Company: IXHL
Filing Date: 2025-04-28
Form Type: 424B3
Source: 0001213900-25-036065
Chunk: 21

Company: Incannex Healthcare Inc.
Filing Date: 2025-04-28
Form: 424B3
Chunk 21
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 Stock could increase significantly, even if our research and development efforts are going well.

The price of our Common Stock may decline or be depressed as a result of short sales. There is an increased potential for short sales of our Common Stock due to the sale of shares of our Common Stock pursuant to the March 2025 Purchase Agreements, which could materially and adversely affect the market price of our Common Stock.

When an investor sells
stock that it does not own, it is known as a short sale. The short selling investor, anticipating that the price of the stock will
go down, intends to buy stock to cover its sale at a later date. If the price of the stock goes down, the short selling investor
will profit to the extent of the difference between the price at which it originally sold it less its later purchase price. Short
sales often enable the short selling investors to profit in a down market. Short sales in the past have, and could again, place
significant downward pressure on the price of our Common Stock. The March 2025 Purchase Agreements do not contain a
prohibition on the selling stockholders against short sales of our Common Stock following closing of the Private Placement,
including short sales between the closing of the Private Placement and the date of Stockholder Approval. As such, receipt of the
Stockholder Approval and, in particular the large number of shares then issuable upon exercise of the Series A Warrants and the exercise price adjustment provisions surrounding share combination events and Release Dates in the Series A Warrants, could
encourage short sales of our Common Stock by the selling stockholders. When and if the Stockholder Approval is
obtained, significant amounts of such short selling could place further downward pressure on the market price of our Common
Stock.

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Our failure to obtain the Stockholder Approval may adversely affect our ability to raise capital when and as needed, our results of operations, prospects and the price of our Common Stock.

We intend to seek the Stockholder
Approval and approval of a reverse stock split of our Common Stock at a special meeting of our stockholders, but there can be no assurance
that this approval will be obtained. As noted above, our stockholders are being asked to approve the issuance of shares upon exercise
of the Series A Warrants, which, if fully exercised will be highly dilutive to our existing holders. Further, we currently do not have
any available authorized shares of Common Stock to use for capital raising activities which greatly limits