Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 894

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 7A
Chunk 894
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, the acquired set is not deemed to be a business and is instead accounted
for as an asset acquisition. If this is not the case, the Company further evaluates whether the acquired set includes, at a minimum, an
input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes
that the acquired set is a business.

The Company measures and recognizes asset acquisitions
that are not deemed to be business combinations based on the cost to acquire the assets, which includes pre-acquisition direct costs recorded
in accrued professional and consulting fees. Goodwill is not recognized in asset acquisitions.

Stock-based compensation

The Company accounts for stock-based compensation
arrangements with employees and non-employees using a fair value method which requires the recognition of compensation expense for costs
related to all stock-based payments including stock options. The fair value method requires the Company to estimate the fair value of
stock-based payment awards on the date of grant using an option-pricing model. The Company uses either the trinomial pricing or Black-Scholes
option-pricing model (“BSOPM”) to estimate the fair value of options granted. Stock-based compensation awards are expensed
using the graded vesting method over the requisite service period, which is generally the vesting period, for each separately vesting
tranche. The Company has elected a policy of estimating forfeitures at grant date. Option valuation models, including the trinomial pricing
and the BSOPM, require the input of several assumptions. These inputs are subjective and generally require significant analysis and judgment
to develop. Refer to Note 12 - “Stock-based payments” for a discussion of the relevant assumptions.

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 was committed to purchase up to $50 million of the
Company’s 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 was
obtained by multiplying by 96% the daily volume weighted average price (“VWAP”) on The Nasdaq Global Market for the trading
day specified in the sale notice (same trading day or one trading day following such notice) delivered to Arena Global.