Company: IXHL
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043682
Chunk: 11

Company: Incannex Healthcare Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 11
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 to Arena Global.
The ELOC Purchase Agreement will terminate automatically upon the earliest to occur of (i) the first day of the month next following the
36-month anniversary of the date of the ELOC Purchase Agreement; or (ii) the date on which Arena Global shall have purchased shares of
Common Stock under the ELOC Purchase Agreement for an aggregate gross purchase price equal to the Commitment Amount (as defined in the
ELOC Purchase Agreement). We have also agreed to pay a financial advisor up to 7% of the gross proceeds raised under the ELOC Agreement.

On December 9, 2024, in connection with the ELOC
Purchase Agreement, the Company issued 142,403 shares of Common Stock as a commitment fee to Arena Global. On January 16, 2025 the Company
issued 10,346 true-up shares of Common Stock to Arena Global. The Company evaluated that the costs incurred in connection with the commitment
fee and the true-up shares do not meet the definition of an asset and, therefore, are expensed as incurred.

As additional consideration for Arena Global’s
execution and delivery of the ELOC Purchase Agreement, the Company issued a five-year warrant (the “ELOC Warrant”) on October
31, 2024, exercisable for 585,000 shares of Common Stock with an exercise price equal to $1.66 per share.

We determine whether to classify contracts, such
as warrants, that may be settled in our own stock as equity of the entity or as a liability. An equity-linked financial instrument must
be considered indexed to the Company’s own stock to qualify for equity classification. The Company classifies warrants as liabilities
for any contracts that may require a transfer of assets. Warrants classified as liabilities are accounted for at fair value and remeasured
at each reporting date until exercise, expiration or modification that results in equity classification. Any change in the fair value
of the warrants is recognized in the Consolidated Statements of Operations and Comprehensive Loss.

Refer to Note 12 for the accounting of the ELOC
Purchase Agreement.

Convertible Debenture Financing

On September 6, 2024, the Company entered into
a Securities Purchase Agreement (the “September 2024 Purchase Agreement”) with Arena Investors, LP (“Arena Investors”),
which provides for the issuance of secured convertible debentures in an aggregate principal amount of up to $10 million at an aggregate
purchase price of up to $9 million (a 10% original issue discount),