Company: IXHL
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110299
Chunk: 43

Company: Incannex Healthcare Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 43
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 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 features of the contract
as well as the economic characteristics and risks of the hybrid instrument. Each term and feature are then weighed based on the relevant
facts and circumstances to determine the nature of the host contract. Terms and features of the hybrid.

On February 5, 2025, Arena Investors converted
a total of $100,000 debt into shares of Common Stock.

10

Note 2 – Basis of Presentation and Summary of Significant
Accounting Policies (continued)

On March 13, 2025 the Company repaid in full the
outstanding Convertible Debenture, previously issued pursuant to that certain Securities Purchase Agreement dated as of September 6, 2024,
by and between the Company and the Arena Investors, by making a cash payment of $3,851,111.00, representing the outstanding principal,
interest, amounts and redemption premiums due as of February 28, 2025. In connection with the repayment of the Debenture, the September
2024 Purchase Agreement, the related security documents and that certain Equity Line Purchase Agreement, dated September 6, 2024, by and
between the Company and Arena Investors were terminated except with respect to the indemnification and registration rights set forth therein.
The (i) warrant to purchase up to 453,749 shares of the Company’s common stock, par value $0.0001 per share, previously issued to
Arena Investors (the “Debenture Warrant”), (ii) Registration Rights Agreement, dated as of October 14, 2025, by and between
the Company and Arena Investors and (iii) warrant to purchase up to 585,000 shares of common stock, previously issued to Arena Global
pursuant to the Equity Line Purchase Agreement (the “ELOC Warrant”) remained in effect.

The Company has accounted for the First Tranche
Debenture as a financing transaction, wherein the net proceeds that were received were allocated to the financial instruments issued.
Prior to making the accounting allocation, the Company