Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 264

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 264
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 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, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management has concluded that we did not maintain effective disclosure controls and procedures due to the material weakness in internal
control over financial reporting which existed as of June 30, 2025, relating to the documentation of accounting policies and procedures,
particularly relating to the correct application of complex accounting measures. The measures that we are undertaking to remediate the
material weakness in internal control over financial reporting have and will include: (i) hiring qualified internal control personnel
or consultants to manage the implementation of internal control policies, procedures and improvement of