Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 380

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 380
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 -   Outstanding as of June 30, 2025   227,508    27.22    1.46    -   Unvested as of June 30, 2025   -    -    -    -  

The aggregate intrinsic value of stock options
is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s shares of common
stock for those stock options that had exercise prices lower than the fair value of the Company’s shares of common stock.

F-18

Note 13 – Fair value of Financial Instruments

Cash and cash equivalents, accounts receivable
(including R&D tax incentive receivable), prepaid expenses and other current assets, accounts payable, accrued expenses and current
liabilities are reflected on the consolidated balance sheets at amounts that approximate fair value because of the short-term nature of
these financial assets and liabilities.

ELOC Purchase Agreement

The Company evaluated the ELOC Purchase Agreement
to determine whether it should be accounted for considering the guidance in ASC 815-40, “Derivatives and Hedging - Contracts on
an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify
for equity classification, and therefore requires fair value accounting as a derivative.

 The ELOC Purchase Agreement was terminated
on March 13, 2025.

ELOC Warrant

Classification of the ELOC Warrant as a liability
instrument was based on management’s analysis of the guidance in ASC 815 and in a statement issued by the staff of the SEC regarding
the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.”

Management considered whether the ELOC Warrant displayed the three
characteristics of a derivative under ASC 815, and concluded that the ELOC Warrant mets the definition of a derivative. However, the ELOC
Warrant failed to meet the equity scope exception in ASC 815-10-15-74(a) and thus is classified as a liability measured at fair value,
subject to remeasurement at each reporting period. This is on the basis that the ELOC Warrant included certain cash-settlement features
in the event of a tender offer, which is outside the control of the Company, and that the exercise price was denominated in a