Item 1.01. Entry into a Material Definitive Agreement
On January 12, 2021, Lexaria Bioscience Corp., a Nevada corporation (the “Company”), entered into an underwriting agreement (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC., as representative of the underwriters (“Wainwright”), pursuant to which the Company agreed to sell to the underwriters in a firm commitment underwritten public offering (the “Offering”) 1,828,571 shares (the “Initial Shares”) of the Company’s common stock, par value $0.001 per share, at a public offering price of $5.25 per share, less underwriting discounts and commissions. Each Initial Share was sold with one five-year warrant (each an “Initial Warrant”) to purchase one share of common stock at an exercise price of $6.58. On January 13, 2021, Wainwright exercised its over-allotment option, pursuant to the terms of the Underwriting Agreement, to purchase an additional 274,285 shares of common stock (the “Option Shares” and, together with the Initial Shares, the “Shares”) at a public offering price of $5.25 per share, less underwriting discounts and commissions, and five-warrants to purchase 274,285 additional shares of common stock at an exercise price of $6.58 (the “Option Warrants” and together with the Initial Warrants, the “Warrants”). The Warrants are immediately exercisable. The Offering closed on January 14, 2021.
The Company agreed to pay Wainwright an underwriting discount equal to 8% of the gross proceeds of the offering and a management fee equal to 1% of the gross proceeds of the offering, and reimburse Wainwright for a non-accountable expense allowance of $50,000, up to $100,000 in legal fees and up to $12,900 for clearing expenses. Additionally, as partial compensation for Wainwright’s services as underwriter in the offering the Company also issued to Wainwright five-year warrants (“Representative Warrants”) to purchase 166,781 shares of common stock with an exercise price of $6.58 per share.
The net proceeds to the Company from the Offering, including proceeds received upon exercise of the over-allotment option and after deducting the underwriting discount and the underwriters’ fees and expenses, were approximately $9,629,490. The Company plans to use approximately $3,700,000 of the net proceeds for research and development studies and the patent and legal costs associated thereto, with the remaining net proceeds to be used for general working capital purposes.
Effective as of the opening of market trading on January 12, 2021, the Company’s common stock and the Warrants began trading on the Nasdaq Capital Market under the symbols LEXX and LEXXW, respectively. The new CUSIP number for the Company’s common stock following the Reverse Stock Split (as defined below) is 52886N 406. The CUSIP number for the Warrants is 52886N 117.
The Underwriting Agreement contains customary representations and warranties that the parties made to, and solely for the benefit of, the other party in the context of all of the terms and conditions of that agreement and in the context of the specific relationship between the parties.
The Shares, Warrants, and Representative Warrants were offered by the Company pursuant to a registration statement on Form S-1, as amended (File No. 333-250326), filed with the Securities and Exchange Commission (the “Commission”), which was declared effective by the Commission on January 11, 2021, and a registration statement on Form S-1 (File No. 333-252031) filed with the Commission on January 11, 2021 pursuant to Rule 462(b) and immediately declared effective.
Also, on January 12, 2021, the Company entered into a Warrant Agency Agreement (the “Warrant Agreement”) with Computershare, Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary, Computershare Trust Company, N.A., (collectively with Computershare, the “Warrant Agent”) pursuant to which the Warrant Agent agrees to act as warrant agent with respect to the Warrants.
The foregoing summaries of the Underwriting Agreement, the Warrant, Representative’s Warrants and Warrant Agency Agreement do not purport to be complete and are qualified in their entirety by such documents attached hereto as Exhibits 1.1, 4.1, 4.2 and 4.3, respectively, each incorporated herein by reference.