Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 121

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 121
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 financial markets have made equity and debt financing more difficult to obtain and may have a material adverse effect on our ability
to meet our fundraising needs. During the past year, we delayed the development of our drug candidate IHL-675A due to a lack of financial
resources. If we are again unable to secure sufficient capital to fund our operations, then we may be required to again delay, limit,
reduce or terminate our drug development or future commercialization efforts or grant rights to third parties to develop and market drug
candidates that we would otherwise prefer to develop and market ourselves. Moreover, we could also have to relinquish valuable rights
to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable
to us.

In
addition, securing additional financing requires a substantial amount of time and attention from our management and may divert a disproportionate
amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development
of our drug candidates. Any of these circumstances or the failure to obtain funding, when and as needed, and on favorable terms would
adversely affect our business, results of operations, R&D efforts, prospects and potentially the value of our common stock.

43

If
we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results or prevent fraud, which could have a material adverse effect on our stock price.

Section
404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC require annual management assessments of the effectiveness
of our internal control over financial reporting. Effective internal controls over financial reporting are necessary for us to provide
reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.

Ineffective
internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our common stock. Our internal controls over financial reporting may not prevent or detect all misstatements
because of inherent limitations. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with our policies and
procedures.

Any failure to design and implement an effective
system of internal controls may reveal deficiencies in our internal controls that are deemed to be material weaknesses. A material weakness
is defined as a deficiency, or a combination of deficiencies,