Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 446

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 446
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 other (income) expense, net in the Consolidated Statements of Operations
and Comprehensive Income (Loss).

F-20

The Series A Warrants were classified as a level
3 financial instrument in the fair value hierarchy and were valued using the BSOPM.

The changes in the fair value of the Series A Warrant
liability were an increase of $22.7 million for the fiscal year ended June 30, 2025.

In May 2025, the Company entered into letter agreements
with the holders of the Series A Warrants pursuant to which the Company paid to the holders of Series A Warrants an aggregate of $24.8
million in exchange for the cancellation of all of the outstanding Series A Warrants.

Note 14 - Income Tax

The prima facie income tax benefit on pre-tax accounting
loss from operations reconciles to the income tax benefit in the financial statements as follows:

    June 30, 2025  
    June 30, 2024 

    (in thousands) 
  
    Accounting loss before tax 
     (46,885) 
     (18,415)
  
    Income tax benefit at the applicable tax rate of 30% 
     (14,066) 
     (5,525)
  
    Non-deductible expenses 
     4,511  
     6,545 
  
    Non-assessable income 
     (1,527) 
     (3,431)
  
    Deferred tax assets not recognized 
     1,143  
     927 
  
    Income tax benefit 
     -  
     (30)
  
    Unrecognized Deferred Tax Asset 

    Deferred tax asset not recognized in the financial statements: 

    Unused tax losses 
     10,648  
     6,887 
  
    Net unrecognized tax benefit at 25% 
     11,790  
     7,813 

ASC 740 requires that the tax benefit of net operating
losses, temporary differences and credit carry forwards be recorded as an asset to the extent that management assesses that realization
is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate
sufficient taxable income within the carry forward period. Because of the Company’s recent history of operating losses, management
believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not