Company: IXHL
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-013783
Chunk: 131

Company: Incannex Healthcare Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 2
Chunk 131
---
 In this assessment, the Company considers the stated and implied substantive features of the contract
as well as the economic characteristics and risks of the hybrid instrument. Each term and feature are then weighed based on the relevant
facts and circumstances to determine the nature of the host contract. Terms and features of the hybrid instrument (i.e. embedded derivatives)
are then assessed to determine if they must be bifurcated and separately accounted for as freestanding derivatives.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller
reporting company” (as defined by Item 10 of Regulation S-K), we are permitted to omit information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and
Procedures

We maintain disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, designed to ensure that information required to be disclosed in our reports is recorded,
processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. These controls are intended
to accumulate and communicate to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), or persons performing similar functions, as appropriate to enable timely decisions regarding required disclosures.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. Our management, with the participation of our CEO and CFO, evaluated, as of the end of the period covered by this
Quarterly Report, the effectiveness of our disclosure controls and procedures. Based on this evaluation, our CEO and CFO concluded that,
as of December 31, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level due to a material
weakness in internal control over financial reporting, which existed as of December 31, 2024, relating to the documentation of accounting
policies and procedures, particularly relating to the correct application of complex accounting measures, as previously reported in our
2024 Annual Report.

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 December