Company: IXHL
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110299
Chunk: 42

Company: Incannex Healthcare Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 42
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 an aggregate purchase price of $3 million (a 10% original
issue discount) to Arena Special Opportunities (Offshore) Master II LP (“Arena Opportunities”). The First Tranche Debenture
provided for a payment-in-kind interest rate at 5% and would have matured on April 14, 2026. In addition, the Company issued a warrant
to Arena Investors exercisable for up to 453,749 shares of Common Stock (the “First Tranche Warrant”), at an exercise price
of $1.89 per share.

The net proceeds received from the issuance of
the First Tranche Debenture, after deduction of expenses reimbursable to the Arena Investors, was $2,877,588.

The Company did not meet the closing conditions
for the second and third tranche closings set forth in the September 2024 Purchase Agreement.

On November 6, 2024, and as required by the Company’s
agreements in connection with the First Tranche 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 First Tranche Debenture and up to 453,749 shares of Common Stock issuable upon the exercise of the First Tranche 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