Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 897

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 7A
Chunk 897
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,588.

 The Company had not met the closing conditions
for the second and third tranche closings set forth in the Debenture Purchase Agreement; however, the Company and Arena Investors could
have conducted additional closings under the Debenture Purchase Agreement, subject to mutual agreement and the closing conditions described
therein. There were assurances that the parties could have reached such an agreement for additional tranche closings.

 On November 6, 2024, and as required by our
agreements in connection with the Debenture, the Company filed a resale Registration Statement on Form S-1/A with the SEC, registering
for resale up to 61,389,758 shares of common stock, including up to 10,101,009 shares of common stock issuable upon
conversion of the Debenture and up to 453,749 shares of common stock issuable upon the exercise of the Debenture Warrant. This
registration statement was declared effective on December 6, 2024.

The Company evaluates its convertible instruments
and warrants to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted
for under ASC 815, Derivatives and Hedging. The classification of derivative instruments, including whether such instruments should be
recorded as assets, liabilities, or equity, is reassessed at the end of each reporting period. For equity-linked financial instruments,
the Company must determine whether the underlying instrument is indexed to its own Common Stock in order to classify the derivative instrument
as equity. Otherwise, the derivative asset or liability, including embedded derivatives, is recognized at fair value with subsequent changes
in fair value recognized in the consolidated statements of operations and comprehensive income (loss).

For hybrid instruments, ASC 815-15 requires bifurcation
of embedded features if (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related
to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument
and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes
in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument
would be considered a derivative instrument. The nature of the host instrument is therefore evaluated to determine if it is more akin
to a debt-like or equity-like host. In this assessment, the Company considers the stated and implied substantive