Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 203

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 203
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 change in the outcome of any of these variables
with respect to the development of our drug candidates could significantly change the costs and timing associated with the development
of that drug candidate. We may never succeed in obtaining regulatory approval for any drug candidate.

In addition, we are obligated under our contracts
with CROs to reimburse these CROs for certain expenses incurred by them in the performance of the services they provide to us. The precise
timing and amounts of these expenses and our corresponding reimbursement obligations are and may continue to be uncertain and outside
of our control. We incur the costs for these reimbursement obligations when invoiced by the CRO. We often receive invoices long after
the CRO has performed the services that are the subject of the invoice. As a result, our related operating expenses have and may continue
to vary significantly period-to-period and are not necessarily indicative of the expenses associated with the activities of the CRO conducted
during the period covered by the periodic report in which these expenses are disclosed.

Acquisition of IPR&D

Acquisition of IPR&D expense was recorded in the fiscal year ended
June 30, 2024, in connection with the acquisition of APIRx Pharmaceutical USA, LLC (“APIRx”) in August 2022. We concluded
that the acquisition of APIRx did not meet the definition of business under Accounting Standards Codification (“ASC”) 805,
Business Combinations as APIRx did not have outputs present and a substantive process was not acquired and recorded the transaction as
an asset acquisition as a result. We determined that drug candidates pertaining to APIRx had no alternative future use at the time of
acquisition and charged $35.3 million, including transaction costs of $2.43 million, to the acquisition of IPR&D expense as of the
date of acquisition.

General and Administrative

General and administrative
expenses consist primarily of personnel-related expenses finance and accounting, human resources and other administrative functions,
including salaries, stock-based compensation and benefits for employees, legal fees, expenses relating to patent and corporate matters
and professional fees paid for accounting, auditing, consulting and tax services, as well as facilities-related costs not otherwise included
in R&D expenses and other costs such as insurance costs and travel expenses.

General and administrative expenses decreased by
$4.0 million for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024. The decrease was mainly due to a
decrease of $6.3 million (from