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

Company: Incannex Healthcare Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 10
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uant to the requirements of ASC 205-40, Presentation of Financial Statements
- Going Concern, and as a result of the financial condition and other factors described herein, there is substantial doubt about the
Company’s ability to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.

The Company’s independent auditor included
a going concern opinion in its audit report, which is part of the 2024 Annual Report, raising substantial doubt about the Company’s
ability to continue as a going concern. This doubt may adversely impact the Company’s ability to secure additional financing necessary
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