Company: IXHL
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-013783
Chunk: 64

Company: Incannex Healthcare Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 8
Chunk 64
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for its business operations and could materially affect its ability to enter into contractual relationships with third parties. Uncertainty
about the Company’s ability to continue as a going concern could materially and adversely affect its liquidity, financial condition,
and business prospects.

6

Note 2 – Basis of Presentation and Summary of Significant
Accounting Policies (continued)

Principles of Consolidation

The accompanying unaudited condensed consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiaries. Details of all controlled entities are set
out in Note 1. All intercompany balances and transactions have been eliminated on consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure
of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and accompanying notes. 

The most significant estimates and assumptions
in the Company’s unaudited condensed consolidated financial statements include the valuation of equity-based instruments (including
the convertible rights and warrant liabilities) issued, accrued research and development expense, and the research and development tax
credit. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded
in the period in which they become known. Actual results could differ materially from those estimates.

Risks and Uncertainties 

The Company is subject to risks and uncertainties
common to companies in the biopharmaceutical industry. The Company believes that changes in any of the following areas could have a material
adverse effect on future financial position or results of operations: ability to obtain future financing; regulatory approval and market
acceptance of, and reimbursement for, product candidates; performance of third-party clinical research organizations and manufacturers
upon which the Company relies; protection of the Company’s intellectual property; litigation or claims against the Company based
on intellectual property, patent, product, regulatory or other factors; the Company’s ability to attract and retain employees.

There can be no assurance that the Company’s
research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be
obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products
will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the
Company will generate significant revenue from product sales. The Company operates in an environment of rapid technological change and
substantial competition from