Company: IXHL
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-013783
Chunk: 65

Company: Incannex Healthcare Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 8
Chunk 65
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 other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services
of its employees, consultants and other third parties.

Significant Accounting Policies

The following is provided to update the Company’s
significant accounting policies previously disclosed in Note 2 to the consolidated financial statements in the Company’s 2024 Annual
Report, reflecting those that have had a material impact on the Company’s unaudited condensed consolidated financial statement and
related notes.

Equity-Line of Credit Purchase Agreement

On September 6, 2024, the Company entered into an equity line of credit
Purchase Agreement (the “ELOC Purchase Agreement”) with Arena Business Solutions Global SPC II, Ltd (“Arena Global”).
Under the ELOC Purchase Agreement, Arena Global has committed to purchase up to $50 million of the Company’s Common Stock par value
$0.0001 per share (the “Common Stock”), at the Company’s direction from time to time, subject to the satisfaction of
the conditions in the ELOC Purchase Agreement. 

The purchase price per share of Common Stock is
obtained by multiplying by 96% the daily volume weighted average price (“VWAP”) on The Nasdaq Global Market (“Nasdaq”)
for the trading day specified in the sale notice (same trading day or one trading day following such notice) delivered to Arena Global.
The ELOC Purchase Agreement will terminate automatically upon the earliest to occur of (i) the first day of the month next following the
36-month anniversary of the date of the ELOC Purchase Agreement; or (ii) the date on which Arena Global shall have purchased shares of
Common Stock under the ELOC Purchase Agreement for an aggregate gross purchase price equal to the Commitment Amount (as defined in the
ELOC Purchase Agreement). We have also agreed to pay a financial advisor up to 7% of the gross proceeds raised under the ELOC Agreement.

On December 9, 2024, in connection with the ELOC Purchase Agreement,
the Company issued 142,403 shares of Common Stock as a commitment fee to Arena Global. On January 16, 2025 the Company issued 10,346 true-up
shares of Common Stock to Arena Global. The Company evaluated that the costs incurred in connection with the commitment fee and the true-up
shares do not meet the definition of an asset and, therefore, are expensed as incurred. 

As additional consideration for Arena Global’s
execution and delivery of the ELOC Purchase Agreement, the