Incannex Healthcare Inc. (NASDAQ:IXHL) has entered into funding agreements expected to provide the pharmaceutical company with up to $60 million in capital. The agreements, detailed in a recent SEC filing, include an equity line of credit and a convertible note issuance.
On Monday, Incannex announced an equity line of credit agreement with Arena Business Solutions Global SPC II, Ltd, allowing the company to sell up to $50 million of its common stock over the next 36 months. The shares' purchase price will be set at 96% of the volume-weighted average price on the Nasdaq on the day of sale.
As part of the agreement, Incannex will issue shares as a commitment fee and a warrant for additional shares to Arena Business Solutions. The company is limited by the number of shares it can sell to prevent Arena Business Solutions from owning more than 9.99% of Incannex's outstanding common stock and is subject to certain SEC rules regarding public float.
Simultaneously, Incannex entered into a Securities Purchase Agreement with Arena Investors, LP, to issue convertible notes for up to $10 million, structured in three tranches, each with a 10% original issue discount.
The notes will convert at a price 115% of the closing stock price before the issuance date, subject to adjustments. Incannex's subsidiaries will provide senior security interests in their assets as collateral and will also guarantee the notes.
The company will issue a warrant related to the convertible notes, exercisable for a number of shares based on the principal amount of the notes and the closing stock price. The issuance of shares upon conversion of the notes and exercise of the warrants is also subject to shareholder approval and SEC regulations.
The closing of both the equity line of credit and the convertible note tranches is subject to customary closing conditions. This funding strategy aims to provide Incannex with the financial flexibility to advance its pharmaceutical preparations. The information is based on a press release statement.
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