Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 737

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 5
Chunk 737
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12.5 million in gross proceeds
of 9,687,045 shares of the Company’s common stock for a purchase price of $1.08 per share of common stock (and, in
lieu thereof, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 1,887,045 shares of common stock
(the “Pre-Funded Warrant Shares”) at a price of $1.0799 per Pre-Funded Warrant) and Series A common stock warrants (the
“Series A Warrants”) to purchase up to 11,574,090 shares of Common Stock at an initial exercise price of $2.16 per
share.

The Pre-Funded Warrants were exercisable
for shares of common stock for a nominal exercise price of $0.0001 per Pre-Funded Warrant Share, were immediately exercisable upon issuance
and expired when exercised in full.  On March 10, 2025, the Company received substantially all the Pre-Funded Warrants proceeds upfront
as part of the Pre-Funded Warrants’ purchase price and in return the Company is obligated to issue up to a fixed number of 1,887,045 shares
of common stock to the investors. Thus, Pre-Funded Warrants were accounted for and were classified as additional paid-in capital as part
of the Company’s equity. Total incremental and direct issuance costs were deducted from additional paid-in-capital as they were
allocated to shares of common stock and Pre-Funded Warrants.

The Series A Warrants were classified as liabilities
and accounted for at fair value and re-measured at each reporting date until exercise, expiration or modification that resulted in equity
classification. Any change in the fair value of the Series A Warrants was recognized in the Consolidated Statements of Operations and
Comprehensive Loss.

 The issuance of common stock is recognized
on its settlement date. Upon issuance, the common stock is recorded at its fair value.

In May 2025, the Company entered into letter agreements
with the holders of the Series A Warrants pursuant to which the Company paid to the holders of Series A Warrants an aggregate of $24.8
million in exchange for the cancellation of all of the outstanding Series A Warrants.

 Fair Value of Financial Instruments 

The Company measures certain financial assets and
liabilities at fair value. ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), specifies a hierarchy of valuation