Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 678

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 4
Chunk 678
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, Fair Value Measurement and Disclosures (“ASC 820”), specifies a hierarchy of valuation
techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market
data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs
have created the following fair-value hierarchy:

Level 1: Quoted prices for identical instruments
in active markets;

Level 2: Quoted prices for similar instruments
in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in
which all significant inputs and significant value drivers are observable in active markets; and

Level 3: Valuations derived from valuation techniques
in which one or more significant inputs or significant value drivers are unobservable.

F-13

Benefit from R&D Tax Incentive

Benefit from R&D tax credit consists of the
R&D tax credit received in Australia, which is recorded within other income (expense), net. The Company recognizes grants once both
of the following conditions are met: (1) the Company is able to comply with the relevant conditions of the grant and (2) the grant is
received.

Interest income

Interest income is recognized as interest accrues
using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the financial asset.

Foreign Currency Translation

For certain of the Company’s international
subsidiaries, the local currency is the functional currency. Monetary assets and liabilities denominated in currencies other than the
functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary
assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing
at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in other income (expense),
net in the consolidated statements of operations and comprehensive loss.

For financial reporting purposes, the consolidated
financial statements of the Company have been presented in the U.S. dollar, the reporting currency. The financial statements of entities
are translated from their functional currency into the reporting currency as follows: assets and liabilities are translated at the exchange
rates at the balance sheet dates, expenses and other income (expense), net are translated