Company: IXHL
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110299
Chunk: 38

Company: Incannex Healthcare Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 38
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”) to operate a psychedelic-assisted therapies services clinic in Melbourne, Australia. The Company owns 50%
of MMA and does not have control over the joint venture. The Company accounts for investments in unconsolidated entities where it exercises
significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes
its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related
to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The
Company’s equity method investments are required to be reviewed for impairment when it is determined there may be an other than-temporary
loss in value.

The carrying value of equity method investments
were $45k as of September 30, 2025.

Comparative information

Comparative information has been reclassified where
appropriate to conform to changes in presentation in the current year to enhance comparability.  

Use of Estimates

The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses
and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and
accompanying notes.

The most significant estimates and assumptions
in the Company’s unaudited condensed consolidated financial statements include the valuation of equity-based instruments issued,
accrued research and development expense, and the research and development tax credit. Estimates are periodically reviewed in light of
changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results
could differ materially from those estimates.

7

Note 2 – Basis of Presentation and Summary of Significant
Accounting Policies (continued)

Risks and Uncertainties 

The Company is subject to risks and uncertainties
common to companies in the biopharmaceutical industry. The Company believes that changes in any of the following areas could have a material
adverse effect on future financial position or results of operations: ability to obtain future financing; regulatory approval and market
acceptance of, and reimbursement for, product candidates; performance of third-party clinical research organizations and manufacturers
upon which the Company relies; protection of the Company’s intellectual property; litigation or claims against the Company based
on intellectual property, patent, product, regulatory or other factors; the Company’s ability to attract and retain employees.

There can be