Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 835

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 7
Chunk 835
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OPM”) to estimate the fair value of options granted. Stock-based compensation awards are expensed using the graded vesting
method over the requisite service period, which is generally the vesting period, for each separately vesting tranche. We have elected
a policy of estimating forfeitures at grant date. Option valuation models, including the trinomial pricing and BSOPM, require the input
of several assumptions. These inputs are subjective and generally require significant analysis and judgment to develop.

R&D Costs

R&D costs are expensed as incurred. R&D
costs 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 our 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 and capitalized as prepaid expenses until the related goods
are delivered or services are performed.

We record accrued liabilities for estimated costs
of R&D activities conducted by third-party service providers, which include the conduct of preclinical studies and clinical trials,
and contract manufacturing activities. We record the estimated costs of R&D activities based upon the estimated amount of services
provided but not yet invoiced and includes these costs in trade and other payables on the consolidated balance sheets and within R&D
expenses on the consolidated statements of operations and comprehensive loss.

We accrue for these costs based on factors such
as estimates of the work completed and in accordance with agreements established with its third-party service providers. We make significant
judgments and estimates in determining the accrued liabilities balance at the end of each reporting period. As actual costs become known,
we adjust our accrued liabilities. We have not experienced any material differences between accrued costs and actual costs incurred.

90

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: (i) the Company is able to comply with the relevant conditions of the grant and (ii) the grant is
received.

Emerging Growth Company Status and Smaller
Reporting Company Status

We are an emerging growth
company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act permits an emerging