options priced
      one-cent above market prices at the time of award. (granted) </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>90 Days after signing: A grant of 500,000 restricted
      common shares (Completed - 462,000 restricted common shares issued with
      cash payment of $16,000, as mutually agreed to between the parties). </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%">Twelve months after signing: A grant of 300,000
      stock options priced one-cent above market prices at
      the time of award (granted). </TD>
  </TR>
</TABLE>
<p align="center">115</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="10%"  ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>18 months after signing: A grant of 300,000 restricted
      common shares (252,000 restricted common shares issued subsequent to the
      year end (Note 19), with cash payment of $6,240, as mutually agreed to
      between the parties). </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD width="85%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>During the first twelve (12) months after signing; for
      combined Lexaria Energy and ViPova&#153; products and including all combined
      sales efforts, achieving non- refundable sales of $200,000 to any single
      customer in any consecutive 60-day period would result in a restricted
      common share award of 100,000 Company shares (expired); and, after the
      first12 months after signing and expiring 24 months after signing; for
      combined Lexaria Energy and ViPova&#153; products and including all sales
      efforts, achieving non-refundable sales of $200,000 to any single customer
      in any consecutive 60-day period would result in a restricted common share
      award of 50,000 Company shares; this clause is limited to one payment per
      customer during the 24-month period, but payable on each customer that
      meets these sales thresholds; </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD width="85%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>During the first 12 months after signing; for combined
      Lexaria Energy and ViPova&#153; products and including all combined sales
      efforts, achieving non- refundable sales of $500,000 in any fiscal quarter
      would result in a restricted common share award of 200,000 Company shares
      (expired); and, after the first 12 months after signing and expiring 24
      months after signing; for combined Lexaria Energy and ViPova&#153; products and
      including all sales efforts, achieving non-refundable sales of $500,000 in
      any fiscal quarter would result in a restricted common share award of
      100,000 Company shares; this clause is limited to one payment per fiscal
      quarter; </P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD width="85%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="10%" ></TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="85%"><P align=justify>During the time this Agreement remains in effect, for
      each new provisional patent application substantially devised by Mr.
      Docherty and successfully created, written and filed with the US Patent
      Office for Company-owned intellectual property, a restricted common share
      award of 250,000 Company shares. This clause is not limited to frequency
      of payment but each patent application is to be approved by the Board of
      Directors of the Company, in advance. During the year ended August 31,
      2016, the Company issued to Mr. Docherty 210,000 restricted common shares
      and further accrued $4,000 combined in lieu of issuance of 250,000
      restricted common shares, as mutually agreed to between the parties. </P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Lease </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has a lease commitment for
  its office space for CAD$826 per month. The lease requires a 90-day termination
  notice. </P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Convertible Debenture </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has issued a convertible
  debenture for $45,000, maturing on August 31, 2020. The convertible debenture
  accrues interest at 10% per annum, payable in quarterly installments (Note
  10).</P>
<P style="MARGIN-LEFT: 5%" align=justify><B><I>Marketing, Branding, and Investor
  Relations Advisory </I></B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 18, 2016, the Company entered
  into a service agreement with an arm&#146;s length service provider for marketing,
  branding, and investor relations advisory services (the &#147;Advisory Agreement&#148;).
  The Advisory Agreement has a term of one year with automatic renewal but can be
  terminated by either party with 30 days&#146; notice. In exchange for services, the
  Company issued 250,000 common shares upon signing of the agreement (Note 11) and
  is obligated to issue share purchase warrants for purchase of 250,000 common
  shares, on a monthly basis, with exercise price that is the average of the daily
  closing prices of the preceding month with a minimum of $0.08 per share. The warrants will have a term of
  five years from the date of issuance. </P>
<p align="center">116</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_106></A>
<P style="MARGIN-LEFT: 5%" align=justify>Lexaria retains the right but has no
  obligation to make any future month&#146;s payment in cash using the same formula to
  establish and per-share valuation price, multiplied by 250,000, in lieu of
  issuing the monthly warrants. The Advisory Service Provider is entitled to 3%
  commissions on revenue received by Lexaria originating from the parties
  introduced by the Advisory Service Provider. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>18.</B> </TD>
    <TD><P align=justify><B>Income Tax</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The following table reconciles the income tax benefit at
      the U.S. Federal statutory rate to income tax benefit at the Company&#146;s
      effective tax rates as at August 31, 2016 and
      2015:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Loss before taxes </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(1,277,249</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(1,934,352</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Income tax rate </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">35.00% </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">35.00% </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Expected income tax recovery </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(447,037</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(677,023</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left>Non-deductible items </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">101,040 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">98,765 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Change in estimates </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(897,713</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>646,711 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Change in valuation allowance </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">1,243,710 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(68,453</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Total income taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>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, 2016 and
  2015 are comprised of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%"  >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=right
    width="12%">August 31 </TD>
    <TD style="BORDER-TOP: #000000 2px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2015 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="12%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD vAlign=bottom align=left bgColor=#e6efff>Non-capital losses </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>3,959,704 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>2,715,994 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Valuation allowance </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(3,959,704</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">(2,715,994</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    bgColor=#e6efff>Net deferred tax assets recognized </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">117</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_107></A>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has net operating loss
  carryforwards of approximately $11,313,000 which may be carried forward to apply
  against future year income tax for U.S. tax purposes. </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%"  >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left>Year </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="50%">Amount </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2025 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>76,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left>2026 </TD>
      <TD vAlign=bottom align=right width="50%">508,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2027 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>1,056,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left>2028 </TD>
      <TD vAlign=bottom align=right width="50%">720,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2029 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>753,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left>2030 </TD>
      <TD vAlign=bottom align=right width="50%">552,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2031 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>538,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left>2032 </TD>
      <TD vAlign=bottom align=right width="50%">252,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2033 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>344,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left>2034 </TD>
      <TD vAlign=bottom align=right width="50%">3,257,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD vAlign=bottom align=left bgColor=#e6efff>2035 </TD>
      <TD vAlign=bottom align=right width="50%" bgColor=#e6efff>2,268,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left>2036 </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="50%">989,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom width="10%" >&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>&nbsp;</TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="50%" bgColor=#e6efff>11,313,000 </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>19.</B> </TD>
    <TD><P align=justify><B>Subsequent Events</B></P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">f) </TD>
    <TD><P align=justify>The Company granted 250,000 stock options to a consultant
      with a strike price of $0.14 per share, and expiry term of two
      years.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">g) </TD>
    <TD><P align=justify>Pursuant to its agreement with Docherty Management Ltd.
      (Note 17), the Company issued 252,000 restricted common shares and cash
      compensation of $6,240.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">h) </TD>
    <TD><P align=justify>Pursuant to the Advisory Agreement (Note 17), the Company
      issued 750,000 warrants with an exercise price of $0.14 per share and
      valid for five years, in return for consulting services provided in
      August, September, and October. The Company recognized the related fair
      value of 250,000 of such warrants for services received during the month
      of August 2016, in these consolidated financial statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">i) </TD>
    <TD><P align=justify>The Company reached an agreement with a director to
      settle the outstanding amount pursuant to a marketing agreement (Note 15),
      through issuance of common shares of the Company. To settle the
      outstanding amount of $16,000 for four months to October 31, 2016, the
      Company issued 114,286 shares of its common stock at a value of $0.14 per
      share.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">j) </TD>
    <TD><P align=justify>The Company issued 56,250 shares of its common stock in
      settlement of $9,000, recognized within accounts payable and accrued
      liabilities as at August 31, 2016.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">k) </TD>
    <TD><P align=justify>A total of 55,000 incentive stock options were exercised
      for proceeds of $12,500.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">l) </TD>
    <TD><P align=justify>A total of 605,000 share purchase warrants were exercised
      for proceeds of $137,508.</P></TD>
  </TR>
</TABLE>
<p align="center">118</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_108></A>
<P align=center><B>MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS </B></P>
<P align=justify>Our management&#146;s discussion and analysis of financial condition
  and results of operations provides a narrative about our financial performance
  and condition that should be read in conjunction with the audited and unaudited
  consolidated financial statements and related notes thereto included in this
  proxy statement/prospectus. This discussion contains forward looking statements
  reflecting our current expectations and estimates and assumptions about events
  and trends that may affect our future operating results or financial position.
  Our actual results and the timing of certain events could differ materially from
  those discussed in these forward-looking statements due to a number of factors,
  including, but not limited to, those set forth in the sections of this
  prospectus titled &#147;Risk Factors&#148; beginning at page 10 above and &#147;Forward-Looking
  Statements&#148; beginning at page 19 above.</P>
<P align=justify><B>Plan of Operations </B></P>
<P align=justify>During the next twelve month period (beginning December 1,
  2017), we intend to:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="90%">continue sales and marketing efforts for
      ViPova&#153; , Lexaria and new product lines </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="90%">identify and secure sources of equity and/or
      debt financing for patent applications; </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="90%"><P align=justify>identify and secure sources of equity and/or debt
      financing for additional line of products for health and wellness; </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&#149; </TD>
    <TD align=left width="90%">identify and secure sources of equity and/or
      debt financing for research and development </TD>
  </TR>
</TABLE>
<P align=justify>Our plans are dependent upon our ability to obtain sufficient
  capital to execute and during the previous year we did not raise sufficient
  capital to fulfill all our plans. Without sufficient capital, our plans will
  change, and could change materially. We anticipate that we will incur the
  following operating expenses during this period:</P>
<P align=justify><B>Estimated Funding Required During the 12 Months beginning
  December 1, 2017</B> <B></B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=center><B>Expense</B> </TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="11%"><B>Amount</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="11%"><B>Estimated</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=center>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="11%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="11%"><B>Completion/Due</B> </TD>
    <TD vAlign=bottom noWrap align=center width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="11%"><B>($)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="11%"><B>Date</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Research and Development of
      additional products </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>70,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>12 months </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Research and Development (General) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">800,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">12 months </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Patent applications and
      trademark </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>250,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>12 months </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Marketing and Sales </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">200,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">12 months </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Consulting Fees (~50% is
      officers and directors) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>900,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>12 months </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Professional fees </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">160,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">12 months </TD>
    <TD vAlign=bottom align=left width="2%"
>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Rent </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>20,000 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%" bgColor=#e6efff>12 months </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Other general administrative expenses
      (including travel, insurance, conferences, and fees) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">300,000 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="11%">12 months </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Interest Expense </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="11%" bgColor=#e6efff>10,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="11%" bgColor=#e6efff>12 months </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom
      align=left><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="11%">2,710,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="11%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">119</p>
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<A name=page_109></A>
<P align=justify><I>12 Month Outlook for Current Product Line, Product
  Development &amp; Design, Patents </I></P>
<P align=justify>
  As at November 30, 2017, we had a working capital surplus of $2,321,497 and cash on hand of $2,209,703. We therefore estimate that we will not require additional cash to finance our planned expenditures for the 12 months beginning December 1, 2017. In the uncertain event that our cash requirements exceed our anticipated expenses and we are unable to raise sufficient additional funds, or in the uncertain event that all of our debt obligations become due, we will be required to scale back our operations to prioritize immediate and necessary expenses in our longer term planning into fiscal 2019.
  These necessary expenses include professional fees and general and administrative expenses necessary to satisfy our public reporting requirements. </P>
<P align=justify>Our business strategy involves several elements. We intend to
  prioritize our revenue generating efforts in
  2018
  on technology licensing,
  with a secondary focus on our consumer food products enriched with full spectrum
  hemp oil.</P>
<P align=justify>Our patented technology was developed to aid absorption and
  bioavailability of certain &#147;payload&#148; molecules, including cannabinoids such as
  cannabidiol (CBD) and tetrahydrocannabinol (THC). CBD is not psychoactive and
  may have desirable qualities, and is found in plant species such as hemp,
  cannabis, and Echinacea. Our technology appears to improve absorption and
  bioavailability of CBD into human epi-intestinal cells. We are developing a line
  of food products fortified with full spectrum hemp oil that contains
  cannabinoids such as CBD, but contains less than 0.3% THC. Because of the low
  amounts of THC, and because the hemp oil is derived from legally imported hemp,
  the products are legal under Federal law. </P>
<P align=justify>We first began selling trial amounts of ViPova&#153; branded black
  tea fortified with hemp oil and utilizing our technology, in January 2015. In
  August 2015 we added six new flavors of tea to expand the brand&#146;s reach. Sales
  of these products have been modest but are expected to improve in the long term. </P>
<P align=justify>We also began offering our first coffee and hot chocolate also
  fortified with full spectrum hemp oil, and also under the ViPova&#153; brand.
  Together, tea, coffee and hot chocolate comprise all our product offerings under
  the ViPova&#153; brand, despite modest changes to flavors or perhaps packaging, etc.
  Offering a variety of self-made beverages to the consumers helps us to establish
  the ViPova&#153; brand and may also help us to develop relationships with retail
  distributors who are less likely to place orders from manufacturers that can
  only offer a single product.</P>
<P align=justify>Generating meaningful revenue from product sales will be
  challenging and will rely in part on our ability to achieve widespread retail
  distribution access. We are also investigating the possibility of generating
  sales from international markets, in those locations where hemp oil fortified
  foods are permissible by law.</P>
<P align=justify>ViPova&#153; branded products are owned by our 51%-owned Poviva Tea
  LLC subsidiary. As of October 2017 Lexaria acquired 100% of Poviva Tea LLC. </P>
<P align=justify>While the ViPova&#153; line is focused on a &#147;coffee house&#148;
  experience, the &#147;Lexaria Energy&#148; line is focused on athletic performance and
  active lifestyle needs. The first Lexaria Energy product is believed to be
  unique or nearly so: a protein energy bar utilizing our technology to fortify with
  full spectrum hemp oil. We first offered the Lexaria Energy Bar for sale in
  November, 2015.</P>
<p align="center">120</p>
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<A name=page_110></A>
<P align=justify>Lexaria Energy branded products are owned 100% by Lexaria Corp.</P>
<P align=justify>A manufacturing facility was contracted to produce the bar in
  2015. Recipes have evolved and at the time of this report the Company had no
  inventories of protein bars to be offered for sales, and was negotiating for a
  suitable 2016/17 manufacturing facility and prices. </P>
<P align=justify>Our strategy was to encourage online sales via a dedicated
  website, and also to encourage fitness enthusiasts to become aware of the
  Lexaria Energy Bars at fitness clubs and gyms, which they are likely to
  frequent. We did pursue traditional grocery store, convenience store, and
  roadside store distribution channels in 2016 with some success but limited due
  to our lack of an established distribution system.</P>
<P align=justify>It is our intention, subject to sufficient funding being
  available, to provide R&amp;D to develop additional fitness-style products in
  2017 under the Lexaria Energy brand, such as protein powders for shakes or
  smoothies, and protein energy drinks. We are also pursuing other product
  development and expect to launch new products.</P>
<P align=justify>We believe the range of products available and under
  development are sufficient to prepare for revenue growth and potentially
  profitable long term operations if we are able to generate sufficient consumer
  demand and obtain sufficiently widespread retail distribution locations.</P>
<P align=justify>Meanwhile our business strategy contains a second element that
  we believe will be more impactful to future corporate growth that involves the
  further development and out-licensing of our intellectual property of molecule
  delivery that enhances bioactivity or absorption.</P>
<P align=justify>At this time we are not planning to offer for sale any products
  containing THC in quantities higher than 0.3% . However, we envision licensing
  our technology to companies legally state-licensed to offer THC products in the
  states or international jurisdictions where they do business. We also plan to
  license our technology to other companies for the delivery of molecules other
  than THC or cannabinoids. Our latest U.S. patent, granted on December 13, 2017,
  for our technology related to new molecule groups may enhance our ability to
  successfully pursue this initiative during fiscal 2018. We will attempt to
  communicate the benefits of our technology to potential licensing partners, i.e.
  with higher absorption levels a manufacturer could infuse smaller amounts of
  active molecules into a product, thus reducing their manufacturing input costs.
  We believe this to a meaningful competitive advantage that may lead to the
  potential to generate licensing revenue, and will pursue these opportunities
  within the THC market both within the USA and also internationally, in those
  locations where it is legal and regulated by government.</P>
<P align=justify>We would not ourselves be selling any THC products &#150; we would
  only be licensing technology to already-licensed participants in valid
  jurisdictions. We expect a low number of licensees initially and currently have
  one revenue generating agreement with such a licensee and additional letters of
  intent and negotiations with other potential licensees.</P>
<P align=justify>Subject to budgetary availability, we also plan to conduct
  additional in vitro and in vivo studies testing the absorption of some or all of
  the molecules named within our patent applications &#150; CBD, NSAIDs, Vitamins, and
  Nicotine &#150; to substantiate the effectiveness of our invention. More than simply
  satisfying scientific curiosity, successful tests could lead to increased
  awareness and acceptance of our technology as a meaningful method by which to
  deliver some or all of the named molecules more effectively than their current
  delivery methods. Therefore absorption tests could become an important element
  leading towards higher rates of acceptance of our technology licensing
  initiatives. </P>
<P align=justify>We will pursue technology licensing opportunities as a method
  of generating highly profitable revenue streams over long periods of time. In
  addition, while one of our patent applications has been granted by the USPTO and
  another patent application has generated a Notice of Allowance, our remaining
  patent applications have not yet been granted. It is not possible to forecast
  with certainty when, or if, our remaining patent pendings will become granted
  patents. But if our remaining patent applications do become granted patents, our
  ability to generate meaningful license revenue from our intellectual property
  may increase in a very short period of time.</P>
<P align=center>121</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_111></A>
<P align=justify>We will continue to pursue our remaining patents pending as
  vigorously as we are able, since the successful granting of more of those
  applications could lead to material increases in shareholder value. We are
  pursuing patent protection in more than 40 countries around the world. </P>
<P align=justify><b>
  Results of Operations &ndash; Three Months Ended November 30, 2017 and 2016
</b></P>
<P align=justify>
  The following summary of our results of operations should be read in conjunction with our financial statements for the period ended November 30, 2017, which are included herein.
</P>
<P align=justify>
  Our operating results for the three months ended November 30, 2017 and 2016 and the changes between those periods for the respective items are summarized as follows:
  <BR>
</P>

<table
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellspacing=0 cellpadding=0 width="100%" border=0>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> Three Months </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> Three Months </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> Change </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> Ended </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> Ended </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> Between the </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> November 30 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> November 30 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> Periods </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> 2017 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> 2016 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=left nowrap>&nbsp;</td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left bgcolor=#e6efff> Sales </td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 24,635 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 9,225 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 15,410 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left> Cost of Goods Sold </td>
    <td align=left width="1%" >&nbsp;</td>
    <td align=right width="12%"> 6,099 </td>
    <td align=left width="2%" >&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td align=right width="12%"> 888 </td>
    <td align=left width="2%" >&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td align=right width="12%"> 5,211 </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left bgcolor=#e6efff> General and Administrative </td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 593,703 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 405,466 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 188,237 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left> Impairment of
      Inventory </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"> 3,546 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"> 3,424 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"> 122 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left
      bgcolor=#e6efff> Net loss </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgcolor=#e6efff> (578,713 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgcolor=#e6efff> ) </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgcolor=#e6efff> (400,553 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgcolor=#e6efff> ) </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgcolor=#e6efff> (178,160 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgcolor=#e6efff> ) </td>
  </tr>
</table>
<P align=justify>
  Our financial statements report a net loss of $578,711 for the
    three month period ended November 30, 2017 compared to 2016 where we incurred a
    net loss of $400,553. During the three month period ended November 30, 2017, our
    general and administrative expenses were significantly higher compared to the
    three months ended November 30, 2016, which is a result of the increases in
    advertising and promotion to potential licensees and partners, patent and
    trademark filing costs and increasing R&amp;D expenditures. These increases are
    in line with expectations for executing our business plan.
</P>
<P align=justify>
  Revenue increases were primarily based on Licensing fees in
    line with contract requirements, while consumer product sales remain low due to
    challenges in securing expansive distribution opportunities, production
    challenges and payment processing changes. The Company continues to pursue more
    widespread distribution possibilities which have the potential to unlock more
    significant consumer revenues.
</P>
<P align=justify>
  The trend of hemp oil fortified foods, and hemp seed products,
    gaining consumer acceptance continued through the period ended November 30,
    2017, and provides a reason to believe that sales could increase. Those trends
    should support higher potential consumer product sales. Release of the TurboCBD
    product in fiscal 2017 was successful but ongoing sales were limited by changes
    to payment processing services outside of the Company&#146;s control. At the time of
    this report the Company had extinguished its supplies of certain products like
    protein bars and the lack of inventory was also a negative impact on consumer
    product sales potential.
</P>
<P align=justify>
  For fiscal 2018 the Company expects to derive ever larger
    proportions of its revenues from technology licensing to third parties. At the
    time of this report the Company has entered more than 10 formal letters of
    intent or definitive agreements and is negotiating more. The Company also has
    formed a joint venture to develop, produce, and sell a line of healthy edible
    cannabinoid products using our patented technology. It is the Company&#146;s view
    that the November 2017 grant of patent 9839612 and its expanding patent
    portfolio is a positive step in enabling the generation of more significant
    revenues during fiscal 2018.
</P>
<P align=justify>
  We do not expect that all of the Letters of Intent into which
    we enter will result in definitive agreements with paying customers and cannot
    predict how many will. We believe that strengthening and expanding our
    intellectual property portfolio and conducting supportive R&amp;D will jointly
    contribute to strengthening revenue prospects.
</P>
<P align=center>122</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_33></A>
<P align=justify>
  <b>Liquidity and Financial Condition </b>
</P>

<table
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellspacing=0 cellpadding=0 width="100%" border=0>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> November 30 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> August 31 </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left> <b><i>Working Capital</i></b> </td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> 2017 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> 2017 </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left bgcolor=#e6efff> Current assets </td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 2,417,202 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> 2,795,495 </td>
    <td align=left width="2%"  bgcolor=#e6efff>&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left> Current
      liabilities </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"> 95,705 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"> 92,347 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left
      bgcolor=#e6efff> Working capital balance (deficiency) </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgcolor=#e6efff> 2,321,497 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgcolor=#e6efff> 2,703,148 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgcolor=#e6efff>&nbsp;</td>
  </tr>
</table>
<P align=justify>
  The Company&#146;s working capital balance decreased during the
    three months ended November 30, 2017, as a result of its executing its operating
    plan via increased activities in potential licensee outreach, research and
    development and other aspects of our business plan utilizing funding from
    financing activities during fiscal 2017 and the ongoing exercises of options and
    warrants.
  <br>

</P>
<table
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellspacing=0 cellpadding=0 width="100%" border=0>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td colspan="4" align=center nowrap> Three Months Ended </td>
    <td align=right width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left>&nbsp;</td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> November 30 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> November 30 </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left> <b><i>Cash flows</i></b> </td>
    <td align=left width="1%" >&nbsp;</td>
    <td width="12%" align=right nowrap> 2017 </td>
    <td width="2%" align=left nowrap >&nbsp;</td>
    <td width="1%" align=left nowrap >&nbsp;</td>
    <td width="12%" align=right nowrap> 2016 </td>
    <td align=left width="2%" >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="1%"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td width="2%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="1%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</td>
    <td width="12%" align=right nowrap style="BORDER-BOTTOM: #000000 1px solid"> $ </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="2%"
    >&nbsp;</td>
  </tr>
  <tr valign=top>
    <td align=left bgcolor=#e6efff> Cash flows used in operating activities </td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> (520,321 </td>
    <td align=left width="2%"  bgcolor=#e6efff> ) </td>
    <td align=left width="1%"  bgcolor=#e6efff>&nbsp;</td>
    <td align=right width="12%" bgcolor=#e6efff> (100,987 </td>
    <td align=left width="2%"  bgcolor=#e6efff> ) </td>
  </tr>
  <tr valign=top>
    <td align=left> Cash flows used in investing activities </td>
    <td align=left width="1%" >&nbsp;</td>
    <td align=right width="12%"> (85,715 </td>
    <td align=left width="2%" > ) </td>
    <td align=left width="1%" >&nbsp;</td>
    <td align=right width="12%"> (13,684 </td>
    <td align=left width="2%" > ) </td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left
      bgcolor=#e6efff> Cash flows provided by financing activities </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgcolor=#e6efff> 282,402 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgcolor=#e6efff>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgcolor=#e6efff> 145,508 </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgcolor=#e6efff>&nbsp;</td>
  </tr>
  <tr valign=top>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left> Increase
      (decrease) in cash </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"> (323,634 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    > ) </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"> 30,837 </td>
    <td style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    >&nbsp;</td>
  </tr>
</table>
<P align=justify><I>
  Operating Activities
</I> </P>
<P align=justify>
  The increase in the net cash used in operating activities
    during the three months ended November 30, 2017, is primarily the result of the
    Company&#146;s execution of its operating plan with available funding compared to
    cost containment during the period ended November 30, 2016. This difference was
    largely due to the increased costs pertaining to consulting, advertising and
    promotion, patent and trademark related filings, research and development, and
    travel.
</P>
<P align=justify><I>
  Investing Activities
</I> </P>
<P align=justify>
  During the three months ended November 30, 2017, the Company
    continued its investment in expanding its patent applications and acquired 100%
    ownership of our subsidiary PoViva Tea LLC.
</P>
<P align=justify><I>
  Financing Activities
</I> </P>
<P align=justify>
  During the period ended November 30, 2017, the Company raised a
    total of $282,402 from equity issuances, relating to the exercise of its
    outstanding stock options and warrants.
</P>
<P align=center>123</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_33></A>
<P align=justify><B><I>Results of Operations for our Year Ended August 31, 2017
  and August 31, 2016 </I></B></P>
<P align=justify>Our net loss and comprehensive loss for the year ended August
  31, 2017, for the year ended August 31, 2016 and the changes between those
  periods for the respective items are summarized as follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%"><B>Year Ended</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%"><B>Year Ended</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="10%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%"><B>August 31,</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="10%"><B>August 31,</B> </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="10%">&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%"><B>2017</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%"><B>2016</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="10%"><B>Change</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=bottom>&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="10%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="10%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="10%">&nbsp;</TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Revenue </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>63,639 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>40,718 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>22,921 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>General and administrative </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">1,963,354 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">1,272,352 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">691,002 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Interest expense </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>6,015 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>2,250 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>3,765 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Consulting fees </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">1,017,872 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">565,543 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%">452,329 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Professional Fees </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>210,297 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>133,860 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="10%" bgColor=#e6efff>76,437 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left>Net
      loss </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%">(1,929,465</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%">(1,277,249</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=right
    width="10%">(652,216</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" vAlign=bottom align=left
    width="2%" >) </TD>
  </TR>
</TABLE>
<P align=justify><B><I>Revenue </I></B></P>
<P align=justify>Licensing revenues represent the majority of the $63,639 in
  revenues during the year ended August 31, 2017. Consumer product sales revenues
  were lower due to challenges in securing expansive distribution opportunities,
  production challenges and payment processing changes. Total licensing revenues
  increased as they were included on a pro-rated basis and also included
  additional contracted fees. Licensing revenues were recognized on a pro-rated
  basis over the term of the licensing agreement as the Company is required to
  provide additional support services during the term and is in a very early stage
  of this revenue cycle to identify a vendor-specific objective evidence of fair
  value of such services. Additional contracted fees were included as earned. As
  of August 31 2017 the company had received all of the pre-defined Licensing
  payments to August 31 2017 for a cash receipts of $50,000 of Licensing fees and
  $20,392 of additional fees corresponding to the areas under the license
  agreement where the licensee has been active to-date. During the year ended
  August 31, 2017, $25,417 of the $50,000 was included (2016 $7,500) on a
  pro-rated basis and $20,392 (2016 $NIL) of additional fees as licensing revenue
  for a total of $45,809 in licensing revenue and $17,830 in product and other
  revenues. </P>
<P align=justify>As fiscal 2017 came to a close, hemp oil fortified foods, and
  hemp seed products continued gaining consumer acceptance and provide a reason to
  believe that sales could increase. Those trends should support higher potential
  consumer product sales. Release of the TurboCBD product was successful but sales
  were limited by changes to payment processing services outside of the Company&#146;s
  control. At the time of this report the Company had extinguished its supplies of
  certain products like protein bars and the lack of inventory was also a negative
  impact on consumer product sales potential.</P>
<P align=justify>For 2018 the Company expects to derive ever larger proportions
  of its revenues from technology licensing to third parties. At August 31, 2015
  the Company had zero technology licensing agreements entered. By August 31, 2016
  we had entered several LOI&#146;s or definitive agreements related to technology
  out-licensing. At the time of this report the Company has entered more than 10
  formal letters of intent or definitive agreements and is negotiating more. The
  Company also has formed a joint venture to develop, produce, and sell a line of
  healthy edible cannabinoid products using our patented technology. It is the
  Company&#146;s view that the expansion of our patent portfolio, including the December 13, 2017 patent granted by the USPTO, of will be a
  positive step in enabling the generation of more significant revenues during
  2018. </P>
<P align=center>124</P>
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<P align=justify>We do not expect that all of the Letters of Intent into which
  we enter will result in definitive agreements with paying customers and cannot
  predict how many will. We believe that strengthening and expanding our
  intellectual property portfolio and conducting supportive R&amp;D will jointly
  contribute to strengthening revenue prospects. </P>
<P align=justify><B><I>General and Administrative </I></B></P>
<P align=justify>Our general and administrative expenses increased by $691,002
  during the year ended August 31, 2017. The increase in our general and
  administrative expenses was largely due to expected increases in executing
  budgeted work. Examples are many and include additional consultants; increasing
  legal fees for patent and trademark filings, new product development and launch,
  and more. However roughly two-thirds of the increase included in the G&amp;A
  total is $258,406 valuation of warrants issued for services and $207,660 of
  share issuance for contracts and in settlement of services recognized in
  accounts payable regarding contractors. Significant increases are expected
  during fiscal 2018 executing the budgeted scientific testing and research and
  development.</P>
<P align=justify><B><I>Interest Expense </I></B></P>
<P align=justify>Interest expense for the year ended August 31, 2017 was $6,015
  (2016 $2,250). The increase was primarily due to the issuance of a convertible
  debt and related payments. As of the year ended August 31, 2017 we eliminated
  our long-term loan and the convertible debt was converted.</P>
<P align=justify><B><I>Consulting fees </I></B></P>
<P align=justify>Our consulting fees increased during the year ended August 31,
  2017 due to the involvement of additional consultants, including the appointment
  of our interim CFO. Our executives are typically hired and compensated as
  consultants and costs associated with those agreements comprise the largest
  majority of our consulting fees expense. </P>
<P align=justify><B><I>Professional Fees</I></B><B> </B></P>
<P align=justify>Our professional fees increased by $76,437 during fiscal 2017
  primarily due to increases in patent and trademark filings, but were offset by
  some reductions due to the appointment of our interim CFO reducing financial
  report preparation fees from third party service providers. These efficiencies
  reduced outside professional fees.</P>
<P align=justify><B>Liquidity and Financial Condition</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left><B><I>Working Capital</I></B> </TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Current assets </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>2,795,495 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>510,166 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom
      align=left>Current liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">92,347 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%">433,881 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    bgColor=#e6efff>Working capital balance </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>2,703,148 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>76,285 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The Company&#146;s working capital balance increased during the year
  ended August 31, 2017 as a result of its financing activities. The warrant
  conversions from previous equity financings, and the new equity financings
  during fiscal 2017 resulted in a significant improvement in our working capital
  position of $2,626,863 compared to the year earlier period. </P>
<P align=center>125</P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=center width="27%" colSpan=4>Year Ended </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left>&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">August 31 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom noWrap align=left><B><I>Cash flows</I></B> </TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2017 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom noWrap align=right width="12%">2016 </TD>
    <TD vAlign=bottom noWrap align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
      align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="1%" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap
    align=right width="12%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom noWrap align=left
    width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Cash flows (used in) provided
      by operating activities </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(1,545,909</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>(660,856</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Cash flows (used in) provided by investing
      activities </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(9,699</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%">(20,102</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    bgColor=#e6efff>Cash flows (used in) provided by financing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>3,995,536 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#e6efff>514,292 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom
      align=left>Increase (decrease) in cash </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">2,439,928 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%">(166,666</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" >) </TD>
  </TR>
</TABLE>
<P align=justify><B><I>Operating Activities </I></B></P>
<P align=justify>Net cash used in operating activities was $1,545,909 for the
  year ended August 31, 2017 compared with cash used in operating activities of
  $660,856 during the same period in 2016. This difference was largely due to the
  increased costs pertaining to consulting, advertising and promotion, patent and
  trademark related filings, research and development, and travel. </P>
<P align=justify><B><I>Investing Activities</I></B><B> </B></P>
<P align=justify>Net cash used in investing activities was $9,699 (2016 $20,102)
  for the year ended August 31, 2017 is primarily due to the Company&#146;s cost
  incurred related to its patent related applications. </P>
<P align=justify><B><I>Financing Activities</I></B><B> </B></P>
<P align=justify>Net cash provided from financing activities was $3,995,536
  during the year ended August 31, 2017 compared to net cash provided of $514,292
  during the same period in 2016. During fiscal 2017, the Company closed a
  brokered private placement and had significant warrant exercises. The Company
  also repaid its loan due to our Chief Executive Officer. We raised $1,635,242
  from equity private placements $177,262 from option and $2,233,032 from warrant
  exercises in fiscal 2017 compared to $419,292 of equity from private placements
  and $95,000 in debt during fiscal 2016. </P>
<P align=justify><B><I>Contractual Obligations</I></B></P>
<P align=justify>As a &#147;smaller reporting company&#148;, we are not required to
  provide tabular disclosure obligations.</P>
<P align=justify><B>Going Concern </B></P>
<P align=justify>The Company&#146;s consolidated financial statements have been
  prepared in accordance with accounting principles generally accepted in the
  United States (U.S. GAAP) applicable to a going concern, which contemplates the
  realization of assets and the satisfaction of liabilities and commitments in the
  normal course of business. The Company has a net loss attributable to its common
  shareholders of $1,869,277 for the year ended August 31, 2017 (2016: $1,214,773)
  and at August 31, 2017 had a deficit accumulated since its inception of
  $13,169,939 (2016: $11,300,662). The Company has a working capital balance of
  $2,703,148 as at August 31, 2017 (2016: $76,285). The Company requires
  additional funds to maintain its operations and developments beyond fiscal 2018.
  Management&#146;s plans in this regard are to raise equity and debt financing as
  required, but there is no certainty that such financing will be available or that it will be available
  at acceptable terms. The outcome of these matters cannot be predicted at this
  time.<b> </b></P>
<P align=center>126</P>
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<P align=justify><B>Off-Balance Sheet Arrangements </B></P>
<P align=justify>We have no off-balance sheet arrangements that have or are
  reasonably likely to have a current or future effect on our financial condition,
  changes in financial condition, revenues or expenses, results of operations,
  liquidity, capital expenditures or capital resources that are material to
  stockholders.</P>
<P align=justify><B>Critical Accounting Policies </B></P>
<P align=justify>The discussion and analysis of our financial condition and
  results of operations are based upon our consolidated financial statements,
  which have been prepared in accordance with the accounting principles generally
  accepted in the United States of America. Preparing consolidated financial
  statements requires management to make estimates and assumptions that affect the
  reported amounts of assets, liabilities, revenue, and expenses. These estimates
  and assumptions are affected by management&#146;s application of accounting policies.
  We believe that understanding the basis and nature of the estimates and
  assumptions involved with the aspects of our financial statements <U>are</U> critical to an understanding of our financial statements as more particularly
  described in Note 3 to our audited annual consolidated financial statements
  included herein.</P>
<P align=justify><B>Recent Accounting Pronouncements </B></P>
<P align=justify>In May 2014, the Financial Accounting Standards Board (the
  &#147;FASB&#148;) issued a new standard related to the revenue recognition. Under the new
  standard, recognition of revenue occurs when a customer obtains control of
  promised goods or services in an amount that reflects the consideration which
  the entity expects to receive in exchange for those goods or services. In
  addition, the standard requires disclosure of the nature, amount, timing, and
  uncertainty of revenue and cash flows arising from contracts with customers. The
  FASB has recently issued several amendments to the standards, including
  clarification on the accounting for licenses of intellectual property and
  identifying performance obligations. </P>
<P align=justify>The guidance permits two methods of adoption: retrospectively
  to each prior reporting period presented (full retrospective method), or
  retrospectively with the cumulative effect of initially applying the guidance
  recognized at the date of initial application (the cumulative catch-up
  transition method). The Company will apply the full retrospective approach to
  adopt the standard but does not anticipate that this standard will have a
  material impact on its consolidated financial statements. </P>
<P align=justify>In July 2015, FASB issued ASU 2015-11, Simplifying the
  Measurement of Inventory (&#147;ASU 2015-11&#148;). ASU 2015-11 requires that an entity
  measure inventory at the lower of cost and net realizable value. This ASU does
  not apply to inventory measured using last-in, first-out methodology. ASU
  2015-11 is effective for annual reporting periods beginning after December 15,
  2016, including interim periods within that reporting period. The Company does
  not expect the new standard to have a significant impact on its consolidated
  financial position, results of operations or cash flows. </P>
<P align=justify>In November 2015, the FASB issued guidance that requires
  companies to classify all deferred tax assets or liabilities as noncurrent on
  the balance sheet rather than separately disclosing deferred taxes as current
  and noncurrent. This standard is effective for the Company beginning on
  September 1, 2017 and can be applied either prospectively or retrospectively to
  all periods presented upon adoption. The standard is not expected to have any
  impact on the Company&#146;s financial statements. </P>
<P align=justify>In January 2016, FASB issued a new standard to amend certain
  aspects of recognition, measurement, presentation, and disclosure of financial
  instruments. Most prominent among the amendments is the requirement for changes
  in fair value of equity investments, with certain exceptions, to be recognized
  through profit or loss rather than other comprehensive income. The new standard
  will be effective for the Company beginning September 1, 2018. The standard is
  not expected to have any impact on the Company&#146;s financial statements. </P>
<P align=center>127</P>
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<P align=justify>In February 2016 FASB issued ASU No. 2016-02, Leases (Topic
  842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides
  principles for the recognition, measurement, presentation, and disclosure of
  leases for both lessees and the lessors. The new standard requires the lessees
  to apply a dual approach, classifying leases as either finance or operating
  leases based on the principle of whether or not the lease is effectively a
  financed purchase by the lessee. The classification will determine whether lease
  expense is recognized based on an effective interest method or on a
  straight-line basis over the term of the lease, respectively. A lessee is also
  required to record a right-of-use asset and a lease liability for all leases
  with a term of greater than twelve months regardless of classification. Leases
  with a term of twelve months or less will be accounted for similar to existing
  guidance for operating leases. The standard is effective for annual and interim
  periods beginning after December 15, 2018, with early adoption permitted upon
  issuance. When adopted, the Company does not expect this guidance to have a
  material impact on its consolidated financial statements. </P>
<P align=justify>In March 2016, the FASB issued ASU 2016-09, Compensation-Stock
  Compensation (Topic 718), Improvements to Employee Share-Based Payment
  Accounting. Under ASU 2016-09, companies will no longer record excess tax
  benefits and certain tax deficiencies in additional paid in capital (&#147;APIC&#148;).
  Instead, they will record all excess tax benefits and tax deficiencies as income
  tax expense or benefit in the income statement and the APIC pools will be
  eliminated. In addition, ASU 2016-09 eliminates the requirement that excess tax
  benefits be realized before companies can recognize them. ASU 2016-09 also
  requires companies to present excess tax benefits as an operating activity on
  the statement of cash flows rather than as a financing activity. Furthermore,
  ASU 2016-09 will increase the amount an employer can withhold to cover income
  taxes on awards and still qualify for the exception to liability classification
  for shares used to satisfy the employer&#146;s statutory income tax withholding
  obligation. An employer with a statutory income tax withholding obligation will
  now be allowed to withhold shares with the fair value up to the amount of taxes
  owed using the maximum statutory rate in the employee&#146;s applicable
  jurisdiction(s). ASU 2016-09 requires a company to classify the cash paid to a
  tax authority when shares are withheld to satisfy its statutory income tax
  withholding obligation as a financing activity on the statement of cash flows.
  Under current U.S. GAAP, it is not specified how these cash flows should be
  classified. In addition, companies will now have to elect whether to account for
  forfeitures on share-based payments by (1) recognizing forfeiture awards as they
  occur or (2) estimating the number of awards expected to be forfeited and
  adjusting the estimate when it is likely to change, as in currently required.
  The amendments of this ASU are effective for reporting periods beginning after
  December 15, 2016, with early adoption permitted but all of the guidance must be
  adopted in the same period. The Company is currently assessing the impact the
  standard will have on its consolidated financial statements. </P>
<P align=justify>In June 2016, the FASB issued a new standard to replace the
  incurred loss impairment methodology in current U.S. GAAP with a methodology
  that reflects expected credit losses and requires consideration of a broader
  range of reasonable and supportable information to inform credit loss credit
  loss estimates. For trade and other receivables, loans and other financial
  instruments, the Company will be required to use a forward-looking expected loss
  model rather than the incurred loss model for recognizing credit losses which
  reflects losses that are probable. Credit losses relating to available for sale
  debt securities will also be recorded through an allowance for credit losses
  rather than as a reduction in the amortized cost basis of the securities. The
  new standard will be effective for Lexaria beginning September 1, 2020, with
  early adoption permitted. Application of the amendments is through a
  cumulative-effect adjustment to deficit as of the effective date. The Company is
  currently assessing the impact of the standard on its consolidated financial
  statements. </P>
<P align=center><B>DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE </B></P>
<P align=justify><B>Directors and Executive Officers</B></P>
<P align=justify>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 of directors
  and hold office until their death, resignation or removal from office. Our
  directors and executive officers, their ages, positions held, and duration as
  such, are as follows: </P>
<P align=center>128</P>
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<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=3 width="100%" border=0>
    <TR vAlign=top>
      <TD align=left valign="bottom" nowrap bgColor=#eeeeee style="BORDER-BOTTOM: #000000 1px solid"><B>Name</B></TD>
      <TD align=left valign="bottom" nowrap bgColor=#eeeeee style="BORDER-BOTTOM: #000000 1px solid"><B>Position Held with our Company</B></TD>
      <TD align=center valign="bottom" nowrap bgColor=#eeeeee style="BORDER-BOTTOM: #000000 1px solid" ><B>Age</B></TD>
      <TD align=center valign="bottom" nowrap bgColor=#eeeeee style="BORDER-BOTTOM: #000000 1px solid"><B>Date First Elected</B><br>
          <B> Or Appointed</B></TD>
      <TD align=center valign="bottom" nowrap bgColor=#eeeeee style="BORDER-BOTTOM: #000000 1px solid" ><B>Date of<br>
        Resignation</B></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Christopher Bunka </TD>
      <TD align=left width="27%" bgColor=#e6efff>Chief Executive Officer,
        Director, Chairman of the Board of Directors </TD>
      <TD align=center width="10%" bgColor=#e6efff >55 </TD>
      <TD align=center width="27%" bgColor=#e6efff>October 26, 2006 <BR>
        February
        14, 2007 <BR>
        April 29, 2016 </TD>
      <TD align=center width="10%" bgColor=#e6efff >- </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>John Docherty </TD>
      <TD align=left width="27%">President and Director </TD>
      <TD align=center width="10%" >46 </TD>
      <TD align=center width="27%">April 15, 2015 <BR>
        April 29, 2016 </TD>
      <TD align=center width="10%" >- </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Allan Spissinger </TD>
      <TD align=left width="27%" bgColor=#e6efff>Chief Financial Officer </TD>
      <TD align=center width="10%" bgColor=#e6efff >&nbsp;</TD>
      <TD align=center width="27%" bgColor=#e6efff>June 1, 2017 </TD>
      <TD align=center width="10%" bgColor=#e6efff >&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Nicholas Baxter </TD>
      <TD align=left width="27%">Director </TD>
      <TD align=center width="10%" >63 </TD>
      <TD align=center width="27%">July 8, 2011 </TD>
      <TD align=center width="10%" >- </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=left
      bgColor=#e6efff>Ted McKenchnie </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="27%"
    bgColor=#e6efff>Director </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="10%"
    bgColor=#e6efff >69 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="27%"
    bgColor=#e6efff>September 16, 2015 </TD>
      <TD style="BORDER-BOTTOM: #000000 2px solid" align=center width="10%"
    bgColor=#e6efff >- </TD>
    </TR>
  </TABLE>
</DIV>
<P align=justify><I>Business Experience</I> </P>
<P align=justify>The following is a brief account of the education and business
  experience of each director and executive officer during the past five years,
  indicating each person's principal occupation during the period, and the name
  and principal business of the organization by which he was employed. </P>
<P align=justify><B><I>Mr. Christopher Bunka &#150;Chief Executive Officer,Director,
  Chairman of the Board of Directors </I></B></P>
<P align=justify>Mr. Bunka has served as our director, chairman, president and
  chief executive officer since October 26, 2006. From February 14, 2007 until May
  12, 2009 he was the chief financial officer of our company. Since October 26,
  2006 Mr. Bunka has successfully completed both equity and debt financings for
  our company, completed the acquisition of additional oil &amp; gas assets,
  disposed of other oil &amp; gas assets, and restructured our company. He has
  refocused our company from one of natural gas exploration to that of development
  of existing oil reserves, and has engaged additional geophysical expertise in an
  attempt to better understand its exploration and development opportunities. Mr.
  Bunka has privately evaluated numerous oil and gas properties and investment
  opportunities for his private investments during the past 10 years.</P>
<P align=justify>Since 1988, Mr. Bunka has been the CEO of CAB Financial
  Services Ltd., a private holding company located in Kelowna, Canada. He is a
  venture capitalist and corporate consultant. </P>
<P align=justify>Mr. Bunka was formerly Chairman/CEO of Enertopia Corp, (symbol
  ENRT-OTC) but resigned in 2013. Mr. Bunka was formerly a director of Defiance
  Capital Corp., (symbol DEF-TSXV) a Canadian resource company, but resigned in
  2014.</P>
<P align=justify><B><I>Mr. John Docherty &#150; President and Director </I></B></P>
<P align=justify>Mr. Docherty was appointed President of Lexaria effective April
  15, 2015. Prior to Lexaria Mr. Docherty was former President and Chief Operating
  officer of Helix BioPharma Corp. (TSX: HBP), where he led the company&#146;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&#146; 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 also
  instrumental in the areas of investor/stakeholder relations, capital raising,
  capital markets development, strategic partnering, regulatory authority
  interactions and media relations, and he also served as a management member of
  its board of directors. Prior to this, 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.</P>
<P align=justify>Mr. Docherty has also held positions with companies such as
  Astra Pharma Inc., Nu-Pharm Inc. and PriceWaterhouseCoopers&#146; 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.</P>
<P align=center>129</P>
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<P align=justify><B><I>Mr. Nicholas Baxter - Director </I></B></P>
<P align=justify>Mr. Baxter has been in the oil &amp; gas business for 30 years.
  Mr. Baxter received a Bachelor of Science (Honors) from the University of
  Liverpool in 1975. Mr. Baxter has worked on geophysical survey and exploration
  projects in the U.K., Europe, Africa and the Middle East. From 1981 to 1985, Mr.
  Baxter worked for Resource Technology plc, a geophysical equipment
  sales/services company that went public on the USM in London in 1983 and
  graduated to the London Stock Exchange in 1984. Mr. Baxter established his own
  company in 1985 as a co-founder of Addison &amp; Baxter Limited, a private
  geophysical/geological sales and services company which was acquired by A&amp;B
  Geoscience Corporation in 1992. Mr. Baxter was Chief Operating Officer and a
  director of A&amp;B Geoscience Corporation from 1992 to 2002. Mr. Baxter worked
  as an independent upstream oil and gas consultant from 2002 to 2004. He joined
  Eurasia Energy Ltd in 2005, where he is currently President and Chief Executive
  Officer.</P>
<P align=justify><B><I>Mr. Ted McKechnie &#150; Director </I></B></P>
<P align=justify>An entrepreneurial executive with extensive Board and Senior
  Management Experience in the consumer goods industry with a proven track record
  for achieving corporate financial and growth objectives. He is the former
  President and COO of Maple Leaf Foods, which in 2014 had revenue of over CDN
  $3.1 billion dollars. Mr. McKechnie also has held executive positions with
  Kraft, Frito Lay, General Foods, PepsiCo, and Philip Morris Companies. He is the
  Founder, Chairman and CEO of Canada&#146;s Technology For Food. Mr. McKechnie is an
  energetic leader experienced in building teams in marketing, sales and supply
  chain management. Ted is the recipient of the Philip Morris Chairman&#146;s Award for
  &#147;recognition of extraordinary contributions having a significant and lasting
  impact on the Corporation&#148;.</P>
<P align=justify><B><I>Mr. Allan Spissinger &#150; Chief Financial Officer </I></B></P>
<P align=justify>Allan Spissinger was involved in the information technologies
  (IT) sector for more than 10 years working on corporate IT infrastructure and
  software development projects before focusing on finance and accounting. Allan
  joined the audit and assurance practice of PricewaterouseCoopers (PwC) obtaining
  his Chartered Professional Accountant (CPA) designation by working primarily in
  the public company space on financial reporting and Sarbanes-Oxley (SOX)
  compliance in sectors including resources, manufacturing and technologies. Allan
  has managed private businesses for 20 years before joining Lexaria in September
  2014 as its corporate controller and is intimately familiar with its operations,
  procedures and controls.</P>
<P align=justify><B>Family Relationships </B></P>
<P align=justify>There are no family relationships between our directors and
  executive officers. </P>
<P align=justify><B>Involvement in Certain Legal Proceedings</B></P>
<P align=justify>Our directors and executive officers have not been involved in
  any of the following events during the past ten years:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD><P align=justify>any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
      time;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD><P align=justify>any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offenses);</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD><P align=justify>being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD><P align=justify>being found by a court of competent jurisdiction (in a
      civil action), the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">5. </TD>
    <TD><P align=justify>being the subject of, or a party to, any federal or state
      judicial or administrative order, judgment, decree, or finding, not
      subsequently reversed, suspended or vacated, relating to an alleged
      violation of: (i) any federal or state securities or commodities law or
      regulation; or (ii) any law or regulation respecting financial
      institutions or insurance companies including, but not limited to, a
      temporary or permanent injunction, order of disgorgement or restitution, civil money
      penalty or temporary or permanent cease- and-desist order, or removal or
      prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud
      or fraud in connection with any business entity; or </P></TD>
  </TR>
</TABLE>
<p align="center">130</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">6. </TD>
    <TD><P align=justify>being the subject of, or a party to, any sanction or
      order, not subsequently reversed, suspended or vacated, of any
      self-regulatory organization (as defined in Section 3(a)(26) of the
      Securities Exchange Act of 1934), any registered entity (as defined in
      Section 1(a)(29) of the Commodity Exchange Act), or any equivalent
      exchange, association, entity or organization that has disciplinary
      authority over its members or persons associated with a
      member.</P></TD>
  </TR>
</TABLE>
<P align=justify><B>Corporate Governance </B></P>
<P align=justify><B><I>Public Availability of Corporate Governance
  Documents</I></B><B> </B></P>
<P align=justify>Our key corporate governance documents, including our Code of
  Ethics and the charter of our audit committee are: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&#149;&nbsp;</TD>
    <TD align=left width="90%">available on our corporate website; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&#149;&nbsp;</TD>
    <TD align=left width="90%">available in print to any stockholder who
      requests them from our President; and </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&#149;&nbsp;</TD>
    <TD align=left width="90%">certain of them are filed as exhibits to our
      securities filings with the Securities and Exchange Commission. </TD>
  </TR>
</TABLE>
<P align=justify><B><I>Code of Ethics </I></B><B></B></P>
<P align=justify>Our board of directors has established a Code of Ethics and
  Business Conduct of Officers, Directors and Employees which applies to all of
  our officers, directors and employees. The Code of Ethics is intended to meet
  the requirements for a code of ethics under the Sarbanes-Oxley Act of 2002, or
  &#147;SOX&#148;, and under the policies of the Canadian Securities Exchange, a Canadian
  stock exchange, and is specifically applicable to our principal executive
  officer, principal financial and accounting officer and controller or persons
  performing similar functions. Among other matters, the Code of Ethics is
  designed to deter wrongdoing and to promote: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">honest and ethical conduct, including the
      ethical handling of actual or apparent conflicts of interest between
      personal and professional relationships; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%"></TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">ethical and fair dealing with our financial
      institutions, suppliers, vendors, competitors, agents and employees; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%"></TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">full, fair, accurate, timely and understandable
      disclosure in our SEC reports and other public communications; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">compliance with applicable governmental laws,
      rules and regulations; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">lawful and ethical conduct when dealing with
      public officials and government entities; </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%"></TD>
    <TD align=left&#149;></TD>
    <TD align=left width="90%">prompt internal reporting of violations of the
      Code of Ethics to appropriate persons identified in the code; and </TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="90%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&#149;</TD>
    <TD align=left width="90%">accountability for adherence to the Code of
      Ethics. </TD>
  </TR>
</TABLE>
<P align=justify>Waivers to the Code of Ethics may be granted only by our full
  board of directors. In the event that our board of directors grants any waiver
  of the elements listed above to any of our directors or officers, we expect to
  announce the waiver within four business days on the corporate governance
  section of our website at <BR>
  www._______________________. </P>
<P align=center>131</P>
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<P align=justify><B><I>Meetings </I></B></P>
<P align=justify>During the fiscal year ended August 31, 2017, our board of
  directors held at least __________________ meetings and each director attended
  all of the meetings of our board of directors and the committees upon which such
  member served. </P>
<P align=justify><B><I>Committees of the Board of Directors </I></B></P>
<P align=justify>Our board of directors has one standing committee, the audit
  committee, consisting of each member of our board of directors, including
  Christopher Bunka, John Docherty, Nicholas Baxter, and Ted McKechnie. <I>Audit
    Committee and Audit Committee Financial Expert</I> </P>
<P align=justify>Our board of directors created an audit committee and adopted
  an audit committee charter. Currently, we have appointed Christopher Bunka, John
  Docherty, Nicholas Baxter, and Ted McKechnie as members of our audit committee.
  However, our board of directors has determined that we do not have a member of
  our audit committee that qualifies as an &#147;audit committee financial expert&#148; as
  defined in Item 407(d)(5) of Regulation S-K. All of the members of our audit
  committee are &#147;independent&#148; under Canadian Securities Exchange and SEC
  independence standards. We do not have an audit committee financial expert
  because we believe that the members of our audit committee are collectively
  capable of analyzing and evaluating our financial statements and understanding
  internal controls and procedures for financial reporting.</P>
<P align=justify>Our audit committee operates pursuant to a written charter
  adopted by our board of directors, a copy of which is on the corporate
  governance section of our website at www.Lexariamining.com. Among other things,
  the charter calls upon the audit committee to: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  ></TD>
    <TD align=left  >&#149;</TD>
    <TD align=left width="90%">oversee our auditing, accounting and control
      functions, including having primary responsibility for our financial
      reporting process; </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149;</TD>
    <TD align=left width="90%">monitor the integrity of our financial
      statements to ensure the balance, transparency and integrity of published
      financial information; </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left  >&#149;</TD>
    <TD align=left width="90%">monitor our outside auditors&#146; independence,
      qualifications and performance; </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left  >&#149;</TD>
    <TD align=left width="90%">monitor our compliance with legal and
      regulatory requirements; and </TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="90%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left  >&#149;</TD>
    <TD align=left width="90%">monitor the effectiveness of our internal
      controls and risk management system. </TD>
  </TR>
</TABLE>
<P align=justify>It is not the duty of our audit committee to determine that our
  financial statements are complete and accurate and in accordance with generally
  accepted accounting principles. 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 committee does,
  however, consult with management and our independent registered public
  accounting firm prior to the presentation of financial statements to
  stockholders and, as appropriate, initiates inquiries into various aspects of
  our financial affairs. In addition, our audit committee is responsible for
  retaining, evaluating and, if appropriate, recommending the termination of our
  independent registered public accounting firm and approving professional
  services provided by them. </P>
<P align=center><I>Audit Committee Report </I></P>
<P align=justify>Our audit committee oversees our financial reporting process.
  Management has the primary responsibility for the financial statements and the
  reporting process, including the system of internal accounting controls.</P>
<P align=justify>Our audit committee has reviewed and discussed the audited
  financial statements for the year ended August 31, 2017 with management. </P>
<P align=justify>Our audit committee has discussed with Davidson &amp; Company
  LLP, Chartered Accountants, our independent registered public accounting firm
  for the year ended August 31, 2016, the matters required to be discussed by the
  statement on Auditing Standards No. 61, as amended (AICPA, Professional
  Standards, Vol. 1. AU Section 380) as adopted by the Public Accounting Oversight
  Board in Rule 3200T. </P>
<P align=center>132</P>
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<P align=justify>Our audit committee has received written disclosures and the
  letter from Davidson &amp; Company LLP required by Independence Standards Board
  Standard No. 1 (Independence Standards Board Standard No. 1, <U>Independence</U> <U>Discussions with Audit Committees</U>) as adopted the Public Company
  Accounting Oversight Board in Rule 3600T, and has discussed with Davidson &amp;
  Company LLP its independence. </P>
<P align=justify>Based on the reviews and discussions referred to above, our
  audit committee recommended to our board of directors that the audited financial
  statements referred to above to be included in our annual report on Form 10-K
  for the year ended August 31, 2017 for filing with the Securities and Exchange
  Commission. </P>
<P align=justify><B><I>Not &#147;Soliciting Material&#148; </I></B>The material in this
  report is not &#147;soliciting material,&#148; is not deemed &#147;filed&#148; with the Securities
  and Exchange Commission and is not to be incorporated by reference in any filing
  of our company under the Securities Act of 1933 or the Securities Exchange Act
  of 1934 whether made before or after the date hereof and irrespective of any
  general incorporation language in any such filing. </P>
<P align=justify><B><I>Director Independence</I></B></P>
<P align=justify>Under NASDAQ Rule 5605(a)(2), a director is not considered to
  be independent if he or she is also an executive officer or employee of the
  corporation. Two of our current directors are independent as that term is
  defined by NASDAQ Rule 5605(a)(2). </P>
<P align=justify><B><I>Stockholder Communications with Our Board of Directors </I></B></P>
<P align=justify>We do not have a formal procedure for stockholder communication
  with our board of directors. In general, members of our board of directors and
  executive officers are accessible by telephone or mail. Any matter intended for
  our board of directors, or for any individual member or members of our board of
  directors, should be directed to our President with a request to forward the
  communication to the intended recipient. </P>
<P align=justify><B><I>Board Leadership Structure</I></B><I> </I></P>
<P align=justify>The positions of our principal executive officer and the
  chairman of our Board of Directors are served by one individual, Chris Bunka. <B></B>We have determined that the leadership structure of our board of
  directors is appropriate, especially given the early stage of our development
  and the size of our company. Our board of directors provides oversight of our
  risk exposure by receiving periodic reports from senior management regarding
  matters relating to financial, operational, legal and strategic risks and
  mitigation strategies for such risks. </P>
<P align=justify><B>Section 16(a) Beneficial Ownership Compliance </B></P>
<P align=justify>Section 16(a) of the Securities Exchange Act of 1934 requires
  our executive officers and directors, and persons who beneficially own more than
  10% of our common stock, to file reports regarding ownership of, and
  transactions in, our securities with the Securities and Exchange Commission and
  to provide us with copies of those filings. Based solely on our review of the
  copies of such forms received by us, or written representations from certain
  reporting persons, we believe that during the fiscal year ended August 31, 2017,
  all filing requirements applicable to our executive officers, directors and
  persons who beneficially own more than 10% of our common stock were complied
  with. </P>
<P align=center><B>EXECUTIVE COMPENSATION </B></P>
<P align=justify>The following table sets forth all compensation received during
  the years ended August 31, 2017 and 2016 by our Chief Executive Officer, Chief
  Financial Officer and each of the other most highly compensated executive
  officers whose total compensation exceeded $100,000 in such fiscal year. These
  officers are referred to as the &#147;named executive officers&#148; in this proxy
  statement/prospectus. </P>
<P align=justify><B>Summary Compensation </B></P>
<P align=justify>The following table provides a summary of the compensation
  received by the persons set out therein for each of our last two fiscal
  years:</P>
<P align=center>133</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_121></A><BR>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR vAlign=top>
      <TD colSpan=10 align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>S</B><B><U>UMMARY
        COMPENSATION TABLE</U></B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Name and</B> <BR>
          <B>Principal</B> <BR>
          <B>Position</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Year</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Salary</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Bonus</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Stock</B> <BR>
          <B>Awards</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Option</B> <BR>
          <B>Awards</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Non-Equity <BR>
        </B><B>Incentive Plan</B> <BR>
        <B>Compensation</B> <BR>
        <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Non-Qualified</B> <BR>
          <B>Deferred</B> <BR>
          <STRONG>Compensation</STRONG> <BR>
          <B>Earnings</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>All Other</B> <BR>
          <B>Compensation</B> <BR>
          <B>($)</B> </TD>
      <TD width="10%" align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>Total</B> <BR>
          <B>($)</B> </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Christopher Bunka<SUP>(1)</SUP>, </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2017 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">61,950<SUP>(7)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">147,800 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">209,750 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Chairman, Chief </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2016 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">120,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">120,000 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Executive </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Officer &amp; </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2015 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">119,700 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">163,750 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Director </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Bal Bhullar<SUP>(2)</SUP>, </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2017 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Chief Financial </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Officer &amp; </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2016 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">44,767 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">44,767 </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Director </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2015 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">49,750 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">69,543 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">119,293 </TD>
    </TR>
    <TR>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Tom Irkhe<SUP>(4)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2017 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Vice President </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2016 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">18,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">18,000 </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2015 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">9,947 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">42,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">51,947 </TD>
    </TR>
    <TR>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>John Docherty<SUP>(5)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2017 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">97,710<SUP>(6)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">143,434 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">241,144 </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>President </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2016 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">21,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">32,768<SUP>(3)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">117,213 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">170,981 </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2015 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">83,532 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">39,722 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">44,965 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">168,219 </TD>
    </TR>
    <TR>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Allan Spissinger<SUP>(8)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2017 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">54,204<SUP>(9)</SUP> </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">57,104 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">111,308 </TD>
    </TR>
    <TR>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Interim Chief </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2016 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Financial </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>Officer </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">2015 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(1) </TD>
    <TD><P align=justify>Mr. Bunka was appointed as chairman, president, chief
      executive officer, and director on October 26, 2006, and was chief
      financial officer of our company from April 29, 2016 to May 31 2017. He
      resigned as president on April 15, 2015. We pay Mr. Bunka a consulting fee
      through CAB Financial Services Ltd., where he is also the Chief Executive
      Officer.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(2) </TD>
    <TD><P align=justify>Ms. Bhullar was appointed Chief Financial Officer on May
      12, 2009 and resigned April 29, 2016. We paid Ms. Bhullar consulting fees
      through her wholly owned company BKB Management
      Ltd.</P></TD>
  </TR>
</TABLE>
<p align="center">134</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_122></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(3) </TD>
    <TD><P align=justify>The fair value of the stock options awarded was estimated
      using the Black-Scholes option pricing model with the following
      assumptions: expected volatility of 240%; risk-free interest rate of
      1.22%; expected life of 5 years; and dividend yield of 0.00%.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(4) </TD>
    <TD><P align=justify>Mr. Ihrke became Vice President on December 23, 2015 and
      resigned on March 8, 2016.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(5) </TD>
    <TD><P align=justify>Mr. Docherty became President on April 15, 2015 and a
      director on April 29, 2016. We pay Mr. Docherty a consulting fee through
      his wholly owned company Docherty Management Ltd.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(6) </TD>
    <TD><P align=justify>Pursuant to the agreement with Docherty Management Ltd.
      Mr. Docherty received 462,000 (2016 - 210,000) common shares with a value
      of 97,710 (2016 - $21,000).</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(7) </TD>
    <TD><P align=justify>Pursuant to the agreement with CAB Financial Services
      Ltd. Mr. Bunka received 210,000 (2016 - NIL) common shares with a value of
      $61,950 (2016 - $NIL).</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(8) </TD>
    <TD><P align=justify>Mr. Spissinger became Interim Chief Financial Officer on
      June 1, 2017. We pay Mr. Spissinger a consulting fee through his wholly
      owned company M&amp;E Services Ltd.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(9) </TD>
    <TD><P align=justify>The fair value of the stock options awarded was estimated
      using the Black-Scholes option pricing model with the following
      assumptions: expected volatility of 102%; risk-free interest rate of
      1.71%; expected life of 5 years; and dividend yield of
      0%.</P></TD>
  </TR>
</TABLE>
<P align=justify>Our company is currently paying consulting fees to our chief
  executive officer $12,000 per month, our president CAD$15,000 per month and our
  Interim Chief Financial Officer CAD$8,000 per month in consulting fees. There are
  no arrangements or plans in which we provide pension, retirement or similar
  benefits for directors or executive officers, except that our directors and
  executive officers may receive stock options at the discretion of our
  compensation committee and our board of directors.</P>
<P align=justify>Other than our Stock Option Plan, and Mr. Docherty&#146;s incentive
  bonuses, we do not have any 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. </P>
<P align=justify>On November 27, 2008, we entered into a consulting agreement
  with CAB Financial Services Ltd., a British Columbia company. The consulting
  services provided by CAB Financial are on a continuing basis for a consideration
  of CAD$8,000 per month plus applicable taxes. CAB Financial is a consulting
  company controlled by our chief executive officer, Christopher Bunka. Effective
  December 1, 2014, the company entered into a new consulting agreement for
  consulting services of $10,000 a month plus GST. On December 1, 2016, the
  Company amended its agreement with CAB Financial Services Ltd. As Chief
  Executive Officer for a revised consulting fee of $12,000 per month plus
  applicable taxes, superseding the previous agreement for $10,000 per month plus
  applicable taxes. </P>
<P align=center>135</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_123></A>
<P align=justify>On May 12, 2009 the Company entered into a consulting agreement
  with BKB Management Ltd. for the services of Bal Bhullar to act as the Chief
  Financial Officer and a Director. December 1, 2014, the Company entered into an
  updated consulting agreement for CAD$7,500 per month plus GST. Effective April
  29, 2016, Ms. Bhullar reigned her position and the contract was terminated. </P>
<P align=justify>On August 5, 2010 we entered into a three-month management
  agreement with Tom Ihrke for Mr. Ihrke to act as the senior vice-president,
  business development for our company for consideration of $3,125 per month. On
  December 2, 2010, we amended the agreement to be month-to-month. On October 3,
  2011 Mr. Ihrke and our company amended the agreement whereby his title changed
  to manager, business development for a monthly consulting fee of $3,125.
  Effective January 15, 2012, the consulting agreement was decreased to $10 a
  month. Effective April 1, 2014, the amended consulting agreement was increased
  to $5,000 per month. Effective December 23, 2014 the company entered into a new
  Executive Management consulting agreement for consulting services of $3,000 a
  month. Mr. Ihrke tendered his resignation on March 8, 2016.</P>
<P align=justify>On September 1, 2014, the company entered into a contract with
  M&amp;E Services Ltd., wholly owned company by Allan Spissinger as Controller
  for CAD$2,500 plus GST. This contract was amended on December 1, 2014 to
  CAD$3,400 a month plus GST.</P>
<P align=justify>The company appointed Mr. John Docherty as President of Lexaria
  effective April 15, 2015. The company executed a twenty-four-month consulting
  contract with Docherty Management Limited, solely owned by Mr. John Docherty
  with monthly compensation of CAD$12,500 and shall increase to a total of
  CAD$15,000 per month effective at that time when the company has $1,000,000 or
  more in cash in its bank accounts, and continue at CAD$15,000 per month from
  that moment until the termination or completion of the contract. The company may
  pay Mr. Docherty a bonus from time to time, at its sole discretion. Mr. Docherty
  will be entitled to receive common stock-based and stock option based bonuses
  upon achieving certain milestones during the time of his consultancy with the
  company. These milestones are:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>Upon signing: A grant of 500,000 stock options priced
      one-cent above market prices at the time of award. (granted). </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>90 Days after signing: A grant of 500,000 restricted
      common shares (Completed - 420,000 restricted common shares issued with
      cash payment of $16,000). </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>Twelve months after signing: A grant of 300,000 stock
      options priced one-cent above market prices at the time of award
      (granted). </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>18 months after signing: A grant of 300,000 restricted
      common shares (210,000 restricted common shares issued). </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>During the first 12 months after signing; for combined
      Lexaria Energy and ViPova products and including all combined sales
      efforts, achieving non-refundable sales of $200,000 to any single customer
      in any consecutive 60-day period would result in a restricted common share
      award of 100,000 Company shares (expired); and, after the first 12 months
      after signing and expiring 24 months after signing; for combined Lexaria
      Energy and ViPova products and including all sales efforts, achieving
      non-refundable sales of $200,000 to any single customer in any consecutive
      60-day period would result in a restricted common share award of 50,000
      shares; this clause is limited to one payment per customer during the 24-
      month period, but payable on each customer that meets these sales
      thresholds; </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>During the first 12 months after signing; for combined
      Lexaria Energy and ViPova products and including all combined sales
      efforts, achieving non- refundable sales of $500,000 in any fiscal quarter
      would result in a restricted common share award of 200,000 company shares
      (expired); and, after the first 12 months after signing and expiring 24
      months after signing; for combined Lexaria Energy and ViPova products and
      including all sales efforts, achieving non-refundable sales of $500,000 in
      any fiscal quarter would result in a restricted common share award of
      100,000 Company shares; this clause is limited to one payment per fiscal
      quarter; </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD  >&nbsp;</TD>
    <TD width="90%"><P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD width="5%" ></TD>
    <TD align=left  >&#149; </TD>
    <TD align=left width="90%"><P align=justify>During the time this Agreement remains in effect, for
      each new provisional patent application substantially devised by Mr.
      Docherty and successfully created, written and filed with the US Patent
      Office for company-owned intellectual property, a restricted
      common share award of 250,000 Company shares. This clause is not limited to the
      frequency of payment but each patent application is to be approved by the Board
      of Directors of the company, in advance. During the nine months ended May 31,
      2016, the company issued to Mr. Docherty, 210,000 restricted common shares and
      further accrued $4,000 combined in lieu of issuance of 250,000 restricted common
      shares, as mutually agreed to between the parties. </P></TD>
  </TR>
</TABLE>
<p align="center">136</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_124></A>
<P align=justify>On March 1, 2017, the Company executed a revised twenty four
  month consulting contract with Docherty Management Limited, solely owned by Mr.
  John Docherty to act as President with monthly compensation of CAD$15,000 plus
  applicable taxes, superseding the previous agreement with monthly compensation
  of CAD$12,500 plus applicable taxes. </P>
<P align=justify><B>Grants of Plan-Based Awards Table</B></P>
<P align=justify>We did not grant any awards to our named executive officers
  during our fiscal year ended August 31, 2016. </P>
<P align=justify><B>Outstanding Equity Awards at Fiscal Year End</B></P>
<P align=justify>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: </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR vAlign=bottom>
      <TD colSpan=10 align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;&nbsp;<B>OUTSTANDING
        EQUITY AWARDS AT FISCAL YEAR-END</B>&nbsp;&nbsp; </TD>
    </TR>
    <TR>
      <TD  colSpan=10 align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;</TD>
    </TR>
    <TR>
      <TD align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"></TD>
      <TD width="50%" colSpan=5 align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>OPTION
        AWARDS</B> </TD>
      <TD width="40%" colSpan=4 align=center
    vAlign=bottom noWrap bgcolor="#eeeeee"
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"><B>STOCK
        AWARDS</B> </TD>
    </TR>
    <TR>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center>Name </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Number of <BR>
        Securities <BR>
        Underlying <BR>
        Unexercised <BR>
        Options <BR>
        Exercisable <BR>
        (#) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Number of <BR>
        Securities <BR>
        Underlying <BR>
        Unexercised <BR>
        Options <BR>
        Unexercisable <BR>
        (#) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Equity <BR>
        Incentive <BR>
        Plan <BR>
        Awards: <BR>
        Number of <BR>
        Securities <BR>
        Underlying <BR>
        Unexercised <BR>
        Unearned <BR>
        Options <BR>
        (#) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Option <BR>
        Exercise <BR>
        Price <BR>
        ($) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Option <BR>
        Expiration <BR>
        Date </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Number of <BR>
        Shares <BR>
        or
        Units <BR>
        of Stock <BR>
        That <BR>
        Have <BR>
        Not <BR>
        Vested<BR>
        (#) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Market <BR>
        Value of <BR>
        Shares <BR>
        or Units <BR>
        of Stock <BR>
        That <BR>
        Have <BR>
        Not <BR>
        Vested <BR>
        ($) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Equity <BR>
        Incentive <BR>
        Plan <BR>
        Awards: <BR>
        Number of <BR>
        Unearned <BR>
        Shares, <BR>
        Units or <BR>
        Other <BR>
        Rights <BR>
        That <BR>
        Have <BR>
        Not <BR>
        Vested <BR>
        (#) </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=bottom noWrap align=center width="10%">Equity <BR>
        Incentive <BR>
        Plan <BR>
        Awards: <BR>
        Market or <BR>
        Payout <BR>
        Value of <BR>
        Unearned <BR>
        Shares, <BR>
        Units or <BR>
        Other Rights <BR>
        That Have <BR>
        Not Vested <BR>
        (#) </TD>
    </TR>
    <TR>
      <TD
      style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>Christopher </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">550,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">$0.11 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2019/12/22 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR vAlign=top>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>Bunka </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">247,500 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">$0.10 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">2018/06/18 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR>
      <TD
      style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
    </TR>
    <TR>
      <TD
      style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>Tom Ihrke </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">330,000 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">$0.11 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">2019/12/22 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR>
      <TD
      style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    width="10%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=left>John </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">550,000 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">$0.10 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">2020/03/26 </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
    <TR vAlign=top>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>Docherty </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">300,000 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">$0.11 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">2021/04/15 </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
      <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=center width="10%">- </TD>
    </TR>
  </TABLE>
</DIV>
<P align=justify><B>Option Exercises</B></P>
<P align=justify>During our fiscal year ended August 31, 2017, on January 9
  2017, Allan Spissinger exercised 27,500 options previously granted at $0.10
  prior to his being appointed interim CFO June 1 2017.</P>
<P align=justify>During our fiscal year ended August 31, 2016, no options were
  exercised by our named officers.</P>
<P align=center>137</P>
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<A name=page_125></A>
<P align=justify><B>Compensation of Directors</B></P>
<P align=justify>We do not have any agreements for compensating our directors
  for their services in their capacity as directors, although such directors are
  expected in the future to receive stock options to purchase shares of our common
  stock as awarded by our board of directors. We have an agreement with a director
  for marketing services that is not in their capacity as a director for $4,000
  per month plus applicable taxes.</P>
<P align=justify><B>Pension, Retirement or Similar Benefit Plans</B></P>
<P align=justify>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 the board of directors or
  a committee thereof.<B> </B></P>
<P align=justify><B>Indebtedness of Directors, Senior Officers, Executive
  Officers and Other Management</B></P>
<P align=justify>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. </P>
<P align=justify><B>Compensation Committee Interlocks and Insider
  Participation</B></P>
<P align=justify>During 2016, we did not have a compensation committee or
  another committee of the board of directors performing equivalent functions.
  Instead the entire board of directors performed the function of compensation
  committee. Our board of directors approved the executive compensation, however,
  there were no deliberations relating to executive officer compensation during
  2016.</P>
<P align=justify><B>Compensation Committee Report</B></P>
<P align=justify>None.</P>
<P align=center><B>TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND <BR>
  CERTAIN
  CONTROL PERSONS</B></P>
<P align=justify>Except as disclosed in the above section of this registration
  statement entitled &#147;EXECUTIVE COMPENSATION&#148;, since the beginning of the year
  ended August 31, 2016, there have been no transactions or proposed transactions
  in which the amount involved exceeds the lesser of $120,000 or one percent of
  the average of our total assets at year-end for the last two completed fiscal
  years in which any of our directors, executive officers or beneficial holders of
  more than 5% of the outstanding shares of our common stock, or any of their
  respective relatives, spouses, associates or affiliates, has had or will have
  any direct or material indirect interest. </P>
<P align=justify>On <B><I>Compensation for Executive Officers and
  Directors</I></B><B><I> </I></B></P>
<P align=justify>For information regarding compensation for our executive
  officers and directors, see &#147;Executive Compensation&#148;. </P>
<P align=center><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT </B></P>
<P align=justify>The following table sets forth, as of
  February 5, 2018,
  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 current directors and executive
  officers as a group. 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.</P>
<P align=center>138</P>
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<A name=page_126></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR>
    <TD align=left valign="bottom" nowrap bgcolor="#eeeeee" style="BORDER-BOTTOM: #000000 1px solid"><B>Name and
      Address of Beneficial Owner</B></TD>
    <TD
    width="15%" align=right valign="bottom" nowrap bgcolor="#eeeeee" style="BORDER-BOTTOM: #000000 1px solid"><B>Amount and Nature of<br>
      Beneficial Ownership </B></TD>
    <TD
    width="15%" align=center valign="bottom" nowrap bgcolor="#eeeeee" style="BORDER-BOTTOM: #000000 1px solid"><B>Percentage<br>
      of Class </B></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=center>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Christopher Bunka; Kelowna BC Canada </TD>
    <TD align=right width="15%"> 14,144,398
        <SUP>(1)</SUP> </TD>
    <TD align=center width="15%"> 19.92% </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Nicholas Baxter; Aberdeenshire, UK </TD>
    <TD align=right width="15%">330,000 <SUP>(2)</SUP> </TD>
    <TD align=center width="15%">
        0.46%
    </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>John Docherty; Toronto, Ontario </TD>
    <TD align=right width="15%"> 2,162,000
        <SUP>(3)</SUP> </TD>
    <TD align=center width="15%"> 3.05% </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Ted McKechnie; Toronto, Ontario </TD>
    <TD align=right width="15%"> 445,738
        <SUP>(4)</SUP> </TD>
    <TD align=center width="15%"> 0.63% </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Allan Spissinger;
      Langley, BC </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%"> 469,166
        <SUP>(5)</SUP> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"> 0.66% </TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="15%" >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Directors and Executive Officers as a Group (5
      persons)</B> </TD>
    <TD align=right width="15%"><B>
      17,551,302
    </B> </TD>
    <TD align=center width="15%"><B>
      24.72%
    </B> </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>David DeMartini,
      Texas, Houston </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%">3,609,375 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"> 5.08% </TD>
  </TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=right width="15%">&nbsp;</TD>
    <TD align=center width="15%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left><B>Total as a
      Group (6 persons) </B><B><SUP>(6)</SUP></B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="15%"><B>
      21,160,677
    </B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=center
      width="15%"><B>
      29.35%
    </B> </TD>
  </TR>
</TABLE>
<BR>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>
    <TR vAlign=top>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left>* </TD>
      <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="80%">Less than 1%. </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD><P align=justify>Includes 5,631,844 shares held in the name of C.A.B.
      Financial Services and
      7,265,054
      shares held directly by Chris Bunka,
      chairman, chief executive officer and a director of our company. Includes
      450,000 warrants held directly by Chris Bunka with an exercise price of
      $0.14. Includes 247,000 options which are exercisable at $0.09 and 550,000
      options exercisable at $0.10.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD><P align=justify>Includes 110,000 options which are exercisable at $0.10.
      Nicholas Baxter is a director of our company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD><P align=justify>Includes 550,000 options which are exercisable at $0.10
      and 300,000 options which are exercisable at $0.11. John Docherty is the
      President and a Director of our Company</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD><P align=justify>Includes 110,000 options exercisable at $0.17. Ted
      McKechnie is a Director of our Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">(5) </TD>
    <TD><P align=justify>Includes 200,000 options exercisable at $0.37
      and 200,000 options exercisable at $0.83.
      Allan
      Spissinger is interim chief financial officer of our company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">(6) </TD>
    <TD><P align=justify>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 amount 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 this table does not necessarily reflect the person&rsquo;s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on
      February 5, 2018. As of February 5, 2018, there were 71,001,039  shares of our common stock issued and outstanding.
    </P></TD>
  </TR>
</TABLE>
<P align=justify><I>Changes in Control</I> </P>
<P align=justify>We are unaware of any contract or other arrangement the
  operation of which may at a subsequent date result in a change in control of our
  company. </P>
<P align=justify><B>Changes in Control </B></P>
<P align=justify>We are unaware of any contract or other arrangement the
  operation of which may at a subsequent date result in a change of control of our
  company. </P>
<P align=center>139</P>
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<P align=center><B>FEES PAID TO OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM </B></P>
<P align=justify><B>Audit fees </B></P>
<P align=justify>The aggregate fees billed for the two most recently completed
  fiscal years ended August 31, 2017 and August 31, 2016 for professional services
  rendered by Davidson &amp; Company LLP for the audit of our annual consolidated
  financial statements, quarterly reviews of our interim consolidated financial
  statements and services normally provided by the independent registered public
  accounting firm in connection with statutory and regulatory filings or
  engagements for these fiscal years were as follows:</P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
      <TD align=left></TD>
      <TD align=center width="15%"><B>Year Ended</B> <BR>
          <B>August 31, 2017</B> </TD>
      <TD align=center width="15%"><B>Year Ended</B> <BR>
          <B>August 31, 2016</B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Audit Fees and Audit Related Fees </TD>
      <TD align=left width="15%">35,392 </TD>
      <TD align=left width="15%">38,186 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Tax Fees </TD>
      <TD align=left width="15%">15,982 </TD>
      <TD align=left width="15%">Nil </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>All Other Fees </TD>
      <TD align=left width="15%">Nil </TD>
      <TD align=left width="15%">Nil </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left><B>Total</B> </TD>
      <TD align=left width="15%">51,374 </TD>
      <TD align=left width="15%">38,186 </TD>
    </TR>
  </TABLE>
</DIV>
<P align=justify>In the above table, &#147;audit fees&#148; are fees billed by our
  independent registered public accounting firm for services provided in auditing
  our annual financial statements for the subject year. &#147;Audit-related fees&#148; are
  fees not included in audit fees that are billed by the independent registered
  public accounting firm for assurance and related services that are reasonably
  related to the performance of the audit review of our financial statements. &#147;Tax
  fees&#148; are fees billed by the independent registered public accounting firm for
  professional services rendered for tax compliance, tax advice and tax planning.
  &#147;All other fees&#148; are fees billed by the independent registered public accounting
  firm for products and services not included in the foregoing categories. </P>
<P align=justify><B>Policy on Pre-Approval by Audit Committee of Services
  Performed by Independent Registered Public Accounting Firm</B><I> </I></P>
<P align=justify>Our audit committee pre-approves all services performed by
  Davidson &amp; Company LLP prior to Davidson &amp; Company LLP&#146;s performance of
  such services. All of the above services were reviewed and pre-approved by our
  audit committee before those services were rendered. </P>
<P align=center><B>INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON </B></P>
<P align=justify>No director, executive officer, or nominee for election as a
  director of our company and no associate of any of the foregoing persons has any
  substantial interest, direct or indirect, by security holding or otherwise, in
  any matter to be acted upon at the annual and special meeting, other than
  elections to office. </P>
<P align=center><B>&#147;HOUSEHOLDING&#148; OF PROXY MATERIALS </B></P>
<P align=justify>The Securities and Exchange Commission permits companies and
  intermediaries such as brokers to satisfy the delivery requirements for proxy
  statements and annual reports with respect to two or more stockholders sharing
  the same address by delivering a single proxy statement or annual report, as
  applicable, addressed to those stockholders. This process, which is commonly
  referred to as &#147;householding&#148;, potentially provides extra conveniences for
  stockholders and cost savings for companies. </P>
<P align=justify>Although we do not intend to household for our stockholders of
  record, some brokers household our proxy materials and annual reports,
  delivering a single copy of proxy statement or annual report to multiple
  stockholders sharing an address unless contrary instructions have been received
  from the affected stockholders. Once you have received notice from your broker
  that it will be householding materials to your address, householding will
  continue until you are notified otherwise or until you revoke your consent. If,
  at any time, you no longer wish to participate in householding and would prefer
  to receive a separate copy of proxy statement or annual report, or if you are
  receiving multiple copies of either document and wish to receive only one,
  please notify your broker. Stockholders who currently receive multiple copies of the proxy statement at
  their address from their brokers and would like to request &#147;householding&#148; of
  their communications should contact their brokers. </P>
<P align=center>140</P>
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<P align=center><B>STOCKHOLDER PROPOSALS </B></P>
<P align=justify>Stockholder proposals to be considered for inclusion in the
  proxy statement and form of proxy relating to our next annual meeting of
  stockholders must be received no later than &#9830;. If we change the date of our next
  annual meeting of stockholders by more than 30 days from the date of the
  previous year&#146;s annual meeting of stockholders, then the deadline is a
  reasonable time before we begin to print and send our proxy materials. All such
  proposals must comply with the requirements of Rule 14a-8 of Regulation 14A of
  the <I>Securities Exchange Act of 1934</I>, which sets forth specific
  requirements and limitations applicable to nominations and proposals at annual
  meetings of stockholders. </P>
<P align=justify>All stockholder proposals, notices and requests should be made
  in writing and sent via registered, certified or express mail, to Lexaria
  Bioscience Corp., 156 Valleyview Road, Kelowna, British Columbia, V1X 3M4,
  Canada, Attention: President.</P>
<P align=justify>With respect to business to be brought before our annual and
  special meeting of stockholders to be held on &#9830;, 2017, we have received no
  notices from our stockholders that we were required to include in this proxy
  statement/prospectus. </P>
<P align=center><B>WHERE YOU CAN FIND MORE INFORMATION</B><B> </B></P>
<P align=justify>We are not required to deliver an annual report to our
  stockholders unless our directors are elected at a meeting of our stockholders
  or by written consents of our stockholders. If our directors are not elected in
  such manner, we are not required to deliver an annual report to our stockholders
  and will not voluntarily send an annual report. </P>
<P align=justify>We are required to file annual, quarterly and current reports,
  proxy statements and other information with the Securities and Exchange
  Commission. Subsequent to the consummation of the continuation, we anticipate
  that we will qualify as a foreign private issuer for purposes of the Securities
  Exchange Act of 1934. Upon our company qualifying as a foreign private issuer,
  we intend to file annual reports on Form 20-F and will no longer required to
  file quarterly reports, however we will be required to file our interim
  financial statements and management discussion and analysis that we prepare as a
  reporting issuer under Canadian securities legislation with the Securities and
  Exchange Commission on Form 6-K. Such filings are available to the public over
  the internet at the Securities and Exchange Commission&#146;s website at
  http://www.sec.gov. </P>
<P align=justify>We have filed with the Securities and Exchange Commission a
  registration statement on Form S-4 under the Securities Act of 1933 with respect
  to the issuance of the common shares of Lexaria BC in connection with the
  continuation. This proxy statement/prospectus, which forms a part of that
  registration statement, does not contain all information included in the
  registration statement. Certain information is omitted and you should refer to
  the registration statement and its exhibits.</P>
<P align=justify>You may review a copy of the registration statement at the
  Securities and Exchange Commission&#146;s public reference room at 100 F Street, N.E.
  Washington, D.C. 20549 on official business days during the hours of 10 a.m. to
  3 p.m. You may obtain information on the operation of the public reference room
  by calling the Securities and Exchange Commission at 1-800-SEC-0330. You may
  also read and copy any materials we file with the Securities and Exchange
  Commission at the Securities and Exchange Commission&#146;s public reference room.
  Our filings and the registration statement can also be reviewed by accessing the
  Securities and Exchange Commission&#146;s website at http://www.sec.gov. </P>
<P align=justify><B>We undertake, on your written request, to provide without
  charge a copy of our annual report on Form 10-K for the year ended August 31,
  2016, as filed with the Securities and Exchange Commission on November 29, 2016.
  Request should be made to our company at Lexaria Bioscience Corp., 156
  Valleyview Road, Kelowna, British Columbia, V1X 3M4, Canada, Attention:
  President.</B> </P>
<P align=center><B>OTHER MATTERS </B></P>
<P align=justify>Our board of directors does not intend to bring any other
  business before the annual and special meeting, and so far as is known to our board of directors, no matters are to be
  brought before the annual and special meeting except as specified in the notice
  of the annual and special meeting. If any other matters are properly brought
  before the annual and special meeting, it is the intention of the persons named
  on the proxy to vote the shares represented by the proxy on such matters in
  accordance with their judgment. </P>
<P align=center>141</P>
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<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>
    <TR vAlign=top>
      <TD align=left><B>By Order of the Board of Directors</B> </TD>
    </TR>
    <TR>
      <TD>&nbsp;</TD>
    </TR>
    <TR>
      <TD>&nbsp;</TD>
    </TR>
    <TR>
      <TD>&nbsp;</TD>
    </TR>
    <TR>
      <TD style="BORDER-BOTTOM: #000000 1px solid"><i>/s/Chris Bunka</i></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Chris Bunka </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Chief Executive Officer and Director </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>March 1
          ,
        2018</TD>
    </TR>
  </TABLE>
</DIV>
<p align="center">142</p>
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<A name=page_130></A>
<P align=center><B>SCHEDULE &#147;A&#148; </B></P>
<P align=center><B>PLAN OF CONVERSION </B></P>
<P align=center><B>OF </B></P>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B> <BR>
  (A corporation incorporated
  under the laws of the State of Nevada) </P>
<P align=center><B>INTO </B></P>
<P align=center><B>LEXARIA BIOSCIENCE CORP. <BR>
  </B>(A corporation organized
  under the laws of the Province of British Columbia) </P>
<P align=justify>Lexaria Bioscience Corp., a Nevada corporation, hereby adopts
  the following plan of conversion (this <B>&#147;Plan of Conversion&#148;</B>): </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">1. </TD>
    <TD><P align=justify>The name of the constituent entity (the <B>&#147;Constituent
      Entity&#148;</B>) is Lexaria Bioscience Corp. (<B>&#147;Lexaria&#148;</B>) and the
      jurisdiction of the laws that govern the Constituent Entity is the State
      of Nevada.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">2. </TD>
    <TD><P align=justify>The name of the resulting entity (the <B>&#147;Resulting
      Entity&#148;</B>) is Lexaria Bioscience Corp. and the jurisdiction of the laws
      that will govern the Resulting Entity is the Province of British Columbia,
      Canada.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">3. </TD>
    <TD><P align=justify>This Plan of Conversion is subject to approval by the
      holders of a majority of the outstanding shares of common stock of
      Constituent Entity, and the Canadian Securities Exchange Inc.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">4. </TD>
    <TD><P align=justify>The Constituent Entity seeks to effect a conversion of
      the Constituent Entity into the Resulting Entity (the <B>&#147;Conversion&#148;</B>)
      pursuant to Section 92A.105 of the Nevada Revised Statutes (<B>&#147;NRS&#148;</B>)
      and intends that this Plan of Conversion will constitute the complete plan
      of conversion referred to in Section 92A.105 of the NRS.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">5. </TD>
    <TD><P align=justify>As promptly as practicable after approval of this Plan of
      Conversion by the holders of a majority of the outstanding shares of
      common stock of the Constituent Entity, shall cause the Conversion to be
      consummated by the filing the Articles of Conversion with the Nevada
      Secretary of State in such form as is required by, and signed in
      accordance with, the applicable provisions of Chapter 92A of the NRS and
      the execution and filing of the Continuation Application with the
      Registrar of Companies in the Province of British Columbia. The effective
      date and time (the <B>&#147;Effective Time&#148;</B>) of the Conversion shall be the
      date and time on and at which the Conversion becomes effective under the
      laws of the State of Nevada or the date and time on and at which the
      Conversion becomes effective under the laws of the Province of British
      Columbia, whichever occurs later.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">6. </TD>
    <TD><P align=justify>As of the Effective Time of the
      Conversion:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>The Constituent Entity shall be converted into the
      Resulting Entity, a corporation organized under the <I>Business
        Corporations Act </I>(British Columbia);</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>The proposed Continuation Application and Articles of the
      Resulting Entity, substantially in the forms attached hereto as Appendix
      &#147;A&#148; and Appendix &#147;B&#148;, respectively, will replace the Articles of
      Incorporation and Bylaws of the Constituent Entity, and the proposed
      Continuation Application and Articles of the Resulting Entity will
      continue in full force and effect until changed, altered or amended as
      provided in the <I>Business Corporations Act </I>(British
      Columbia);</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>The separate existence of the Constituent Entity will
      cease;</P></TD>
  </TR>
</TABLE>
<p align="center">143</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>The title to all real estate vested by deed or otherwise
      under the laws of any jurisdiction, and the title to all other property,
      real and personal, owned by the Constituent Entity, and all debts due to
      the Constituent Entity on whatever account, as well as all other things in
      action or belonging to the Constituent Entity, shall in accordance with
      the NRS be vested in the Resulting Entity without reservation or
      impairment;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(e) </TD>
    <TD><P align=justify>The Resulting Entity shall have all of the debts,
      liabilities and duties of the Constituent Entity, and all rights of
      creditors accruing and all liens placed upon any property of the
      Constituent Entity up to the Effective Time of the Conversion shall be
      preserved unimpaired, and all debts, liabilities and duties of the
      Constituent Entity shall attach to the Resulting Entity and may be
      enforced against it to the same extent as if it had incurred or contracted
      such debts, liabilities and duties;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(f) </TD>
    <TD><P align=justify>Any proceeding pending against the Constituent Entity may
      be continued as if the Conversion had not occurred or the Resulting Entity
      may be substituted in the proceeding in place of the Constituent
      Entity;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(g) </TD>
    <TD><P align=justify>Each share of common stock of the Constituent Entity,
      with US$0.001 par value per share, issued and outstanding immediately
      before the Effective Time of the Conversion will, by virtue of the
      Conversion and without any action on the part of the holder thereof, be
      converted into and become one validly issued, fully paid and nonassessable
      common share of the Resulting Entity, without par value;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(h) </TD>
    <TD><P align=justify>Each option to acquire shares of common stock of the
      Constituent Entity outstanding immediately before the Effective Time of
      the Conversion will, by virtue of the Conversion and without any action on
      the part of the holder thereof, be converted into and become an equivalent
      option to acquire, upon the same terms and conditions, the number of
      common shares of the Resulting Entity that is equal to the number of
      shares of common stock of the Constituent Entity that the optionee would
      have received had the optionee exercised such option in full immediately
      before the Effective Time of the Conversion (whether or not such option
      was then exercisable) and the exercise price per share under each such
      option shall be equal to the exercise price per share thereunder
      immediately before the Effective Time of the Conversion, unless otherwise
      provided in the instrument granting such option;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>Each warrant to acquire shares of common stock of the
      Constituent Entity outstanding immediately before the Effective Time of
      the Conversion will, by virtue of the Conversion and without any action on
      the part of the holder thereof, be converted into and become an equivalent
      warrant to acquire, upon the same terms and conditions, the number of
      common shares of the Resulting Entity that is equal to the number of
      shares of common stock of the Constituent Entity that the warrant holder
      would have received had the warrant holder exercised such warrant in full
      immediately before the Effective Time of the Conversion (whether or not
      such warrant was then exercisable) and the exercise price per share under
      each such warrant shall be equal to the exercise price per share
      thereunder immediately before the Effective Time of the Conversion, unless
      otherwise provided in the instrument granting such warrant;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(j) </TD>
    <TD><P align=justify>Any other right, by contract or otherwise, to acquire
      shares of common stock of the Constituent Entity outstanding immediately
      before the Effective Time of the Conversion shall, by virtue of the
      Conversion and without any action on the part of the holder thereof, be
      converted into and become a right to acquire, upon the same terms and
      conditions, the number of common shares of the Resulting Entity that is
      equal to the number of shares of common stock of the Constituent Entity
      that the right holder would have received had the right holder exercised
      such right in full immediately before the Effective Time of the Conversion
      (whether or not such right was then exercisable) and the exercise price
      per share under each such right shall be equal to the exercise price per
      share thereunder immediately before the Effective Time of the Conversion,
      unless otherwise provided in the agreement granting such right;
      and</P></TD>
  </TR>
</TABLE>
<p align="center">144</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(k) </TD>
    <TD><P align=justify>The directors and officers of the Constituent Entity in
      office at the Effective Time of the Conversion will become the directors
      and officers, respectively, of the Resulting Entity, each of such
      directors and officers to hold office, subject to the applicable
      provisions of the Continuation Application, Articles of the Resulting
      Entity and the <I>Business Corporations Act </I>(British Columbia), until
      his or her successor is duly elected or appointed and
      qualified.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">7. </TD>
    <TD><P align=justify>The boards of directors of the Constituent Entity may
      amend this Plan of Conversion at any time before the Effective Time of
      Conversion, provided, however, that an amendment made subsequent to the
      approval of the Conversion by the stockholders of the Constituent Entity,
      whichever is earlier, shall not (a) alter or change the manner or basis of
      exchanging a stockholder&#146;s shares of the Constituent Entity for a
      stockholder&#146;s shares, rights to purchase a stockholder&#146;s shares, or other
      securities of the Resulting Entity, or for cash or other property in whole
      or in part or (b) alter or change any of the terms and conditions of this
      Plan of Conversion in a manner that adversely affects the stockholders of
      the Constituent Entity.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">8. </TD>
    <TD><P align=justify>At any time before the Effective Time of Conversion, this
      Plan of Conversion may be terminated and the Conversion contemplated
      hereby may be abandoned by the board of directors of the Constituent
      Entity, notwithstanding approval of this Plan of Conversion by the
      stockholders of the Constituent Entity.</P></TD>
  </TR>
</TABLE>
<BR>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>
    <TR vAlign=top>
      <TD align=left colSpan=2><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left colSpan=2>a Nevada corporation </TD>
    </TR>
    <TR>
      <TD >&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR>
      <TD >&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >By: </TD>
      <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="90%"><I>/s/
        Chris Bunka</I> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >&nbsp;</TD>
      <TD align=left width="90%">Name: Chris Bunka </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >&nbsp;</TD>
      <TD align=left width="90%">Title: Chief Executive Officer, Director,
        Chairman of the Board of Directors </TD>
    </TR>
    <TR>
      <TD >&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >Date: </TD>
      <TD align=left width="90%">_______________________,
        2018 </TD>
    </TR>
  </TABLE>
</DIV>
<p align="center">145</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=bottom>
    <TD align=center><B>APPENDIX &#147;A&#148;</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=center><B>SCHEDULE TO</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>CONTINUATION APPLICATION OF</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center><B>LEXARIA BIOSCIENCE CORP.</B> </TD>
  </TR>
</TABLE>
<P align=justify><B><U>ADDITIONAL DIRECTORS</U></B><B> </B></P>
<P align=justify><B>DIRECTOR NAME(S) AND ADDRESS(ES) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left >LAST NAME </TD>
    <TD align=left width="60%">FIRST NAME </TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="60%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >DELIVERY ADDRESS </TD>
    <TD align=left width="60%">&nbsp;</TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="60%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >MAILING ADDRESS </TD>
    <TD align=left width="60%">&nbsp;</TD>
  </TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
  </TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="60%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >LAST NAME </TD>
    <TD align=left width="60%">&nbsp; &nbsp;FIRST NAME </TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="60%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >DELIVERY ADDRESS </TD>
    <TD align=left width="60%">&nbsp;</TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="60%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >MAILING ADDRESS </TD>
    <TD align=left width="60%">&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">146</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_134></A>
<P align=center><B>APPENDIX &#147;B&#148; </B></P>
<P align=center><B>ARTICLES</B> </P>
<P align=right><B>Continuation No.</B></P>
<P align=center>BUSINESS CORPORATIONS ACT<B> </B></P>
<P align=center><B>ARTICLES </B></P>
<P align=center>OF </P>
<P align=center><B>LEXARIA BIOSCIENCE CORP.</B> </P>
<P align=center><B><U>Table of Contents</U></B><B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 1 &#150; Interpretation </TD>
    <TD align=right width="10%" bgColor=#eeeeee >1 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 2 &#150; Shares and Share certificates </TD>
    <TD align=right width="10%" >2 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 3 &#150; Issue of Shares </TD>
    <TD align=right width="10%" bgColor=#eeeeee >2 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 4 &#150; Share Transfers </TD>
    <TD align=right width="10%" >3 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 5 &#150; Acquisition of Shares </TD>
    <TD align=right width="10%" bgColor=#eeeeee >3 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 6 &#150; Borrowing Powers </TD>
    <TD align=right width="10%" >4 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 7 &#150; General Meetings </TD>
    <TD align=right width="10%" bgColor=#eeeeee >4 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 8 &#150; Proceedings at Meetings of Shareholders </TD>
    <TD align=right width="10%" >5 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 9 &#150; Alterations </TD>
    <TD align=right width="10%" bgColor=#eeeeee >8 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 10 &#150; Votes of Shareholders </TD>
    <TD align=right width="10%" >9 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 11 &#150; Directors </TD>
    <TD align=right width="10%" bgColor=#eeeeee >12 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 12 &#150; Election and Removal of Directors </TD>
    <TD align=right width="10%" >13 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 13 &#150; Proceedings of Directors </TD>
    <TD align=right width="10%" bgColor=#eeeeee >15 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 14 &#150; Committees of Directors </TD>
    <TD align=right width="10%" >16 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 15 &#150; Officers </TD>
    <TD align=right width="10%" bgColor=#eeeeee >17 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 16 &#150; Certain Permitted Activities of Directors </TD>
    <TD align=right width="10%" >18 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 17 &#150; Indemnification </TD>
    <TD align=right width="10%" bgColor=#eeeeee >18 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 18 &#150; Auditor </TD>
    <TD align=right width="10%" >18 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 19 &#150; Dividends </TD>
    <TD align=right width="10%" bgColor=#eeeeee >18 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 20 &#150; Accounting Records </TD>
    <TD align=right width="10%" >19 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 21 &#150; Execution of Instruments </TD>
    <TD align=right width="10%" bgColor=#eeeeee >19 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 22 &#150; Notices </TD>
    <TD align=right width="10%" >20 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Part 23 &#150; Restriction on Share Transfer </TD>
    <TD align=right width="10%" bgColor=#eeeeee >21 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Part 24 &#150; Special Rights and Restrictions </TD>
    <TD align=right width="10%" >21 </TD>
  </TR>
</TABLE>
<p align="center">147</p>
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<A name=page_135></A>
<P align=right><B>Continuation No.</B></P>
<P align=center>BUSINESS CORPORATIONS ACT<B> </B></P>
<P align=center><B>ARTICLES </B></P>
<P align=center>OF </P>
<P align=center><B>LEXARIA BIOSCIENCE CORP. <BR>
</B>(the &#147;Company&#148;) </P>
<P align=center><B>PART 21&#150; INTERPRETATION </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>21.1</B> </TD>
    <TD><P align=justify><B>Definitions</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Without limiting Article 1.2, in these
  Articles, unless the context requires otherwise: </P>
<P style="MARGIN-LEFT: 10%" align=justify><B>&#147;adjourned meeting&#148; </B>means the
  meeting to which a meeting is adjourned under Article 8.7 or 8.11; </P>
<P style="MARGIN-LEFT: 10%" align=justify><B>&#147;board&#148; </B>and <B>&#147;directors&#148; </B>mean the directors or sole director of the Company for the time being; </P>
<P style="MARGIN-LEFT: 10%" align=justify><B>&#147;</B><B><I>Business Corporations
  Act</I></B><B>&#148;</B><B><I> </I></B>means the <I>Business Corporations Act</I>,
  S.B.C. 2002, c.57, and includes its regulations; </P>
<P style="MARGIN-LEFT: 10%" align=justify><B>&#147;</B><B><I>Interpretation
  Act</I></B><B>&#148; </B>means the <I>Interpretation Act</I>, R.S.B.C. 1996, c. 238; </P>
<P style="MARGIN-LEFT: 10%" align=justify><B>&#147;trustee&#148;, </B>in relation to a
  shareholder, means the personal or other legal representative of the
  shareholder, and includes a trustee in bankruptcy of the shareholder. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>21.2</B> </TD>
    <TD><P align=justify><B>Business Corporations Act definitions
      apply</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The definitions in the <I>Business Corporations Act </I>apply to these Articles.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>21.3</B> </TD>
    <TD><P align=justify><B>Interpretation Act applies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The <I>Interpretation Act </I>applies to the
      interpretation of these Articles as if these Articles were an
      enactment.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>21.4</B> </TD>
    <TD><P align=justify><B>Conflict in definitions</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If there is a conflict between a definition in the <I>Business Corporations Act </I>and a definition or rule in the <I>Interpretation Act </I>relating to a term used in these Articles, the
      definition in the <I>Business Corporations Act </I>will prevail in
      relation to the use of the term in these Articles.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>21.5</B> </TD>
    <TD><P align=justify><B>Conflict between Articles and
      legislation</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If there is a conflict between these Articles and the <I>Business Corporations Act</I>, the <I>Business Corporations Act </I>will prevail.</P></TD>
  </TR>
</TABLE>
<p align="center">148</p>
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<A name=page_136></A>
<P align=center><B>PART 22 &#150; SHARES AND SHARE CERTIFICATES </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>22.1</B> </TD>
    <TD><P align=justify><B>Form of share certificate</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Each share certificate issued by the Company must comply
      with, and be signed as required by, the <I>Business Corporations
        Act</I>.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>22.2</B> </TD>
    <TD><P align=justify><B>Shareholder Entitled to Certificate or
      Acknowledgement</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Each shareholder is entitled, without charge, to (a) one
      share certificate representing the shares of each class or series of
      shares registered in the shareholder&#146;s name or (b) a non-transferable
      written acknowledgement of the shareholder&#146;s right to obtain such a share
      certificate, provided that in respect of a share held jointly by several
      persons, the Company is not bound to issue more than one share certificate
      and delivery of a share certificate for a share to one of several joint
      shareholders or to one of the shareholders&#146; duly authorized agents will be
      sufficient delivery to all.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>22.3</B> </TD>
    <TD><P align=justify><B>Sending of share certificate</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any share certificate to which a shareholder is entitled
      may be sent to the shareholder by mail and neither the Company nor any
      agent is liable for any loss to the shareholder because the certificate
      sent is lost in the mail or stolen.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>22.4</B> </TD>
    <TD><P align=justify><B>Replacement of worn out or defaced
      certificate</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If the directors are satisfied that a share certificate
      is worn out or defaced, they must, on production to them of the
      certificate and on such other terms, if any, as they think
      fit,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>order the certificate to be cancelled, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>issue a replacement share
      certificate.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>22.5</B> </TD>
    <TD><P align=justify><B>Replacement of lost, stolen or destroyed
      certificate</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a share certificate is lost, stolen or destroyed, a
      replacement share certificate must be issued to the person entitled to
      that certificate if the directors receive</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>proof satisfactory to them that the certificate is lost,
      stolen or destroyed, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>any indemnity the directors consider
      adequate.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>22.6</B> </TD>
    <TD><P align=justify><B>Splitting share certificates</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a shareholder surrenders a share certificate to the
      Company with a written request that the Company issue in the shareholder&#146;s
      name 2 or more certificates, each representing a specified number of
      shares and in the aggregate representing the same number of shares as the
      certificate, so surrendered, the Company must cancel the surrendered
      certificate and issue replacement share certificates in accordance with
      that request.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 23 &#150; ISSUE OF SHARES </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>23.1</B> </TD>
    <TD><P align=justify><B>Directors authorized to issue shares</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may, subject to the rights of the holders
      of the issued shares of the Company, issue, allot, sell, grant options on
      or otherwise dispose of the unissued shares, and issued shares held by the
      Company, at the times, to the persons, including directors, in the manner,
      on the terms and conditions and for the issue prices that the directors,
      in their absolute discretion, may determine.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>23.2</B> </TD>
    <TD><P align=justify><B>Company need not recognize unregistered
      interests</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Except as required by law or these Articles, the Company
      need not recognize or provide for any person&#146;s interests in or rights to a
      share unless that person is the shareholder of the
      share.</P></TD>
  </TR>
</TABLE>
<p align="center">149</p>
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<A name=page_137></A>
<P align=center><B>PART 24 &#150; SHARE TRANSFERS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>24.1</B> </TD>
    <TD><P align=justify><B>Recording or registering transfer</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A transfer of a share of the Company must not be
      registered</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>unless a duly signed instrument of transfer in respect of
      the share has been received by the Company and the certificate
      representing the share to be transferred has been surrendered and
      cancelled, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if no certificate has been issued by the Company in
      respect of the share, unless a duly signed instrument of transfer in
      respect of the share has been received by the
      Company.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>24.2</B> </TD>
    <TD><P align=justify><B>Form of instrument of transfer</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The instrument of transfer in respect of any share of the
      Company must be either in the form, if any, on the back of the Company&#146;s
      share certificates or in any other form that may be approved by the
      directors from time to time.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>24.3</B> </TD>
    <TD><P align=justify><B>Signing of instrument of transfer</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a shareholder, or his or her duly authorized attorney,
      signs an instrument of transfer in respect of shares registered in the
      name of the shareholder, the signed instrument of transfer constitutes a
      complete and sufficient authority to the Company and its directors,
      officers and agents to register the number of shares specified in the
      instrument of transfer, or, if no number is specified, all the shares
      represented by share certificates deposited with the instrument of
      transfer,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>in the name of the person named as transferee in that
      instrument of transfer, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if no person is named as transferee in that instrument of
      transfer, in the name of the person on whose behalf the share certificate
      is deposited for the purpose of having the transfer
      registered.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>24.4</B> </TD>
    <TD><P align=justify><B>Enquiry as to title not required</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Neither the Company nor any director, officer or agent of
      the Company is bound to inquire into the title of the person named in the
      instrument of transfer as transferee or, if no person is named as
      transferee in the instrument of transfer, of the person on whose behalf
      the instrument is deposited for the purpose of having the transfer
      registered or is liable for any claim related to registering the transfer
      by the shareholder or by any intermediate owner or holder of the shares,
      of any interest in the shares, of any share certificate representing such
      shares or of any written acknowledgment of a right to obtain a share
      certificate for such shares.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>24.5</B> </TD>
    <TD><P align=justify><B>Transfer fee</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>There must be paid to the Company, in relation to the
      registration of any transfer, the amount determined by the
      directors.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 25 &#150; ACQUISITION OF SHARES </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>25.1</B> </TD>
    <TD><P align=justify><B>Company authorized to purchase shares</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to the special rights and restrictions attached
      to any class or series of shares, the Company may, if it is authorized to
      do so by the directors, purchase or otherwise acquire any of its
      shares.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>25.2</B> </TD>
    <TD><P align=justify><B>Company authorized to accept surrender of
      shares</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company may, if it is authorized to do so by the
      directors, accept a surrender of any of its shares by way of gift or for
      cancellation.</P></TD>
  </TR>
</TABLE>
<p align="center">150</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>25.3</B> </TD>
    <TD><P align=justify><B>Company authorized to convert fractional shares into
      whole shares</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company may, if it is authorized to do so by the
      directors, convert any of its fractional shares into whole shares in
      accordance with, and subject to the limitations contained in, the <I>Business Corporations Act</I>.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 26 &#150; BORROWING POWERS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>26.1</B> </TD>
    <TD><P align=justify><B>Powers of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may from time to time on behalf of the
      Company</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>borrow money in the manner and amount, on the security,
      from the sources and on the terms and conditions that they consider
      appropriate,</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>issue bonds, debentures and other debt obligations either
      outright or as security for any liability or obligation of the Company or
      any other person, and at any discount or premium and on such other terms
      as they consider appropriate,</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>guarantee the repayment of money by any other person or
      the performance of any obligation of any other person, and</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>mortgage or charge, whether by way of specific or
      floating charge, or give other security on the whole or any part of the
      present and future assets and undertaking of the
      Company.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 27 &#150; GENERAL MEETINGS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>27.1</B> </TD>
    <TD><P align=justify><B>Annual general meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Unless an annual general meeting is deferred or waived in
      accordance with section 182(2)(a) or (c) of the <I>Business Corporations
        Act</I>, the Company must hold its first annual general meeting within 18
      months after the date on which it was incorporated or otherwise
      recognized, and after that must hold an annual general meeting at least
      once in each calendar year and not more than 15 months after the last
      annual general meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>27.2</B> </TD>
    <TD><P align=justify><B>When annual general meeting is deemed to have been
      held</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If all of the shareholders who are entitled to vote at an
      annual general meeting consent by a unanimous resolution under the <I>Business Corporations Act </I>to all of the business that is required
      to be transacted at that annual general meeting, the annual general
      meeting is deemed to have been held on the date of the unanimous
      resolution. The shareholders must, in any unanimous resolution passed
      under this Article 7.2, select as the Company&#146;s annual reference date a
      date that would be appropriate for the holding of the applicable annual
      general meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>27.3</B> </TD>
    <TD><P align=justify><B>Calling of shareholder meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may, whenever they think fit, call a
      meeting of shareholders.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>27.4</B> </TD>
    <TD><P align=justify><B>Notice for meetings of shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company must send notice of the date, time and
      location of any meeting of shareholders, in the manner provided in these
      Articles, or in such other manner, if any, as may be prescribed by
      ordinary resolution (whether previous notice of the resolution has been
      given or not), to each shareholder entitled to attend the meeting, to each
      director and to the auditor of the Company, unless these Articles
      otherwise provide, at least the following number of days before the
      meeting:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>if and for so long as the Company is a public company, 21
      days;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>otherwise, 10 days.</P></TD>
  </TR>
</TABLE>
<p align="center">151</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>27.5</B> </TD>
    <TD><P align=justify><B>Record date for notice</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may set a date as the record date for the
      purpose of determining shareholders entitled to notice of any meeting of
      shareholders. The record date must not precede the date on which the
      meeting is to be held by more than two months or, in the case of a general
      meeting requisitioned by shareholders under the <I>Business Corporations
        Act</I>, by more than four months. The record date must not precede the
      date on which the meeting is held by fewer
      than:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>if and for so long as the Company is a public company, 21
      days;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>otherwise, 10 days.</P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>If no record date is set, the record
  date is 5 p.m. on the day immediately preceding the first date on which the
  notice is sent or, if no notice is sent, the beginning of the meeting. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>27.6</B> </TD>
    <TD><P align=justify><B>Record date for voting</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may set a date as the record date for the
      purpose of determining shareholders entitled to vote at any meeting of
      shareholders. The record date must not precede the date on which the
      meeting is to be held by more than two months or, in the case of a general
      meeting requisitioned by shareholders under the <I>Business Corporations
        Act</I>, by more than four months. If no record date is set, the record
      date is 5 p.m. on the day immediately preceding the first date on which
      the notice is sent or, if no notice is sent, the beginning of the
      meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>27.7</B> </TD>
    <TD><P align=justify><B>Failure to give notice and waiver of
      notice</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The accidental omission to send notice of any meeting to,
      or the non-receipt of any notice by, any of the persons entitled to notice
      does not invalidate any proceedings at that meeting. Any person entitled
      to notice of a meeting of shareholders may, in writing or otherwise, waive
      or reduce the period of notice of such meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>27.8</B> </TD>
    <TD><P align=justify><B>Notice of special business at meetings of
      shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a meeting of shareholders is to consider special
      business within the meaning of Article 8.1, the notice of meeting
      must:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>state the general nature of the special business;
      and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if the special business includes considering, approving,
      ratifying, adopting or authorizing any document or the signing of or
      giving of effect to any document, have attached to it a copy of the
      document or state that a copy of the document will be available for
      inspection by shareholders:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>at the Company&#146;s records office, or at such other
      reasonably accessible location in British Columbia as is specified in the
      notice; and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>during statutory business hours on any one or more
      specified days before the day set for the holding of the
      meeting.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 28 &#150; PROCEEDINGS AT MEETINGS OF SHAREHOLDERS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.1</B> </TD>
    <TD><P align=justify><B>Special business</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>At a meeting of shareholders, the following business is
      special business:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>at a meeting of shareholders that is not an annual
      general meeting, all business is special business except business relating
      to the conduct of or voting at the meeting;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>at an annual general meeting, all business is special
      business except for the following:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>business relating to the conduct of or voting at the
      meeting;</P></TD>
  </TR>
</TABLE>
<p align="center">152</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>consideration of any financial statements of the Company
      presented to the meeting;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>consideration of any reports of the directors or
      auditor;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iv) </TD>
    <TD><P align=justify>the setting or changing of the number of
      directors;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(v) </TD>
    <TD><P align=justify>the election or appointment of directors;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(vi) </TD>
    <TD><P align=justify>the appointment of an auditor;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(vii) </TD>
    <TD><P align=justify>the setting of the remuneration of an auditor;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(viii) </TD>
    <TD><P align=justify>business arising out of a report of the directors not
      requiring the passing of a special resolution or an exceptional
      resolution;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ix) </TD>
    <TD><P align=justify>any other business which, under these Articles or the <I>Business Corporations Act</I>, may be transacted at a meeting of
      shareholders without prior notice of the business being given to the
      shareholders.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.2</B> </TD>
    <TD><P align=justify><B>Special majority</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The majority of votes required for the Company to pass a
      special resolution at a meeting of shareholders is two-thirds of the votes
      cast on the resolution.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.3</B> </TD>
    <TD><P align=justify><B>Quorum</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to the special rights and restrictions attached
      to the shares of any class or series of shares, the quorum for the
      transaction of business at a meeting of shareholders is 2 persons who are,
      or who represent by proxy, shareholders who, in the aggregate, hold at
      least 1/20 of the issued shares entitled to be voted at the
      meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.4</B> </TD>
    <TD><P align=justify><B>One shareholder may constitute quorum</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If there is only one shareholder entitled to vote at a
      meeting of shareholders,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the quorum is one person who is, or who represents by
      proxy, that shareholder, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>that shareholder, present in person or by proxy, may
      constitute the meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.5</B> </TD>
    <TD><P align=justify><B>Other persons may attend</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors, the president, if any, the secretary, if
      any, and any lawyer or auditor for the Company are entitled to attend any
      meeting of shareholders, but if any of those persons do attend a meeting
      of shareholders, that person is not to be counted in the quorum, and is
      not entitled to vote at the meeting, unless that person is a shareholder
      or proxy holder entitled to vote at the meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.6</B> </TD>
    <TD><P align=justify><B>Requirement of quorum</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No business, other than the election of a chair of the
      meeting and the adjournment of the meeting, may be transacted at any
      meeting of shareholders unless a quorum of shareholders entitled to vote
      at the meeting is present at the commencement of the meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.7</B> </TD>
    <TD><P align=justify><B>Lack of quorum</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If, within 1/2 hour from the time set for the holding of
      a meeting of shareholders, a quorum is not
      present,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>in the case of a general meeting convened by requisition
      of shareholders, the meeting is dissolved, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>in the case of any other meeting of shareholders, the
      meeting stands adjourned to the same day in the next week at the same time
      and place.</P></TD>
  </TR>
</TABLE>
<p align="center">153</p>
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noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.8</B> </TD>
    <TD><P align=justify><B>Lack of quorum at succeeding meeting</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If, at the meeting to which the first meeting referred to
      in Article 8.7 was adjourned, a quorum is not present within 1/2 hour from
      the time set for the holding of the meeting, the persons present and who
      are, or who represent by proxy, shareholders entitled to attend and vote
      at the meeting constitute a quorum.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.9</B> </TD>
    <TD><P align=justify><B>Chair</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The following individual is entitled to preside as chair
      at a meeting of shareholders:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the chair of the board, if any;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if the chair of the board is absent or unwilling to act
      as chair of the meeting, the president, if
      any.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.10</B> </TD>
    <TD><P align=justify><B>Alternate chair</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>At any meeting of shareholders, the directors present
      must choose one of their number to be chair of the meeting if: (a) there
      is no chair of the board or president present within 15 minutes after the
      time set for holding the meeting; (b) the chair of the board and the
      president are unwilling to act as chair of the meeting; or (c) if the
      chair of the board and the president have advised the secretary, if any,
      or any director present at the meeting, that they will not be present at
      the meeting. If, in any of the foregoing circumstances, all of the
      directors present decline to accept the position of chair or fail to
      choose one of their number to be chair of the meeting, or if no director
      is present, the shareholders present in person or by proxy must choose any
      person present at the meeting to chair the meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.11</B> </TD>
    <TD><P align=justify><B>Adjournments</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The chair of a meeting of shareholders may, and if so
      directed by the meeting must, adjourn the meeting from time to time and
      from place to place, but no business may be transacted at any adjourned
      meeting other than the business left unfinished at the meeting from which
      the adjournment took place.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.12</B> </TD>
    <TD><P align=justify><B>Notice of adjourned meeting</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>It is not necessary to give any notice of an adjourned


      meeting or of the business to be transacted at an adjourned meeting of
      shareholders except that, when a meeting is adjourned for 30 days or more,
      notice of the adjourned meeting must be given as in the case of the
      original meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.13</B> </TD>
    <TD><P align=justify><B>Motion need not be seconded</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No motion proposed at a meeting of shareholders need be
      seconded unless the chair of the meeting rules otherwise, and the chair of
      any meeting of shareholders is entitled to propose or second a
      motion.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.14</B> </TD>
    <TD><P align=justify><B>Manner of taking a poll</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to Article 8.15, if a poll is duly demanded at a
      meeting of shareholders,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the poll must be taken</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>at the meeting, or within 7 days after the date of the
      meeting, as the chair of the meeting directs, and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>in the manner, at the time and at the place that the
      chair of the meeting directs,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the result of the poll is deemed to be a resolution of,
      and passed at, the meeting at which the poll is demanded, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>the demand for the poll may be
      withdrawn.</P></TD>
  </TR>
</TABLE>
<p align="center">154</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_142></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>28.15</B> </TD>
    <TD colSpan=2><P align=justify><B>Demand for a poll on adjournment</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>A poll demanded at a meeting of shareholders on a question
      of adjournment must be taken immediately at the meeting.</TD>
  </TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.16</B> </TD>
    <TD colSpan=2><P align=justify><B>Demand for a poll not to prevent continuation of
      meeting</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>The demand for a poll at a meeting of shareholders does
      not, unless the chair of the meeting so rules, prevent the continuation of
      a meeting for the transaction of any business other than the question on
      which a poll has been demanded.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.17</B> </TD>
    <TD colSpan=2><P align=justify><B>Poll not available in respect of election of
      chair</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>No poll may be demanded in respect of the vote by which a
      chair of a meeting of shareholders is elected.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.18</B> </TD>
    <TD colSpan=2><P align=justify><B>Casting of votes on poll</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>On a poll, a shareholder entitled to more than one vote
      need not cast all the votes in the same way.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.19</B> </TD>
    <TD colSpan=2><P align=justify><B>Chair must resolve dispute</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>In the case of any dispute as to the admission or
      rejection of a vote given on a poll, the chair of the meeting must
      determine the same, and his or her determination made in good faith is
      final and conclusive.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.20</B> </TD>
    <TD colSpan=2><P align=justify><B>Chair has no second vote</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>In case of an equality of votes, the chair of a meeting
      of shareholders does not, either on a show of hands or on a poll, have a
      casting or second vote in addition to the vote or votes to which the chair
      may be entitled as a shareholder.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"><P align=justify>&nbsp;</P></TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.21</B> </TD>
    <TD colSpan=2><P align=justify><B>Declaration of result</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"><P align=justify>&nbsp;</P></TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2><P align=justify>The chair of a meeting of shareholders must declare to
      the meeting the decision on every question in accordance with the result
      of the show of hands or the poll, as the case may be, and that decision
      must be entered in the minutes of the meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"><P align=justify>&nbsp;</P></TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>28.22</B> </TD>
    <TD colSpan=2><P align=justify><B>Meetings by telephone or other communications
      medium</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"><P align=justify>&nbsp;</P></TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top colSpan=2><P align=justify>A shareholder or proxy holder who is entitled to
      participate in a meeting of shareholders may do so in person, or by
      telephone or other communications medium, if all shareholders and proxy
      holders participating in the meeting are able to communicate with each
      other; provided, however, that nothing in this Section shall obligate the
      Company to take any action or provide any facility to permit or facilitate
      the use of any communications medium at a meeting of shareholders. If one
      or more shareholders or proxy holders participate in a meeting of
      shareholders in a manner contemplated by this
      Section,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>each such shareholder or proxy holder shall be deemed to
      be present at the meeting, and</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the meeting shall be deemed to be held at the location
      specified in the notice of the meeting.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 29 &#150; ALTERATIONS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>29.1</B> </TD>
    <TD><P align=justify><B>Alteration of Authorized Share Structure</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to the <I>Business Corporations Act</I>, the
      Company may by resolution of the directors:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>create one or more classes or series of shares or, if
      none of the shares of a class or series of shares are allotted or issued,
      eliminate that class or series of shares;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>increase, reduce or eliminate the maximum number of
      shares that the Company is authorized to issue out of any class or series
      of shares or establish a maximum number of shares that
      the Company is authorized to issue out of any class or series of
      shares for which no maximum is established; </P></TD>
  </TR>
</TABLE>
<p align="center">155</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>if the Company is authorized to issue shares of a class
      of shares with par value:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>decrease the par value of those shares;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>if none of the shares of that class of shares are
      allotted or issued, increase the par value of those shares;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares with par value into shares of smaller par value;
      or</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iv) </TD>
    <TD><P align=justify>consolidate all or any of its unissued, or fully paid
      issued, shares with par value into shares of larger par
      value;</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares without par value;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(e) </TD>
    <TD><P align=justify>consolidate all or any of its unissued, or fully paid
      issued, shares without par value;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(f) </TD>
    <TD><P align=justify>subdivide all or any of its unissued, or fully paid
      issued, shares by way of a share dividend;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(g) </TD>
    <TD><P align=justify>change all or any of its unissued, or fully paid issued,
      shares with par value into shares without par value or all or any of its
      unissued shares without par value into shares with par value;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(h) </TD>
    <TD><P align=justify>alter the identifying name of any of its shares;
      or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" ></TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>otherwise alter its shares or authorized share structure
      when required or permitted to do so by the <I>Business Corporations
        Act</I>.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>29.2</B> </TD>
    <TD><P align=justify><B>Change of Name</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company may by resolution of the directors alter its
      Notice of Articles in order to change its name or adopt or change any
      translation of that name.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>29.3</B> </TD>
    <TD><P align=justify><B>Other Alterations</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If the <I>Business Corporations Act </I>does not specify
      the type of resolution and these Articles do not specify another type of
      resolution, the Company may by resolution of the directors alter these
      Articles.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 30 &#150; VOTES OF SHAREHOLDERS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.1</B> </TD>
    <TD><P align=justify><B>Voting rights</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to any special rights or restrictions attached to
      any shares and to the restrictions imposed on joint registered holders of
      shares under Article 10.3,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>on a vote by show of hands, every person present who is a
      shareholder or proxy holder and entitled to vote at the meeting has one
      vote, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>on a poll, every shareholder entitled to vote has one
      vote in respect of each share held by that shareholder that carries the
      right to vote on that poll and may exercise that vote either in person or
      by proxy.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.2</B> </TD>
    <TD><P align=justify><B>Trustee of shareholder may vote</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A person who is not a shareholder may vote on a
      resolution at a meeting of shareholders, whether on a show of hands or on
      a poll, and may appoint a proxy holder to act at the meeting in relation
      to that resolution, if, before doing so, the person satisfies the chair of
      the meeting at which the resolution is to be considered, or satisfies all of the directors present at the
      meeting, that the person is a trustee for a shareholder who is entitled to vote
      on the resolution. </P></TD>
  </TR>
</TABLE>
<p align="center">156</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.3</B> </TD>
    <TD><P align=justify><B>Votes by joint shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If there are joint shareholders registered in respect of
      any share,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>any one of the joint shareholders, but not both or all,
      may vote at any meeting, either personally or by proxy, in respect of the
      share as if that joint shareholder were solely entitled to it,
      or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if more than one of the joint shareholders is present at
      any meeting, personally or by proxy, the joint shareholder present whose
      name stands first on the central securities register in respect of the
      share is alone entitled to vote in respect of that
      share.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.4</B> </TD>
    <TD><P align=justify><B>Trustees as joint shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Two or more trustees of a shareholder in whose sole name
      any share is registered are, for the purposes of Article 10.3, deemed to
      be joint shareholders.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>30.5</B> </TD>
    <TD><P align=justify><B>Representative of a corporate
      shareholder</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a corporation that is not a subsidiary of the Company
      is a shareholder, that corporation may appoint a person to act as its
      representative at any meeting of shareholders of the Company,
      and,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>for that purpose, the instrument appointing a
      representative must</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>be received at the registered office of the Company or at
      any other place specified, in the notice calling the meeting, for the
      receipt of proxies, at least 2 business days before the day set for the
      holding of the meeting, or</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>be provided, at the meeting, to the chair of the meeting,
      and</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if a representative is appointed under this Article
      10.5,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>the representative is entitled to exercise in respect of
      and at that meeting the same rights on behalf of the corporation that the
      representative represents as that corporation could exercise if it were a
      shareholder who is an individual, including, without limitation, the right
      to appoint a proxy holder, and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>the representative, if present at the meeting, is to be
      counted for the purpose of forming a quorum and is deemed to be a
      shareholder present in person at the meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.6</B> </TD>
    <TD><P align=justify><B>When proxy provisions do not apply</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Articles 10.7 to 10.13 do not apply to the Company if and
      for so long as it is a public company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>30.7</B> </TD>
    <TD><P align=justify><B>Appointment of proxy holder</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Every shareholder of the Company, including a corporation
      that is a shareholder but not a subsidiary of the Company, entitled to
      vote at a meeting of shareholders of the Company may, by proxy, appoint a
      proxy holder to attend and act at the meeting in the manner, to the extent
      and with the powers conferred by the proxy.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>30.8</B> </TD>
    <TD><P align=justify><B>Alternate proxy holders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A shareholder may appoint one or more alternate proxy
      holders to act in the place of an absent proxy
      holder.</P></TD>
  </TR>
</TABLE>
<p align="center">157</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_145></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.9</B> </TD>
    <TD><P align=justify><B>When proxy holder need not be
      shareholder</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A person must not be appointed as a proxy holder unless
      the person is a shareholder, although a person who is not a shareholder
      may be appointed as a proxy holder if</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the person appointing the proxy holder is a corporation
      or a representative of a corporation appointed under Article
      10.5,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the Company has at the time of the meeting for which the
      proxy holder is to be appointed only one shareholder entitled to vote at
      the meeting, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>the shareholders present in person or by proxy at and
      entitled to vote at the meeting for which the proxy holder is to be
      appointed, by a resolution on which the proxy holder is not entitled to
      vote but in respect of which the proxy holder is to be counted in the
      quorum, permit the proxy holder to attend and vote at the
      meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.10</B> </TD>
    <TD><P align=justify><B>Form of proxy</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A proxy, whether for a specified meeting or otherwise,
      must be either in the following form or in any other form approved by the
      directors or the chair of the meeting:</P></TD>
  </TR>
</TABLE>
<BR>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="80%" border=0>
    <TR vAlign=bottom>
      <TD align=center>&nbsp;(Name of Company) </TD>
    </TR>
    <TR>
      <TD>&nbsp;</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left><P align=justify>The undersigned, being a shareholder of the above named
        Company, hereby appoints ___________________or, failing that
        person,___________________ , as proxy holder for the undersigned to
        attend, act and vote for and on behalf of the undersigned at the meeting
        of shareholders to be held on the day of and at any adjournment of that
        meeting. </P></TD>
    </TR>
    <TR>
      <TD><P align=justify>&nbsp; </P></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left><P align=justify>Signed ______this day of ___________________,
        __________</P></TD>
    </TR>
    <TR>
      <TD><P align=justify>&nbsp; </P></TD>
    </TR>
    <TR>
      <TD align=left>&nbsp;_______________________________</TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Signature of shareholder </TD>
    </TR>
  </TABLE>
</DIV>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.11</B> </TD>
    <TD><P align=justify><B>Provision of proxies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A proxy for a meeting of shareholders
      must</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>be received at the registered office of the Company or at
      any other place specified, in the notice calling the meeting, for the
      receipt of proxies, at least the number of business days specified in the
      notice, or if no number of days is specified, 2 business days, before the
      day set for the holding of the meeting, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>unless the notice provides otherwise, be provided at the
      meeting to the chair of the meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.12</B> </TD>
    <TD><P align=justify><B>Revocation of proxies</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Subject to Article 10.13, every proxy
  may be revoked by an instrument in writing that is </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>received at the registered office of the Company at any
      time up to and including the last business day before the day set for the
      holding of the meeting at which the proxy is to be used, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>provided at the meeting to the chair of the
      meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.13</B> </TD>
    <TD><P align=justify><B>Revocation of proxies must be
      signed</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>An instrument referred to in Article
  10.12 must be signed as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>if the shareholder for whom the proxy holder is appointed
      is an individual, the instrument must be signed by the shareholder or his
      or her trustee;</P></TD>
  </TR>
</TABLE>
<p align="center">158</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_146></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if the shareholder for whom the proxy holder is appointed
      is a corporation, the instrument must be signed by the corporation or by a
      representative appointed for the corporation under Article
      10.5.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.14</B> </TD>
    <TD><P align=justify><B>Validity of proxy votes</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A vote given in accordance with the terms of a proxy is
      valid despite the death or incapacity of the shareholder giving the proxy
      and despite the revocation of the proxy or the revocation of the authority
      under which the proxy is given, unless notice in writing of that death,
      incapacity or revocation is received</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>at the registered office of the Company, at any time up
      to and including the last business day before the day set for the holding
      of the meeting at which the proxy is to be used, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>by the chair of the meeting, before the vote is
      taken.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>30.15</B> </TD>
    <TD><P align=justify><B>Production of evidence of authority to
      vote</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The chair of any meeting of shareholders may, but need
      not, inquire into the authority of any person to vote at the meeting and
      may, but need not, demand from that person production of evidence as to
      the existence of the authority to vote.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 31 &#150; DIRECTORS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>31.1</B> </TD>
    <TD><P align=justify><B>First directors; number of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The first directors are the persons designated as
      directors of the Company in the Notice of Articles that applies to the
      Company when it is recognized under the <I>Business Corporations Act</I>.
      The number of directors, excluding additional directors appointed under
      Article 12.8, is set at:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>subject to paragraph (b), the number of directors that is
      equal to the number of the Company&#146;s first directors;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the number most recently
      established:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>by ordinary resolution (whether or not previous notice of
      the resolution was given); and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>under Article 12.4;</P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>provided, however, if the Company is a
  public company, the Company must have at least 3 directors. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>31.2</B> </TD>
    <TD><P align=justify><B>Change in number of
      directors</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>If the number of directors is set under
  Articles 11.1(b)(i): </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the shareholders may elect or appoint the directors
      needed to fill any vacancies in the board of directors up to that
      number;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if, contemporaneously with setting that number, the
      shareholders do not elect or appoint the directors needed to fill
      vacancies in the board of directors up to that number, then the directors
      may appoint, or the shareholders may elect or appoint, directors to fill
      those vacancies.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>31.3</B> </TD>
    <TD><P align=justify><B>Directors&#146; acts valid despite vacancy</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>An act or proceeding of the directors is not invalid
      merely because fewer directors have been appointed or elected than the
      number of directors set or otherwise required under these
      Articles.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>31.4</B> </TD>
    <TD><P align=justify><B>Qualifications of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A director is not required to hold a share in the capital
      of the Company as qualification for his or her office but must be
      qualified as required by the <I>Business Corporations Act </I>to become,
      act or continue to act as a director.</P></TD>
  </TR>
</TABLE>
<p align="center">159</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>31.5</B> </TD>
    <TD><P align=justify><B>Remuneration of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors are entitled to the remuneration, if any,
      for acting as directors as the directors may from time to time determine.
      If the directors so decide, the remuneration of the directors will be
      determined by the shareholders. That remuneration may be in addition to
      any salary or other remuneration paid to a director in such director&#146;s
      capacity as an officer or employee of the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>31.6</B> </TD>
    <TD><P align=justify><B>Reimbursement of expenses of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company must reimburse each director for the
      reasonable expenses that he or she may incur in and about the business of
      the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>31.7</B> </TD>
    <TD><P align=justify><B>Special remuneration for directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If any director performs any professional or other
      services for the Company that in the opinion of the directors are outside
      the ordinary duties of a director, or if any director is otherwise
      specially occupied in or about the Company&#146;s business, he or she may be
      paid remuneration fixed by the directors, or, at the option of that
      director, fixed by ordinary resolution, and such remuneration may be
      either in addition to, or in substitution for, any other remuneration that
      he or she may be entitled to receive.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>31.8</B> </TD>
    <TD><P align=justify><B>Gratuity, pension or allowance on retirement of
      director</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Unless otherwise determined by ordinary resolution, the
      directors on behalf of the Company may pay a gratuity or pension or
      allowance on retirement to any director who has held any salaried office
      or place of profit with the Company or to his or her spouse or dependents
      and may make contributions to any fund and pay premiums for the purchase
      or provision of any such gratuity, pension or
    allowance.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 32 &#150; ELECTION AND REMOVAL OF DIRECTORS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.1</B> </TD>
    <TD><P align=justify><B>Election at annual general meeting</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>At every annual general meeting and in every unanimous
      resolution contemplated by Article 7.2:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the shareholders entitled to vote at the annual general
      meeting for the election of directors must elect, or in the unanimous
      resolution appoint, a board of directors consisting of the number of
      directors for the time being set under these Articles; and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>all the directors cease to hold office immediately before
      the election or appointment of directors under paragraph (a), but are
      eligible for re-election or re-appointment.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.2</B> </TD>
    <TD><P align=justify><B>Consent to be a director</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No election, appointment or designation of an individual
      as a director is valid unless:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>that individual consents to be a director in the manner
      provided for in the <I>Business Corporations Act</I>;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>that individual is elected or appointed at a meeting at
      which the individual is present and the individual does not refuse, at the
      meeting, to be a director; or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>with respect to first directors, the designation is
      otherwise valid under the <I>Business Corporations
        Act</I>.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.3</B> </TD>
    <TD><P align=justify><B>Failure to elect or appoint directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the Company fails to hold an annual general meeting, and
      all the shareholders who are entitled to vote at an annual general meeting
      fail to pass the unanimous resolution contemplated by
      Article 7.2, on or before the date by which the annual general meeting
      is required to be held under the <i>Business Corporations Act</i>; or</P></TD>
  </TR>
</TABLE>
<p align="center">160</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the shareholders fail, at the annual general meeting or
      in the unanimous resolution contemplated by Article 7.2, to elect or
      appoint any directors;</P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>then each director in office at such
  time continues to hold office until the earlier of: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>the date on which his or her successor is elected or
      appointed; and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>the date on which he or she otherwise ceases to hold
      office under the <I>Business Corporations Act </I>or these
      Articles.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.4</B> </TD>
    <TD><P align=justify><B>Places of retiring directors not filled</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If, at any meeting of shareholders at which there should
      be an election of directors, the places of any of the retiring directors
      are not filled by that election, those retiring directors who are not
      re-elected and who are asked by the newly elected directors to continue in
      office will, if willing to do so, continue in office to fill the vacancies
      in the number of directors set pursuant to these Articles until further
      new directors are elected at a meeting of shareholders convened for that
      purpose. If any such election or continuance of directors does not result
      in the election or continuance of the number of directors set pursuant to
      these Articles, the number of directors of the Company is deemed to be set
      at the number of directors actually elected or continued in
      office.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>32.5</B> </TD>
    <TD><P align=justify><B>Directors may fill casual vacancies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any casual vacancy occurring in the board of directors
      may be filled by the directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>32.6</B> </TD>
    <TD><P align=justify><B>Remaining directors&#146; power to act</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may act notwithstanding any vacancy in the
      board of directors, but if the Company has fewer directors in office than
      the number set pursuant to these Articles as the quorum of directors, the
      directors may only act for the purpose of appointing directors up to that
      number or for the purpose of summoning a meeting of shareholders to fill
      any vacancies on the board of directors or for any other purpose permitted
      by the <I>Business Corporations Act</I>.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>32.7</B> </TD>
    <TD><P align=justify><B>Shareholders may fill vacancies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If the Company has no directors or fewer directors in
      office than the number set pursuant to these Articles as the quorum of
      directors, the shareholders may elect or appoint directors to fill any
      vacancies on the board of directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>32.8</B> </TD>
    <TD><P align=justify><B>Additional directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Notwithstanding Articles 11.1 and 11.2, between annual
      general meetings or unanimous resolutions contemplated by Article 7.2, the
      directors may appoint one or more additional directors, but the number of
      additional directors appointed under this Article 12.8 must not at any
      time exceed:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>one-third of the number of first directors, if, at the
      time of the appointments, one or more of the first directors have not yet
      completed their first term of office; or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>in any other case, one-third of the number of the current
      directors who were elected or appointed as directors other than under this
      Article 12.8.</P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Any director so appointed ceases to
  hold office immediately before the next election or appointment of directors
  under Article 12.1(a), but is eligible for re-election or re-appointment. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.9</B> </TD>
    <TD><P align=justify><B>Ceasing to be a director</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A director ceases to be a director
  when: </P>
<p align="center">161</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_149></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the term of office of the director expires;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the director dies;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>the director resigns as a director by notice in writing
      provided to the Company or a lawyer for the Company; or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>the director is removed from office pursuant to Articles
      12.10 or 12.11.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>32.10</B> </TD>
    <TD><P align=justify><B>Removal of director by shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Shareholders may, by special resolution, remove any
      director before the expiration of his or her term of office, and may, by
      ordinary resolution, elect or appoint a director to fill the resulting
      vacancy. If the shareholders do not contemporaneously elect or appoint a
      director to fill the vacancy created by the removal of a director, then
      the directors may appoint, or the shareholders may elect or appoint by
      ordinary resolution, a director to fill that vacancy.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>32.11</B> </TD>
    <TD><P align=justify><B>Removal of director by directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may remove any director before the
      expiration of his or her term of office if the director is convicted of an
      indictable offence, or if the director ceases to be qualified to act as a
      director of a company and does not promptly resign, and the directors may
      appoint a director to fill the resulting vacancy.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 33 &#150; PROCEEDINGS OF DIRECTORS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>33.1</B> </TD>
    <TD><P align=justify><B>Meetings of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may meet together for the conduct of
      business, adjourn and otherwise regulate their meetings as they think fit,
      and meetings of the board held at regular intervals may be held at the
      place, at the time and on the notice, if any, that the board may by
      resolution from time to time determine.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.2</B> </TD>
    <TD><P align=justify><B>Chair of meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Meetings of directors are to be chaired
      by</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the chair of the board, if any,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>in the absence of the chair of the board, the president,
      if any, if the president is a director, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>any other director chosen by the directors
      if</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>neither the chair of the board nor the president, if a
      director, is present at the meeting within 15 minutes after the time set
      for holding the meeting,</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>neither the chair of the board nor the president, if a
      director, is willing to chair the meeting, or</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>the chair of the board and the president, if a director,
      have advised the secretary, if any, or any other director, that they will
      not be present at the meeting.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>33.3</B> </TD>
    <TD><P align=justify><B>Voting at meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Questions arising at any meeting of directors are to be
      decided by a majority of votes and, in the case of an equality of votes,
      the chair of the meeting does not have a second or casting vote.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.4</B> </TD>
    <TD><P align=justify><B>Meetings by telephone or other communications
      medium</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A director may participate in a meeting of the directors
      or of any committee of the directors in person, or by telephone or other
      communications medium, if all directors participating in the meeting are
      able to communicate with each other. A director may participate in a
      meeting of the directors or of any committee of the directors by a
      communications medium other than telephone if all directors participating
      in the meeting, whether in person or by telephone or other
      communications medium, are able to communicate with each other and if all
      directors who wish to participate in the meeting agree to such participation. A
      director who participates in a meeting in a manner contemplated by this Article
      13.4 is deemed for all purposes of the <i>Business Corporations Act</i> and
      these Articles to be present at the meeting and to have agreed to participate in
      that manner<b>. </b></P></TD>
  </TR>
</TABLE>
<p align="center">162</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_150></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>33.5</B> </TD>
    <TD><P align=justify><B>Who may call extraordinary meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A director may call a meeting of the board at any time.
      The secretary, if any, must on request of a director , call a meeting of
      the board.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.6</B> </TD>
    <TD><P align=justify><B>Notice of extraordinary meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to Articles 13.7 and 13.8, if a meeting of the
      board is called under Article 13.5, reasonable notice of that meeting,
      specifying the place, date and time of that meeting, must be given to each
      of the directors</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>by mail addressed to the director&#146;s address as it appears
      on the books of the Company or to any other address provided to the
      Company by the director for this purpose,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>by leaving it at the director&#146;s prescribed address or at
      any other address provided to the Company by the director for this
      purpose, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>orally, by delivery of written notice or by telephone,
      voice mail, e-mail, fax or any other method of legibly transmitting
      messages.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>33.7</B> </TD>
    <TD><P align=justify><B>When notice not required</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>It is not necessary to give notice of a meeting of the
      directors to a director if</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the meeting is to be held immediately following a meeting
      of shareholders at which that director was elected or appointed or is the
      meeting of the directors at which that director is appointed, or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>the director has filed a waiver under Article
      13.9.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>33.8</B> </TD>
    <TD><P align=justify><B>Meeting valid despite failure to give
      notice</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The accidental omission to give notice of any meeting of
      directors to any director, or the non-receipt of any notice by any
      director, does not invalidate any proceedings at that meeting.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.9</B> </TD>
    <TD><P align=justify><B>Waiver of notice of meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any director may file with the Company a document signed
      by the director waiving notice of any past, present or future meeting of
      the directors and may at any time withdraw that waiver with respect to
      meetings of the directors held after that withdrawal.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.10</B> </TD>
    <TD><P align=justify><B>Effect of waiver</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>After a director files a waiver under Article 13.9 with
      respect to future meetings of the directors, and until that waiver is
      withdrawn, notice of any meeting of the directors need not be given to
      that director unless the director otherwise requires in writing to the
      Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.11</B> </TD>
    <TD><P align=justify><B>Quorum</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The quorum necessary for the transaction of the business
      of the directors may be set by the directors and, if not so set, is a
      majority of the directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>33.12</B> </TD>
    <TD><P align=justify><B>If only one director</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If, in accordance with Article 11.1, the number of
      directors is one, the quorum necessary for the transaction of the business
      of the directors is one director, and that director may constitute a
      meeting.</P></TD>
  </TR>
</TABLE>
<p align="center">163</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<A name=page_151></A>
<P align=center><B>PART 34 &#150; COMMITTEES OF DIRECTORS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>34.1</B> </TD>
    <TD><P align=justify><B>Appointment of committees</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The directors may, by resolution, </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>appoint one or more committees consisting of the director
      or directors that they consider appropriate,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>delegate to a committee appointed under paragraph (a) any
      of the directors&#146; powers, except</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>the power to fill vacancies in the board,</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>the power to change the membership of, or fill vacancies
      in, any committee of the board, and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>the power to appoint or remove officers appointed by the
      board, and</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>make any delegation referred to in paragraph (b) subject
      to the conditions set out in the resolution.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>34.2</B> </TD>
    <TD><P align=justify><B>Obligations of committee</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Any committee formed under Article
  14.1, in the exercise of the powers delegated to it, must </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>conform to any rules that may from time to time be
      imposed on it by the directors, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>report every act or thing done in exercise of those
      powers to the earliest meeting of the directors to be held after the act
      or thing has been done.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>34.3</B> </TD>
    <TD><P align=justify><B>Powers of board</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The board may, at any time, </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>revoke the authority given to a committee, or override a
      decision made by a committee, except as to acts done before such
      revocation or overriding,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>terminate the appointment of, or change the membership
      of, a committee, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>fill vacancies in a
      committee,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>34.4</B> </TD>
    <TD><P align=justify><B>Committee meetings</B></P></TD>
  </TR>
</TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Subject to Article 14.2(a), </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>the members of a directors&#146; committee may meet and
      adjourn as they think proper,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>a directors&#146; committee may elect a chair of its meetings
      but, if no chair of the meeting is elected, or if at any meeting the chair
      of the meeting is not present within 15 minutes after the time set for
      holding the meeting, the directors present who are members of the
      committee may choose one of their number to chair the meeting,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>a majority of the members of a directors&#146; committee
      constitutes a quorum of the committee, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>questions arising at any meeting of a directors&#146;
      committee are determined by a majority of votes of the members present,
      and in case of an equality of votes, the chair of the meeting has no
      second or casting vote.</P></TD>
  </TR>
</TABLE>
<p align="center">164</p>
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<A name=page_152></A>
<P align=center><B>PART 35 &#150; OFFICERS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>35.1</B> </TD>
    <TD><P align=justify><B>Appointment of officers</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The board may, from time to time, appoint a president,
      secretary or any other officers that it considers necessary, and none of
      the individuals appointed as officers need be a member of the
      board.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>35.2</B> </TD>
    <TD><P align=justify><B>Functions, duties and powers of officers</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The board may, for each
      officer,</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>determine the functions and duties the officer is to
      perform,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>entrust to and confer on the officer any of the powers
      exercisable by the directors on such terms and conditions and with such
      restrictions as the directors think fit, and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>from time to time revoke, withdraw, alter or vary all or
      any of the functions, duties and powers of the
      officer.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>35.3</B> </TD>
    <TD><P align=justify><B>Remuneration</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>All appointments of officers are to be made on the terms
      and conditions and at the remuneration (whether by way of salary, fee,
      commission, participation in profits or otherwise) that the board thinks
      fit and are subject to termination at the pleasure of the
      board.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 36 &#150; CERTAIN PERMITTED ACTIVITIES OF DIRECTORS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>36.1</B> </TD>
    <TD><P align=justify><B>Other office of director</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A director may hold any office or place of profit with
      the Company (other than the office of auditor of the Company) in addition
      to his or her office of director for the period and on the terms (as to
      remuneration or otherwise) that the directors may determine.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>36.2</B> </TD>
    <TD><P align=justify><B>No disqualification</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No director or intended director is disqualified by his
      or her office from contracting with the Company either with regard to the
      holding of any office or place of profit the director holds with the
      Company or as vendor, purchaser or otherwise.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>36.3</B> </TD>
    <TD><P align=justify><B>Professional services by director or
      officer</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to compliance with the provisions of the <I>Business Corporations Act</I>, a director or officer of the Company, or
      any corporation or firm in which that individual has an interest, may act
      in a professional capacity for the Company, except as auditor of the
      Company, and the director or officer or such corporation or firm is
      entitled to remuneration for professional services as if that individual
      were not a director or officer.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>36.4</B> </TD>
    <TD><P align=justify><B>Remuneration and benefits received from certain
      entities</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A director or officer may be or become a director,
      officer or employee of, or may otherwise be or become interested in, any
      corporation, firm or entity in which the Company may be interested as a
      shareholder or otherwise, and, subject to compliance with the provisions
      of the <I>Business Corporations Act</I>, the director or officer is not
      accountable to the Company for any remuneration or other benefits received
      by him or her as director, officer or employee of, or from his or her
      interest in, such other corporation, firm or
      entity.</P></TD>
  </TR>
</TABLE>
<p align="center">165</p>
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<A name=page_153></A>
<P align=center><B>PART 37 &#150; INDEMNIFICATION</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>37.1</B> </TD>
    <TD><P align=justify><B>Indemnification of directors</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors must cause the Company to indemnify its
      directors and former directors, and their respective heirs and personal or
      other legal representatives to the greatest extent permitted by Division 5
      of Part 5 of the <I>Business Corporations Act</I>.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>37.2</B> </TD>
    <TD><P align=justify><B>Deemed contract</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Each director is deemed to have contracted with the
      Company on the terms of the indemnity referred to in Article
      17.1.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 38 &#150; AUDITOR</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>38.1</B> </TD>
    <TD><P align=justify><B>Remuneration of an auditor</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors may set the remuneration of the auditor of
      the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>38.2</B> </TD>
    <TD><P align=justify><B>Waiver of appointment of an auditor</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company shall not be required to appoint an auditor
      if all of the shareholders of the Company, whether or not their shares
      otherwise carry the right to vote, resolve by a unanimous resolution to
      waive the appointment of an auditor. Such waiver may be given before, on
      or after the date on which an auditor is required to be appointed under
      the <I>Business Corporations Act</I>, and is effective for one financial
      year only.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 39 &#150; DIVIDENDS</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>39.1</B> </TD>
    <TD><P align=justify><B>Declaration of dividends</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to the rights, if any, of shareholders holding
      shares with special rights as to dividends, the directors may from time to
      time declare and authorize payment of any dividends the directors consider
      appropriate.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.2</B> </TD>
    <TD><P align=justify><B>No notice required</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The directors need not give notice to any shareholder of
      any declaration under Article 19.1.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.3</B> </TD>
    <TD><P align=justify><B>Directors may determine when dividend
      payable</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any dividend declared by the directors may be made
      payable on such date as is fixed by the directors.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.4</B> </TD>
    <TD><P align=justify><B>Dividends to be paid in accordance with number of
      shares</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Subject to the rights of shareholders, if any, holding
      shares with special rights as to dividends, all dividends on shares of any
      class or series of shares must be declared and paid according to the
      number of such shares held.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.5</B> </TD>
    <TD><P align=justify><B>Manner of paying dividend</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>A resolution declaring a dividend may direct payment of
      the dividend wholly or partly by the distribution of specific assets or of
      paid up shares or fractional shares, bonds, debentures or other debt
      obligations of the Company, or in any one or more of those ways, and, if
      any difficulty arises in regard to the distribution, the directors may
      settle the difficulty as they consider expedient, and, in particular, may
      set the value for distribution of specific assets.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.6</B> </TD>
    <TD><P align=justify><B>Dividend bears no interest</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No dividend bears interest against the
      Company.</P></TD>
  </TR>
</TABLE>
<p align="center">166</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_154></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>39.7</B> </TD>
    <TD><P align=justify><B>Fractional dividends</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If a dividend to which a shareholder is entitled includes
      a fraction of the smallest monetary unit of the currency of the dividend,
      that fraction may be disregarded in making payment of the dividend and
      that payment represents full payment of the dividend.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>39.8</B> </TD>
    <TD><P align=justify><B>Payment of dividends</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any dividend or other distribution payable in cash in
      respect of shares may be paid by cheque, made payable to the order of the
      person to whom it is sent, and mailed</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>subject to paragraphs (b) and (c), to the address of the
      shareholder,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>subject to paragraph (c), in the case of joint
      shareholders, to the address of the joint shareholder whose name stands
      first on the central securities register in respect of the shares,
      or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>to the person and to the address as the shareholder or
      joint shareholders may direct in writing.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>39.9</B> </TD>
    <TD><P align=justify><B>Receipt by joint shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>If several persons are joint shareholders of any share,
      any one of them may give an effective receipt for any dividend, bonus or
      other money payable in respect of the share.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 40 &#150; ACCOUNTING RECORDS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>40.1</B> </TD>
    <TD><P align=justify><B>Recording of financial affairs</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The board must cause adequate accounting records to be
      kept to record properly the financial affairs and condition of the Company
      and to comply with the provisions of the <I>Business Corporations
        Act</I>.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 41 &#150; EXECUTION OF INSTRUMENTS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>41.1</B> </TD>
    <TD><P align=justify><B>Who may attest seal</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Company&#146;s seal, if any, must not be impressed on any
      record except when that impression is attested by the signature or
      signatures of</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>any 2 directors,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>any officer, together with any director,</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>if the Company has only one director, that director,
      or</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>any one or more directors or officers or persons as may
      be determined by resolution of the directors.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>41.2</B> </TD>
    <TD><P align=justify><B>Sealing copies</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>For the purpose of certifying under seal a true copy of
      any resolution or other document, the seal must be impressed on that copy
      and, despite Article 21.1, may be attested by the signature of any
      director or officer.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>41.3</B> </TD>
    <TD><P align=justify><B>Execution of documents not under seal</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Any instrument, document or agreement for which the seal
      need not be affixed may be executed for and on behalf of and in the name
      of the Company by any one director or officer of the Company, or by any
      other person appointed by the directors for such
      purpose.</P></TD>
  </TR>
</TABLE>
<p align="center">167</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<A name=page_155></A>
<P align=center><B>PART 42 &#150; NOTICES </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>42.1</B> </TD>
    <TD><P align=justify><B>Method of giving notice</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Unless the <I>Business Corporations Act </I>or these
      Articles provides otherwise, a notice, statement, report other record
      required or permitted by the <I>Business Corporations Act </I>or these
      Articles to be sent by or person may be sent by any one of the following
      methods:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>mail addressed to the person at the applicable address
      for that person as follows:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>for a record mailed to a shareholder, the shareholder&#146;s
      registered address;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>for a record mailed to a director or officer, the
      prescribed address for mailing shown for the director or officer in the
      records kept by the Company or the mailing address provided by the
      recipient for the sending of that record or records of that
      class;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>in any other case, the mailing address of the intended
      recipient;</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>delivery at the applicable address for that person as
      follows, addressed to the person:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>for a record delivered to a shareholder, the
      shareholder&#146;s registered address;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>for a record delivered to a director or officer, the
      prescribed address for delivery shown for the director or officer in the
      records kept by the Company or the delivery address provided by the
      recipient for the sending of that record or records of that
      class;</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD><P align=justify>in any other case, the delivery address of the intended
      recipient;</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>sending the record by fax to the fax number provided by
      the intended recipient for the sending of that record or records of that
      class;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD><P align=justify>sending the record by email to the email address provided
      by the intended recipient for the sending of that record or records of
      that class;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(e) </TD>
    <TD><P align=justify>physical delivery to the intended
      recipient.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>42.2</B> </TD>
    <TD><P align=justify><B>Deemed receipt of mailing</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A record that is mailed to a person by ordinary mail to
      the applicable address for that person referred to in Article 22.1 is
      deemed to be received by the person to whom it was mailed on the day,
      Saturdays, Sundays and holidays excepted, following the date of
      mailing.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>42.3</B> </TD>
    <TD><P align=justify><B>Certificate of sending</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A certificate signed by the secretary, if any, or other
      officer of the Company or of any other corporation acting in that behalf
      for the Company stating that a notice, statement, report or other record
      was addressed as required by Article 22.1, prepaid and mailed or otherwise
      sent as permitted by Article 22.1 is conclusive evidence of that
      fact.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>42.4</B> </TD>
    <TD><P align=justify><B>Notice to joint shareholders</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A notice, statement, report or other record may be
      provided by the Company to the joint registered shareholders of a share by
      providing the notice to the joint registered shareholder first named in
      the central securities register in respect of the share.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>42.5</B> </TD>
    <TD><P align=justify><B>Notice to trustees</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD><P align=justify>&nbsp;</P></TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top><P align=justify>A notice, statement, report or other record may be
      provided by the Company to the persons entitled to a share in consequence
      of the death, bankruptcy or incapacity of a shareholder
      by:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>mailing the record, addressed to
      them:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD><P align=justify>by name, by the title of the legal personal
      representative of the deceased or incapacitated shareholder, by the title
      of trustee of the bankrupt shareholder or by any similar description;
      and</P></TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD><P align=justify>at the address, if any, supplied to the Company for that
      purpose by the persons claiming to be so entitled;
      or</P></TD>
  </TR>
</TABLE>
<br>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>if an address referred to in Article 22.5(a)(ii) has not
      been supplied to the Company, by giving the notice in a manner in which it
      might have been given if the death, bankruptcy or incapacity had not
      occurred.</P></TD>
  </TR>
</TABLE>
<p align="center">168</p>
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<A name=page_156></A>
<P align=center><B>PART 43 &#150; RESTRICTION ON SHARE TRANSFER </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>43.1</B> </TD>
    <TD><P align=justify><B>Application</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Article 23.2 does not apply to the Company if and for so
      long as it is a public company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%"><B>43.2</B> </TD>
    <TD><P align=justify><B>Consent required for transfer</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>No shares may be sold, transferred or otherwise disposed
      of without the consent of the directors and directors are not required to
      give any reason for refusing to consent to any such sale, transfer or
      disposition.</P></TD>
  </TR>
</TABLE>
<P align=center><B>PART 44 &#150; SPECIAL RIGHTS AND RESTRICTIONS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>44.1</B> </TD>
    <TD><P align=justify><B>Preferred shares issuable in series</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The Preferred shares may include one or more series and,
      subject to the <I>Business Corporations Act</I>, the directors may, by
      resolution, if none of the shares of any particular series are issued,
      alter the Articles of the Company and authorize the alteration of the
      Notice of Articles of the Company, as the case may be, to do one or more
      of the following:</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD><P align=justify>determine the maximum number of shares of that series
      that the Company is authorized to issue, determine that there is no such
      maximum number, or alter any such determination;</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD><P align=justify>create an identifying name for the shares of that series,
      or alter any such identifying name; and</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD><P align=justify>attach special rights or restrictions to the shares of
      that series, or alter any such special rights or
      restrictions.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>44.2</B> </TD>
    <TD><P align=justify><B>Dissolution or winding up</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>The holders of Preferred shares shall be entitled, on the
      liquidation or dissolution of the Company, whether voluntary or
      involuntary, or on any other distribution of its assets among its
      shareholders for the purpose of winding up its affairs, to receive, before
      any distribution is made to the holders of Common shares or any other
      shares of the Company ranking junior to the Preferred shares with respect
      to the repayment of capital on the liquidation or dissolution of the
      Company, whether voluntary or involuntary, or on any other distribution of
      its assets among its shareholders for the purpose of winding up its
      affairs, the amount paid up with respect to each Preferred share held by
      them, together with the fixed premium (if any) thereon, all accrued and
      unpaid cumulative dividends (if any and if preferential) thereon, which
      for such purpose shall be calculated as if such dividends were accruing on
      a day-to-day basis up to the date of such distribution, whether or not
      earned or declared, and all declared and unpaid non-cumulative dividends
      (if any and if preferential) thereon. After payment to the holders of the
      Preferred shares of the amounts so payable to them, they shall not, as
      such, be entitled to share in any further distribution of the property or
      assets of the Company, except as specifically provided in the special
      rights and restrictions attached to any particular series. All assets
      remaining after payment to the holders of Preferred shares as aforesaid
      shall be distributed rateably among the holders of the Common
      shares.</P></TD>
  </TR>
</TABLE>
<p align="center">169</p>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%"><B>44.3</B> </TD>
    <TD><P align=justify><B>Preferred shares do not confer right to receive notice
      of, attend or vote at general meetings</B></P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD><P align=justify>Except for such rights relating to the election of
      directors on a default in payment of dividends as may be attached to any
      series of the Preferred shares by the directors, holders of Preferred
      shares shall not be entitled, as such, to receive notice of, or to attend
      or vote at, any general meeting of shareholders of the
      Company.</P></TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD style="BORDER-TOP: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left>Full Name and Signature of Authorized Signatory: </TD>
    <TD
    style="BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="49%">Date of Signing </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD style="BORDER-LEFT: #000000 1px solid" width="49%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>CHRIS BUNKA</B> </TD>
    <TD style="BORDER-LEFT: #000000 1px solid" align=left width="49%">&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD style="BORDER-LEFT: #000000 1px solid" width="49%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
    <TD style="BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="49%"><BR>
      , </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Authorized Signatory for </TD>
    <TD style="BORDER-LEFT: #000000 1px solid" align=left width="49%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>LEXARIA
      BIOSCIENCE CORP.</B> </TD>
    <TD style="BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    align=left width="49%">&nbsp;</TD>
  </TR>
</TABLE>
<p align="center">170</p>
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<A name=page_158></A>
<P align=center><B>SCHEDULE &#147;B&#148; </B></P>
<P align=center><B>NEVADA REVISED STATUTES </B></P>
<P align=center><B>CHAPTER 92A - MERGERS, CONVERSIONS, EXCHANGES AND
  DOMESTICATIONS </B></P>
<P align=center><B>RIGHTS OF DISSENTING OWNERS </B></P>
<P align=justify style="text-indent:5%"><B>NRS 92A.300 Definitions. </B>As used in <U><FONT color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive, unless the context otherwise
  requires, the words and terms defined in <U><FONT color=#800080>NRS
    92A.305</FONT></U> to <U><FONT color=#800080>92A.335</FONT></U>, inclusive, have
  the meanings ascribed to them in those sections. (Added to NRS by <U><FONT
color=#800080>1995, 2086</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.305 &#147;Beneficial
  stockholder&#148; defined. </B>&#147;Beneficial stockholder&#148; means a person who is a
  beneficial owner of shares held in a voting trust or by a nominee as the
  stockholder of record. (Added to NRS by <U><FONT color=#800080>1995,
    2087</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.310 &#147;Corporate action&#148;
  defined. </B>&#147;Corporate action&#148; means the action of a domestic corporation.
  (Added to NRS by <U><FONT color=#800080>1995, 2087</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.315 &#147;Dissenter&#148;
  defined. </B>&#147;Dissenter&#148; means a stockholder who is entitled to dissent from a
  domestic corporation&#146;s action under <U><FONT color=#800080>NRS
    92A.380</FONT></U> and who exercises that right when and in the manner required
  by <U><FONT color=#800080>NRS 92A.400</FONT></U> to <U><FONT
color=#800080>92A.480</FONT></U>, inclusive. (Added to NRS by <U><FONT
color=#800080>1995, 2087</FONT></U>; A <U><FONT color=#800080>1999,
    1631</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.320 &#147;Fair value&#148;
  defined. </B>&#147;Fair value,&#148; with respect to a dissenter&#146;s shares, means the value
  of the shares determined: </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Immediately before the effectuation of the corporate action to which the
  dissenter objects, excluding any appreciation or depreciation in anticipation of
  the corporate action unless exclusion would be inequitable; </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Using
  customary and current valuation concepts and techniques generally employed for
  similar businesses in the context of the transaction requiring appraisal; and </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Without discounting for lack of marketability or minority status. (Added to NRS
  by <U><FONT color=#800080>1995, 2087</FONT></U>; A <U><FONT
color=#800080>2009,</FONT></U> <U><FONT color=#800080>1720</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.325 &#147;Stockholder&#148;
  defined. </B>&#147;Stockholder&#148; means a stockholder of record or a beneficial
  stockholder of a domestic corporation. (Added to NRS by <U><FONT
color=#800080>1995, 2087</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.330 &#147;Stockholder of
  record&#148; defined. </B>&#147;Stockholder of record&#148; means the person in whose name
  shares are registered in the records of a domestic corporation or the beneficial
  owner of shares to the extent of the rights granted by a nominee&#146;s certificate
  on file with the domestic corporation. (Added to NRS by <U><FONT
color=#800080>1995, 2087</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.335 &#147;Subject
  corporation&#148; defined. </B>&#147;Subject corporation&#148; means the domestic corporation
  which is the issuer of the shares held by a dissenter before the corporate
  action creating the dissenter&#146;s rights becomes effective or the surviving or
  acquiring entity of that issuer after the corporate action becomes effective.
  (Added to NRS by <U><FONT color=#800080>1995, 2087</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.340 Computation of
  interest. </B>Interest payable pursuant to <U><FONT color=#800080>NRS
    92A.300</FONT></U> to <U><FONT color=#800080>92A.500</FONT></U>, inclusive, must
  be computed from the effective date of the action until the date of payment, at
  the rate of interest most recently established pursuant to <U><FONT
color=#800080>NRS 99.040</FONT></U>. (Added to NRS by <U><FONT
color=#800080>1995, 2087</FONT></U>; A <U><FONT color=#800080>2009,
    1721</FONT></U>) </P>
<P align=center style="text-indent:0%">171</P>
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<P align=justify style="text-indent:5%"><B>NRS 92A.350 Rights of
  dissenting partner of domestic limited partnership. </B>A partnership agreement
  of a domestic limited partnership or, unless otherwise provided in the
  partnership agreement, an agreement of merger or exchange, may provide that
  contractual rights with respect to the partnership interest of a dissenting
  general or limited partner of a domestic limited partnership are available for
  any class or group of partnership interests in connection with any merger or
  exchange in which the domestic limited partnership is a constituent entity.
  (Added to NRS by <U><FONT color=#800080>1995, 2088</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.360 Rights of
  dissenting member of domestic limited-liability company. </B>The articles of
  organization or operating agreement of a domestic limited-liability company or,
  unless otherwise provided in the articles of organization or operating
  agreement, an agreement of merger or exchange, may provide that contractual
  rights with respect to the interest of a dissenting member are available in
  connection with any merger or exchange in which the domestic limited-liability
  company is a constituent entity. (Added to NRS by <U><FONT color=#800080>1995,
    2088</FONT></U>) </P>
<P align=justify style="text-indent:5%"><STRONG>NRS 92A.370 Rights of
  dissenting member of domestic nonprofit corporation.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Except as otherwise provided in subsection 2, and unless otherwise provided in
  the articles or bylaws, any member of any constituent domestic nonprofit
  corporation who voted against the merger may, without prior notice, but within
  30 days after the effective date of the merger, resign from membership and is
  thereby excused from all contractual obligations to the constituent or surviving
  corporations which did not occur before the member&#146;s resignation and is thereby
  entitled to those rights, if any, which would have existed if there had been no
  merger and the membership had been terminated or the member had been expelled. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
  otherwise provided in its articles of incorporation or bylaws, no member of a
  domestic nonprofit corporation, including, but not limited to, a cooperative
  corporation, which supplies services described in <U><FONT
color=#800080>chapter</FONT></U> <U><FONT color=#800080>704</FONT></U> of NRS to
  its members only, and no person who is a member of a domestic nonprofit
  corporation as a condition of or by reason of the ownership of an interest in
  real property, may resign and dissent pursuant to subsection 1. (Added to NRS by <U><FONT color=#800080>1995, 2088</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.380 Right of
  stockholder to dissent from certain corporate actions and to obtain payment for
  shares.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
  as otherwise provided in <U><FONT color=#800080>NRS 92A.370</FONT></U> and <U><FONT color=#800080>92A.390</FONT></U> and subject to the limitation in
  paragraph (f), any stockholder is entitled to dissent from, and obtain payment
  of the fair value of the stockholder&#146;s shares in the event of any of the
  following corporate actions: </P>
<P align=justify style="text-indent:5%">(a) Consummation of a plan of
  merger to which the domestic corporation is a constituent entity: </P>
<P align=justify style="text-indent:10%">(1)
  If approval by the stockholders is required for the merger by <U><FONT
color=#800080>NRS 92A.120</FONT></U> to <U><FONT
color=#800080>92A.160</FONT></U>, inclusive, or the articles of incorporation,
  regardless of whether the stockholder is entitled to vote on the plan of merger;
  or </P>
<P align=justify style="text-indent:10%">(2)
  If the domestic corporation is a subsidiary and is merged with its parent
  pursuant to <U><FONT color=#800080>NRS 92A.180</FONT></U>. </P>
<P align=justify style="text-indent:5%">(b) Consummation of a plan of
  conversion to which the domestic corporation is a constituent entity as the
  corporation whose subject owner&#146;s interests will be converted. </P>
<P align=justify style="text-indent:5%">(c) Consummation of a plan of
  exchange to which the domestic corporation is a constituent entity as the
  corporation whose subject owner&#146;s interests will be acquired, if the
  stockholder&#146;s shares are to be acquired in the plan of exchange. </P>
<P align=justify style="text-indent:5%">(d) Any corporate action taken
  pursuant to a vote of the stockholders to the extent that the articles of
  incorporation, bylaws or a resolution of the board of directors provides that
  voting or nonvoting stockholders are entitled to dissent and obtain payment for
  their shares. </P>
<P align=justify style="text-indent:5%">(e) Accordance of full voting
  rights to control shares, as defined in NRS 78.3784, only to the extent provided
  for pursuant to <U><FONT color=#800080>NRS 78.3793</FONT></U>. </P>
<p align="center">172</p>
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<P align=justify style="text-indent:5%">(f) Any corporate action not
  described in this subsection that will result in the stockholder receiving money
  or scrip instead of a fraction of a share except where the stockholder would not
  be entitled to receive such payment pursuant to <U><FONT color=#800080>NRS
    78.205</FONT></U>, <U><FONT color=#800080>78.2055</FONT></U> or <U><FONT
color=#800080>78.207</FONT></U>. A dissent pursuant to this paragraph applies
  only to the fraction of a share, and the stockholder is entitled only to obtain
  payment of the fair value of the fraction of a share. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  stockholder who is entitled to dissent and obtain payment pursuant to <U><FONT
color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive, may not challenge the corporate
  action creating the entitlement unless the action is unlawful or fraudulent with
  respect to the stockholder or the domestic corporation. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
  to the limitations in this subsection, from and after the effective date of any
  corporate action described in subsection 1, no stockholder who has exercised the
  right to dissent pursuant to <U><FONT color=#800080>NRS</FONT></U> <U><FONT
color=#800080>92A.300</FONT></U> to <U><FONT color=#800080>92A.500</FONT></U>,
  inclusive, is entitled to vote his or her shares for any purpose or to receive
  payment of dividends or any other distributions on shares. This subsection does
  not apply to dividends or other distributions payable to stockholders on a date
  before the effective date of any corporate action from which the stockholder has
  dissented. If a stockholder exercises the right to dissent with respect to a
  corporate action described in paragraph (f) of subsection 1, the restrictions of
  this subsection apply only to the shares to be converted into a fraction of a
  share and the dividends and distributions to those shares. (Added to NRS by <U><FONT color=#800080>1995, 2087</FONT></U>; A <U><FONT color=#800080>2001,
    1414</FONT></U>, <U><FONT color=#800080>3199</FONT></U>; <U><FONT
color=#800080>2003,</FONT></U> <U><FONT color=#800080>3189</FONT></U>; <U><FONT
color=#800080>2005, 2204</FONT></U>; <U><FONT color=#800080>2007,
      2438</FONT></U>; <U><FONT color=#800080>2009, 1721</FONT></U>; <U><FONT
color=#800080>2011, 2814</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.390 Limitations on
  right of dissent: Stockholders of certain classes or series; action of
  stockholders not required for plan of merger.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
  is no right of dissent with respect to a plan of merger, conversion or exchange
  in favor of stockholders of any class or series which is: </P>
<P align=justify style="text-indent:5%">(a) A covered security under
  section 18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. &#167;
  77r(b)(1)(A) or (B), as amended; </P>
<P align=justify style="text-indent:5%">(b) Traded in an organized market
  and has at least 2,000 stockholders and a market value of at least $20,000,000,
  exclusive of the value of such shares held by the corporation&#146;s subsidiaries,
  senior executives, directors and beneficial stockholders owning more than 10
  percent of such shares; or </P>
<P align=justify style="text-indent:5%">(c) Issued by an open end
  management investment company registered with the Securities and Exchange
  Commission under the Investment Company Act of 1940, 15 U.S.C. &#167;&#167; 80a-1 et seq.,
  as amended, and which may be redeemed at the option of the holder at net asset
  value, </P>
<P align=justify>&#10149; unless the articles of incorporation of the
  corporation issuing the class or series or the resolution of the board of
  directors approving the plan of merger, conversion or exchange expressly provide
  otherwise. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  applicability of subsection 1 must be determined as of: </P>
<P align=justify style="text-indent:5%">(a) The record date fixed to
  determine the stockholders entitled to receive notice of and to vote at the
  meeting of stockholders to act upon the corporate action requiring dissenter&#146;s
  rights; or </P>
<P align=justify style="text-indent:5%">(b) The day before the effective
  date of such corporate action if there is no meeting of stockholders. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsection
  1 is not applicable and dissenter&#146;s rights are available pursuant to <U><FONT
color=#800080>NRS 92A.380</FONT></U> for the holders of any class or series of
  shares who are required by the terms of the corporate action requiring
  dissenter&#146;s rights to accept for such shares anything other than cash or shares
  of any class or any series of shares of any corporation, or any other
  proprietary interest of any other entity, that satisfies the standards set forth
  in subsection 1 at the time the corporate action becomes effective. </P>
<P align=justify style="text-indent:5%">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
  is no right of dissent for any holders of stock of the surviving domestic
  corporation if the plan of merger does not require action of the stockholders of
  the surviving domestic corporation under <U><FONT color=#800080>NRS
    92A.130</FONT></U>. </P>
<p align="center">173</p>
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<P align=justify style="text-indent:5%">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
  is no right of dissent for any holders of stock of the parent domestic
  corporation if the plan of merger does not require action of the stockholders of
  the parent domestic corporation under <U><FONT color=#800080>NRS
    92A.180</FONT></U>. (Added to NRS by <U><FONT color=#800080>1995,
      2088</FONT></U>; A <U><FONT color=#800080>2009, 1722</FONT></U>; <U><FONT
color=#800080>2013, 1285</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.400 Limitations on
  right of dissent: Assertion as to portions only to shares registered to
  stockholder; assertion by beneficial stockholder.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  stockholder of record may assert dissenter&#146;s rights as to fewer than all of the
  shares registered in his or her name only if the stockholder of record dissents
  with respect to all shares of the class or series beneficially owned by any one
  person and notifies the subject corporation in writing of the name and address
  of each person on whose behalf the stockholder of record asserts dissenter&#146;s
  rights. The rights of a partial dissenter under this subsection are determined
  as if the shares as to which the partial dissenter dissents and his or her other
  shares were registered in the names of different stockholders. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  beneficial stockholder may assert dissenter&#146;s rights as to shares held on his or
  her behalf only if the beneficial stockholder: </P>
<P align=justify style="text-indent:5%">(a) Submits to the subject
  corporation the written consent of the stockholder of record to the dissent not
  later than the time the beneficial stockholder asserts dissenter&#146;s rights; and </P>
<P align=justify style="text-indent:5%">(b) Does so with respect to all
  shares of which he or she is the beneficial stockholder or over which he or she
  has power to direct the vote. (Added to NRS by <U><FONT color=#800080>1995,
    2089</FONT></U>; A <U><FONT color=#800080>2009, 1723</FONT></U>) </P>
<P align=justify style="text-indent:5%"><STRONG>NRS 92A.410 Notification
  of stockholders regarding right of dissent.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  a proposed corporate action creating dissenter&#146;s rights is submitted to a vote
  at a stockholders&#146; meeting, the notice of the meeting must state that
  stockholders are, are not or may be entitled to assert dissenter&#146;s rights under <U><FONT color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive. If the domestic corporation
  concludes that dissenter&#146;s rights are or may be available, a copy of <U><FONT
color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive, must accompany the meeting notice
  sent to those record stockholders entitled to exercise dissenter&#146;s rights. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  the corporate action creating dissenter&#146;s rights is taken by written consent of
  the stockholders or without a vote of the stockholders, the domestic corporation
  shall notify in writing all stockholders entitled to assert dissenter&#146;s rights
  that the action was taken and send them the dissenter&#146;s notice described in <U><FONT color=#800080>NRS 92A.430</FONT></U>. (Added to NRS by <U><FONT
color=#800080>1995, 2089</FONT></U>; A <U><FONT color=#800080>1997,
    730</FONT></U>; <U><FONT color=#800080>2009, 1723</FONT></U>; <U><FONT
color=#800080>2013, 1286</FONT></U>) </P>
<P align=justify style="text-indent:5%"><STRONG>NRS 92A.420 Prerequisites
  to demand for payment for shares.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  a proposed corporate action creating dissenter&#146;s rights is submitted to a vote
  at a stockholders&#146; meeting, a stockholder who wishes to assert dissenter&#146;s
  rights with respect to any class or series of shares: </P>
<P align=justify style="text-indent:5%">(a) Must deliver to the subject
  corporation, before the vote is taken, written notice of the stockholder&#146;s
  intent to demand payment for his or her shares if the proposed action is
  effectuated; and </P>
<P align=justify style="text-indent:5%">(b) Must not vote, or cause or
  permit to be voted, any of his or her shares of such class or series in favor of
  the proposed action. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  a proposed corporate action creating dissenter&#146;s rights is taken by written
  consent of the stockholders, a stockholder who wishes to assert dissenter&#146;s
  rights with respect to any class or series of shares must not consent to or
  approve the proposed corporate action with respect to such class or series. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  stockholder who does not satisfy the requirements of subsection 1 or 2 and <U><FONT color=#800080>NRS 92A.400</FONT></U> is not entitled to payment for his
  or her shares under this chapter. (Added to NRS by <U><FONT color=#800080>1995,
    2089</FONT></U>; A <U><FONT color=#800080>1999, 1631</FONT></U>; <U><FONT
color=#800080>2005, 2204</FONT></U>; <U><FONT color=#800080>2009,</FONT></U> <U><FONT color=#800080>1723</FONT></U>; <U><FONT color=#800080>2013,
      1286</FONT></U>) </P>
<p align="center">174</p>
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<P align=justify style="text-indent:5%"><STRONG>NRS 92A.430 Dissenter&#146;s
  notice: Delivery to stockholders entitled to assert rights; contents.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  subject corporation shall deliver a written dissenter&#146;s notice to all
  stockholders of record entitled to assert dissenter&#146;s rights in whole or in
  part, and any beneficial stockholder who has previously asserted dissenter&#146;s
  rights pursuant to <U><FONT color=#800080>NRS 92A.400</FONT></U>. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  dissenter&#146;s notice must be sent no later than 10 days after the effective date
  of the corporate action specified in <U><FONT color=#800080>NRS
    92A.380</FONT></U>, and must: </P>
<P align=justify style="text-indent:5%">(a) State where the demand for
  payment must be sent and where and when certificates, if any, for shares must be
  deposited; </P>
<P align=justify style="text-indent:5%">(b) Inform the holders of shares
  not represented by certificates to what extent the transfer of the shares will
  be restricted after the demand for payment is received; </P>
<P align=justify style="text-indent:5%">(c) Supply a form for demanding
  payment that includes the date of the first announcement to the news media or to
  the stockholders of the terms of the proposed action and requires that the
  person asserting dissenter&#146;s rights certify whether or not the person acquired
  beneficial ownership of the shares before that date; </P>
<P align=justify style="text-indent:5%">(d) Set a date by which the
  subject corporation must receive the demand for payment, which may not be less
  than 30 nor more than 60 days after the date the notice is delivered and state
  that the stockholder shall be deemed to have waived the right to demand payment
  with respect to the shares unless the form is received by the subject
  corporation by such specified date; and </P>
<P align=justify style="text-indent:5%">(e) Be accompanied by a copy of <U><FONT color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive. (Added to NRS by <U><FONT
color=#800080>1995, 2089</FONT></U>; A <U><FONT color=#800080>2005,</FONT></U> <U><FONT color=#800080>2205</FONT></U>; <U><FONT color=#800080>2009,
  1724</FONT></U>; <U><FONT color=#800080>2013, 1286</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.440 Demand for payment
  and deposit of certificates; loss of rights of stockholder; withdrawal from
  appraisal process.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  stockholder who receives a dissenter&#146;s notice pursuant to <U><FONT
color=#800080>NRS 92A.430</FONT></U> and who wishes to exercise dissenter&#146;s
  rights must: </P>
<P align=justify style="text-indent:5%">(a) Demand payment; </P>
<P align=justify style="text-indent:5%">(b) Certify whether the
  stockholder or the beneficial owner on whose behalf he or she is dissenting, as
  the case may be, acquired beneficial ownership of the shares before the date
  required to be set forth in the dissenter&#146;s notice for this certification; and </P>
<P align=justify style="text-indent:5%">(c) Deposit the stockholder&#146;s
  certificates, if any, in accordance with the terms of the notice. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  a stockholder fails to make the certification required by paragraph (b) of
  subsection 1, the subject corporation may elect to treat the stockholder&#146;s
  shares as after-acquired shares under <U><FONT color=#800080>NRS
    92A.470</FONT></U>. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Once
  a stockholder deposits that stockholder&#146;s certificates or, in the case of
  uncertified shares makes demand for payment, that stockholder loses all rights
  as a stockholder, unless the stockholder withdraws pursuant to subsection 4. </P>
<P align=justify style="text-indent:5%">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  A stockholder who has complied with subsection 1 may nevertheless decline to
  exercise dissenter&#146;s rights and withdraw from the appraisal process by so
  notifying the subject corporation in writing by the date set forth in the
  dissenter&#146;s notice pursuant to <U><FONT color=#800080>NRS 92A.430</FONT></U>. A
  stockholder who fails to so withdraw from the appraisal process may not
  thereafter withdraw without the subject corporation&#146;s written consent. </P>
<P align=center style="text-indent:0%">175</P>
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<P align=justify style="text-indent:5%">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  stockholder who does not demand payment or deposit his or her certificates where
  required, each by the date set forth in the dissenter&#146;s notice, is not entitled
  to payment for his or her shares under this chapter. (Added to NRS by <U><FONT
color=#800080>1995, 2090</FONT></U>; A <U><FONT color=#800080>1997,
    730</FONT></U>; <U><FONT color=#800080>2003, 3189</FONT></U>; <U><FONT
color=#800080>2009, 1724</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.450 Uncertificated
  shares: Authority to restrict transfer after demand for payment. </B>The subject
  corporation may restrict the transfer of shares not represented by a certificate
  from the date the demand for their payment is received. (Added to NRS by <U><FONT color=#800080>1995, 2090</FONT></U>; A <U><FONT color=#800080>2009,
    1725</FONT></U>) </P>
<P align=justify style="text-indent:5%"><STRONG>NRS 92A.460 Payment for
  shares: General requirements.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Except as otherwise provided in <U><FONT color=#800080>NRS 92A.470</FONT></U>,
  within 30 days after receipt of a demand for payment pursuant to <U><FONT
color=#800080>NRS 92A.440</FONT></U>, the subject corporation shall pay in cash
  to each dissenter who complied with <U><FONT color=#800080>NRS</FONT></U> <U><FONT color=#800080>92A.440</FONT></U> the amount the subject corporation
  estimates to be the fair value of the dissenter&#146;s shares, plus accrued interest.
  The obligation of the subject corporation under this subsection may be enforced
  by the district court: </P>
<P align=justify style="text-indent:5%">(a) Of the county where the
  subject corporation&#146;s principal office is located; </P>
<P align=justify style="text-indent:5%">(b) If the subject corporation&#146;s
  principal office is not located in this State, in the county in which the
  corporation&#146;s registered office is located; or </P>
<P align=justify style="text-indent:5%">(c) At the election of any
  dissenter residing or having its principal or registered office in this State,
  of the county where the dissenter resides or has its principal or registered
  office. </P>
<P align=justify>The court shall dispose of the complaint promptly. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  payment must be accompanied by: </P>
<P align=justify style="text-indent:5%">(a) The subject corporation&#146;s
  balance sheet as of the end of a fiscal year ending not more than 16 months
  before the date of payment, a statement of income for that year, a statement of
  changes in the stockholders&#146; equity for that year or, where such financial
  statements are not reasonably available, then such reasonably equivalent
  financial information and the latest available quarterly financial statements,
  if any; </P>
<P align=justify style="text-indent:5%">(b) A statement of the subject
  corporation&#146;s estimate of the fair value of the shares; and </P>
<P align=justify style="text-indent:5%">(c) A statement of the
  dissenter&#146;s rights to demand payment under <U><FONT color=#800080>NRS
    92A.480</FONT></U> and that if any such stockholder does not do so within the
  period specified, such stockholder shall be deemed to have accepted such payment
  in full satisfaction of the corporation&#146;s obligations under this chapter. (Added
  to NRS by <U><FONT color=#800080>1995, 2090</FONT></U>; A <U><FONT
color=#800080>2007, 2704</FONT></U>; <U><FONT color=#800080>2009,
    1725</FONT></U>; <U><FONT color=#800080>2013, 1287</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.470 Withholding
  payment for shares acquired on or after date of dissenter&#146;s notice: General
  requirements.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  subject corporation may elect to withhold payment from a dissenter unless the
  dissenter was the beneficial owner of the shares before the date set forth in
  the dissenter&#146;s notice as the first date of any announcement to the news media
  or to the stockholders of the terms of the proposed action. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
  the extent the subject corporation elects to withhold payment, within 30 days
  after receipt of a demand for payment pursuant to <U><FONT color=#800080>NRS
    92A.440</FONT></U>, the subject corporation shall notify the dissenters
  described in subsection 1: </P>
<P align=justify style="text-indent:5%">(a) Of the information required
  by paragraph (a) of subsection 2 of <U><FONT color=#800080>NRS
    92A.460</FONT></U>; </P>
<P align=justify style="text-indent:5%">(b) Of the subject corporation&#146;s
  estimate of fair value pursuant to paragraph (b) of subsection 2 of <U><FONT
color=#800080>NRS</FONT></U> <U><FONT color=#800080>92A.460</FONT></U>; </P>
<p align="center">176</p>
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<P align=justify style="text-indent:5%">(c) That they may accept the
  subject corporation&#146;s estimate of fair value, plus interest, in full
  satisfaction of their demands or demand appraisal under <U><FONT
color=#800080>NRS 92A.480</FONT></U>; </P>
<P align=justify style="text-indent:5%">(d) That those stockholders who
  wish to accept such an offer must so notify the subject corporation of their
  acceptance of the offer within 30 days after receipt of such offer; and </P>
<P align=justify style="text-indent:5%">(e) That those stockholders who
  do not satisfy the requirements for demanding appraisal under <U><FONT
color=#800080>NRS</FONT></U> <U><FONT color=#800080>92A.480</FONT></U> shall be
  deemed to have accepted the subject corporation&#146;s offer. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Within 10 days after receiving the stockholder&#146;s acceptance pursuant to
  subsection 2, the subject corporation shall pay in cash the amount offered under
  paragraph (b) of subsection 2 to each stockholder who agreed to accept the
  subject corporation&#146;s offer in full satisfaction of the stockholder&#146;s demand. </P>
<P align=justify style="text-indent:5%">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within
  40 days after sending the notice described in subsection 2, the subject
  corporation shall pay in cash the amount offered under paragraph (b) of
  subsection 2 to each stockholder described in paragraph (e) of subsection 2.
  (Added to NRS by <U><FONT color=#800080>1995, 2091</FONT></U>; A <U><FONT
color=#800080>2009, 1725</FONT></U>; <U><FONT color=#800080>2013,
    1287</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.480 Dissenter&#146;s
  estimate of fair value: Notification of subject corporation; demand for payment
  of estimate.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  dissenter paid pursuant to <U><FONT color=#800080>NRS 92A.460</FONT></U> who is
  dissatisfied with the amount of the payment may notify the subject corporation
  in writing of the dissenter&#146;s own estimate of the fair value of his or her
  shares and the amount of interest due, and demand payment of such estimate, less
  any payment pursuant to <U><FONT color=#800080>NRS 92A.460</FONT></U>. A
  dissenter offered payment pursuant to <U><FONT color=#800080>NRS
    92A.470</FONT></U> who is dissatisfied with the offer may reject the offer
  pursuant to <U><FONT color=#800080>NRS 92A.470</FONT></U> and demand payment of
  the fair value of his or her shares and interest due. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  dissenter waives the right to demand payment pursuant to this section unless the
  dissenter notifies the subject corporation of his or her demand to be paid the
  dissenter&#146;s stated estimate of fair value plus interest under subsection 1 in
  writing within 30 days after receiving the subject corporation&#146;s payment or
  offer of payment under <U><FONT color=#800080>NRS 92A.460</FONT></U> or <U><FONT
color=#800080>92A.470</FONT></U> and is entitled only to the payment made or
  offered. (Added to NRS by <U><FONT color=#800080>1995,</FONT></U> <U><FONT
color=#800080>2091</FONT></U>; A <U><FONT color=#800080>2009, 1726</FONT></U>) </P>
<P align=justify style="text-indent:5%"><B>NRS 92A.490 Legal proceeding
  to determine fair value: Duties of subject corporation; powers of court; rights
  of dissenter.</B> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  a demand for payment pursuant to <U><FONT color=#800080>NRS 92A.480</FONT></U> remains unsettled, the subject corporation shall commence a proceeding within 60
  days after receiving the demand and petition the court to determine the fair
  value of the shares and accrued interest. If the subject corporation does not
  commence the proceeding within the 60-day period, it shall pay each dissenter
  whose demand remains unsettled the amount demanded by each dissenter pursuant to <U><FONT color=#800080>NRS 92A.480</FONT></U> plus interest. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
  subject corporation shall commence the proceeding in the district court of the
  county where its principal office is located in this State. If the principal
  office of the subject corporation is not located in this State, the right to
  dissent arose from a merger, conversion or exchange and the principal office of
  the surviving entity, resulting entity or the entity whose shares were acquired,
  whichever is applicable, is located in this State, it shall commence the
  proceeding in the county where the principal office of the surviving entity,
  resulting entity or the entity whose shares were acquired is located. In all
  other cases, if the principal office of the subject corporation is not located
  in this State, the subject corporation shall commence the proceeding in the
  district court in the county in which the corporation&#146;s registered office is
  located. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  subject corporation shall make all dissenters, whether or not residents of
  Nevada, whose demands remain unsettled, parties to the proceeding as in an
  action against their shares. All parties must be served with a copy of the
  petition. Nonresidents may be served by registered or certified mail or by
  publication as provided by law. </P>
<p align="center">177</p>
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<P align=justify style="text-indent:5%">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  jurisdiction of the court in which the proceeding is commenced under subsection
  2 is plenary and exclusive. The court may appoint one or more persons as
  appraisers to receive evidence and recommend a decision on the question of fair
  value. The appraisers have the powers described in the order appointing them, or
  any amendment thereto. The dissenters are entitled to the same discovery rights
  as parties in other civil proceedings. </P>
<P align=justify style="text-indent:5%">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
  dissenter who is made a party to the proceeding is entitled to a judgment: </P>
<P align=justify style="text-indent:5%">(a) For the amount, if any, by
  which the court finds the fair value of the dissenter&#146;s shares, plus interest,
  exceeds the amount paid by the subject corporation; or </P>
<P align=justify style="text-indent:5%">(b) For the fair value, plus
  accrued interest, of the dissenter&#146;s after-acquired shares for which the subject
  corporation elected to withhold payment pursuant to <U><FONT color=#800080>NRS
    92A.470</FONT></U>. (Added to NRS by <U><FONT color=#800080>1995,
      2091</FONT></U>; A <U><FONT color=#800080>2007,</FONT></U> <U><FONT
color=#800080>2705</FONT></U>; <U><FONT color=#800080>2009, 1727</FONT></U>; <U><FONT color=#800080>2011, 2815</FONT></U>; <U><FONT color=#800080>2013,
        1288</FONT></U>) </P>
<P align=justify style="text-indent:5%"><STRONG>NRS 92A.500 Assessment of
  costs and fees in certain legal proceedings.</STRONG> </P>
<P align=justify style="text-indent:5%">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  court in a proceeding to determine fair value shall determine all of the costs
  of the proceeding, including the reasonable compensation and expenses of any
  appraisers appointed by the court. The court shall assess the costs against the
  subject corporation, except that the court may assess costs against all or some
  of the dissenters, in amounts the court finds equitable, to the extent the court
  finds the dissenters acted arbitrarily, vexatiously or not in good faith in
  demanding payment. </P>
<P align=justify style="text-indent:5%">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  court may also assess the fees and expenses of the counsel and experts for the
  respective parties, in amounts the court finds equitable: </P>
<P align=justify style="text-indent:5%">(a) Against the subject
  corporation and in favor of all dissenters if the court finds the subject
  corporation did not substantially comply with the requirements of <U><FONT
color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive; or </P>
<P align=justify style="text-indent:5%">(b) Against either the subject
  corporation or a dissenter in favor of any other party, if the court finds that
  the party against whom the fees and expenses are assessed acted arbitrarily,
  vexatiously or not in good faith with respect to the rights provided by <U><FONT
color=#800080>NRS 92A.300</FONT></U> to <U><FONT
color=#800080>92A.500</FONT></U>, inclusive. </P>
<P align=justify style="text-indent:5%">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  the court finds that the services of counsel for any dissenter were of
  substantial benefit to other dissenters similarly situated, and that the fees
  for those services should not be assessed against the subject corporation, the
  court may award to those counsel reasonable fees to be paid out of the amounts
  awarded to the dissenters who were benefited. </P>
<P align=justify style="text-indent:5%">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
  a proceeding commenced pursuant to <U><FONT color=#800080>NRS
    92A.460</FONT></U>, the court may assess the costs against the subject
  corporation, except that the court may assess costs against all or some of the
  dissenters who are parties to the proceeding, in amounts the court finds
  equitable, to the extent the court finds that such parties did not act in good
  faith in instituting the proceeding. </P>
<P align=justify style="text-indent:5%">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
  the extent the subject corporation fails to make a required payment pursuant to <U><FONT color=#800080>NRS</FONT></U> <U><FONT color=#800080>92A.460</FONT></U>, <U><FONT color=#800080>92A.470</FONT></U> or <U><FONT
color=#800080>92A.480</FONT></U>, the dissenter may bring a cause of action
  directly for the amount owed and, to the extent the dissenter prevails, is
  entitled to recover all expenses of the suit. </P>
<P align=justify style="text-indent:5%">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
  section does not preclude any party in a proceeding commenced pursuant to <U><FONT color=#800080>NRS</FONT></U> <U><FONT color=#800080>92A.460</FONT></U> or <U><FONT color=#800080>92A.490</FONT></U> from applying the provisions of <U><FONT color=#800080>N.R.C.P. 68</FONT></U>. (Added to NRS by <U><FONT
color=#800080>1995, 2092</FONT></U>; A <U><FONT color=#800080>2009,</FONT></U> <U><FONT color=#800080>1727</FONT></U>; <U><FONT color=#800080>2015,
    2566</FONT></U>) </P>
<p align="center">178</p>
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<P align=center><B>INFORMATION NOT REQUIRED IN THE PROSPECTUS</B> </P>
<P align=center><B>INDEMNIFICATION OF DIRECTORS AND OFFICERS </B></P>
<P align=justify>Our directors and officers are indemnified as provided by the
  Nevada Statutes and our Bylaws. We have agreed to indemnify each of our
  directors and certain officers against certain liabilities, including
  liabilities under the Securities Act of 1933. Insofar as indemnification for
  liabilities arising under the Securities Act of 1933 may be permitted to our
  directors, officers and controlling persons pursuant to the provisions described
  above, or otherwise, we have been advised that in the opinion of the Securities
  and Exchange Commission such indemnification is against public policy as
  expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
  event that a claim for indemnification against such liabilities (other than our
  payment of expenses incurred or paid by our director, officer or controlling
  person in the successful defense of any action, suit or proceeding) is asserted
  by such director, officer or controlling person in connection with the
  securities being registered, we will, unless in the opinion of our counsel the
  matter has been settled by controlling precedent, submit to a court of
  appropriate jurisdiction the question whether such indemnification by it is
  against public policy as expressed in the Securities Act and will be governed by
  the final adjudication of such issue. </P>
<P align=justify>We have been advised that in the opinion of the Securities and
  Exchange Commission indemnification for liabilities arising under the Securities
  Act is against public policy as expressed in the Securities Act, and is,
  therefore, unenforceable. In the event that a claim for indemnification against
  such liabilities is asserted by one of our directors, officers, or controlling
  persons in connection with the securities being registered, we will, unless in
  the opinion of our legal counsel the matter has been settled by controlling
  precedent, submit the question of whether such indemnification is against public
  policy to a court of appropriate jurisdiction. We will then be governed by the
  court&#146;s decision. </P>
<P align=center>179</P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
