Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 559

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 2
Chunk 559
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For certain of the Company’s international
subsidiaries, the local currency is the functional currency. Monetary assets and liabilities denominated in currencies other than the
functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary
assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing
at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in other income (expense),
net in the consolidated statements of operations and comprehensive loss.

For financial reporting purposes, the consolidated
financial statements of the Company have been presented in the U.S. dollar, the reporting currency. The financial statements of entities
are translated from their functional currency into the reporting currency as follows: assets and liabilities are translated at the exchange
rates at the balance sheet dates, expenses and other income (expense), net are translated at the average exchange rates for the periods
presented and stockholders’ equity is translated based on historical exchange rates. Translation adjustments are not included in
determining net loss but are included as a foreign exchange adjustment to other comprehensive income, a component of stockholders’
equity.

The following table presents data regarding the
dollar exchange rate of relevant currencies:

    June 30, 2025  
    June 30, 2024 
  
    Exchange rate on balance sheet dates 

    USD: AUD Exchange Rate 
     0.6550  
     0.6624 
  
    Average exchange rate for the period 

    USD: AUD Exchange Rate 
     0.6482  
     0.6556 

Income tax

The Company is governed by Australia and U.S income
tax laws. The Company follows ASC 740, Accounting for Income Taxes, when accounting for income taxes, which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for
temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

For uncertain tax positions that meet a “more
likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements.
The Company’s practice