Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 611

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 3
Chunk 611
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 the consideration to which the Company expects to be entitled in exchange
for those goods and services by applying the following steps:

●Identify the contract with a client;

●Identify the performance obligations in the contract;

●Determine the transaction price;

●Allocate the transaction price to the performance obligations;
and

●Recognize revenue when, or as, the Company satisfies a performance
obligation.

Revenue may be earned over time as the performance
obligations are satisfied or at a point in time which is when the entity has earned a right to payment, the customer has possession of
the asset and the related significant risks and rewards of ownership, and the customer has accepted the asset.

The Company’s arrangements with clients can
include multiple performance obligations. When contracts involve various performance obligations, the Company evaluates whether each performance
obligation is distinct and should be accounted for as a separate unit of accounting under ASC 606-Revenue from Contracts with Customers
(“ASC 606”), Revenue from Contracts with Customers.

The Company determines the standalone selling price
by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include discounting
practices, the size and volume of our transactions, our marketing strategy, historical sales, and contract prices. The determination of
standalone selling prices is made through consultation with and approval by management, taking into consideration our go-to-market strategy.
As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result
in changes in relative standalone selling prices.

The Company disaggregates revenue from contracts
with customers based on the categories that most closely depict how the nature, amount, timing and uncertainty of revenue and cash flows
are affected by economic factors.

The Company receives payment from its clients after
invoicing within the normal 28-day commercial terms. If a client is specifically identified as a credit risk, recognition of revenue is
stopped except to the extent of fees that have already been collected.

R&D Costs

R&D costs are expensed as incurred. Research
and development consist of salaries, benefits and other personnel related costs including equity-based compensation expense, laboratory
supplies, preclinical studies, clinical trials and related clinical manufacturing costs, costs related to manufacturing preparations,
fees paid to other entities to conduct certain R&D activities on the Company’s behalf and allocated facility and other related
costs.

Nonrefundable advance payments for goods or services
that will be used or rendered for future R&D activities are deferred