Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 414

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 414
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ow of $5.6 million).

Net cash flows from investing activities

Net cash used in investing activities decreased
by $0.3 million in the fiscal year ended June 30, 2025 compared to fiscal year ended June 30, 2024. The decrease was due to less spending
on property, plant and equipment.

Cash flows from financing activities

Cash provided by financing activities increased
by $21.4 million in the fiscal year ended June 30, 2025, compared to the fiscal year ended June 30, 2024. This increase was primarily
driven by share issuance proceeds of $48.3 million, partially offset by cash outflows related to financing arrangements entered into
during the year, including the cancellation of warrants amounting to $24.8 million and the repayment of convertible debt totaling $3.8
million.

89

Critical Accounting Estimates

Our financial statements
are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements
and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and
expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience,
known trends and events, and various other factors we believe are reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate
our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or
conditions.

While our significant
accounting policies are described in more detail in Note 2 to our financial statements included elsewhere in this Annual Report, we believe
the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Acquisitions

We evaluate acquisitions under the accounting
framework in ASC 805, Business Combinations, to determine whether the transaction is a business combination or an asset acquisition.
In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, we first perform a screen
test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset
or a group of similar identifiable assets. If this is the case, the acquired set is not deemed to be a business and is instead accounted
for as an asset acquisition. If this is not the case, we further evaluate whether the acquired set includes, at a