Exhibit 99.1
INCANNEX HEALTHCARE LIMITED
ABN 93 096 635 246
(and controlled entities)
HALF-YEAR INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMEBR 2022
PROVIDED TO THE ASX UNDER LISTING RULE 4.2A.3
Appendix 4D
Half Year Report for the six months to 31 December 2022
INCANNEX HEALTHCARE LIMITED
ABN 93 096 635 246
1. Reporting period
| Report for the half year ended: | 31 December 2022 |
| Previous corresponding periods: | Financial year ended 30 June 2022 Half-year ended 31 December 2021 |
2. Results for announcement to the market
| Description | 31-Dec-22 | 31-Dec-21 | Change | |||||||
| Item 2.1 - Revenue from ordinary activities | - | - | nmf | |||||||
| Item 2.2 - Profit/(Loss) from ordinary activities | (8,529,015 | ) | (5,244,874 | ) | Down 63% | |||||
| Item 2.3 - Net Profit/(Loss) attributable to memb | (8,529,015 | ) | (5,244,874 | ) | Down 63% | |||||
| Item 2.4 – Dividends – no dividends for the period have been paid or declared (FY22: nil) | ||||||||||
3. Details of entities over which control has been gained or lost during the period: APIRx LLC & APIRx BV
4. Dividends: No dividends have been declared of paid during the period
5. Details of dividend or distribution reinvestment plans in operation are described below: Nil
6. Details of associates and joint venture entities: Nil
7. The financial information provided in this Appendix 4D is based on the half-year financial report which accompanies this report.
8. The financial report has been independently reviewed and is not subject to any qualified independent review statement.
Incannex Healthcare Limited
(and consolidated entities)
ABN 93 096 635 246
Interim Financial Report
for the half-year ended 31 December 2022
TABLE OF CONTENTS
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
CORPORATE DIRECTORY
BOARD OF DIRECTORS
Mr Joel Latham – Managing Director
Mr Troy Valentine – Non-executive Chairman
Mr Peter Widdows – Non-executive Director
Dr George Anastassov – Non-executive Director
Mr Robert B. Clark – Non-executive Director
COMPANY SECRETARY
Madhukar Bhalla
REGISTERED OFFICE
Level 39, South Tower Rialto
525 Collins Street
Melbourne Victoria 3000
AUDITORS
PKF Brisbane Audit
Level 6, 10 Eagle St
Brisbane 4000, Queensland
SHARE REGISTRY
AUTOMIC REGISTRY SERVICES
Level 5, 126 Phillip Street, SYDNEY, NSW, AUSTRALIA, 2000
LAWYER
Thomson Geer
Level 35, 525 Collins Street, Melbourne VIC 3000
SECURITIES EXCHANGE LISTING
ASX code: “IHL”
Australian Securities Exchange
Level 4, North Tower Rialto, 525 Collins Street, Melbourne VIC 3000
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
DIRECTORS’ REPORT
Your directors submit the interim financial report of the consolidated entity, comprising Incannex Healthcare Limited (“the Company” or “IHL”) and its controlled entities (collectively “the Group”) for them half-year ended 31 December 2022. To comply with the provisions of the Corporations Act 2001, the directors report as follows:
DIRECTORS
The names of directors who held office during or since the end of the interim period and until the date of this report are noted below. All directors were in office for the entire period, except for Mr Robert B Clark who joined the Company’s board 17 August 2022.
| ● | Mr Troy Valentine (Chairman) |
| ● | Mr Joel Latham |
| ● | Mr Peter Widdows |
| ● | Dr George Anastassov |
| ● | Mr Robert B Clark |
PRINCIPAL ACTIVITIES
The Group continued research and development (“R&D”) of its novel medicinal cannabinoid drug candidates and psychedelic-assisted psychotherapies.
REVIEW OF OPERATIONS
Results
The consolidated loss for the half-year after tax was A$8,529,015 (2021: loss of A$5,244,874). During this period, the Group worked towards implementing separate strategies for its two business segments.
Medicinal Cannabinoid
The Company continued to advance its novel drug development programs using combination cannabinoid compounds (IHL-42X, IHL-675A and IHL-216A) to treat unmet medical conditions. Three proprietary drug formulations are being applied to five indications: (i) obstructive sleep apnoea; (ii) traumatic brain injury (concussion); (iii) rheumatoid arthritis; (iv) lung inflammation; and (v) inflammatory bowel disease.
During the half-year ended 31 December 2022, the Company finalised the acquisition of another medicinal cannabinoid company to acquire a portfolio of twenty-two (22) additional clinical and pre- clinical R&D projects. These projects are underpinned by 19 granted patents and 23 pending patents.
R&D activities have commenced on the newly acquired portfolio with manufacturing of cGMP CannQuit products for addiction disorders and Renecann products for skin disorders.
Psychedelic-assisted Psychotherapies
The Company advanced its R&D program for the application of psilocybin combined with psychotherapy to treat generalised anxiety disorder. During the December 2022 half year, the Company continued its phase 2 clinical trial at Monash University. IHL has achieved its interim milestone of 29 patients completing primary endpoint assessments and independent analysis of the interim study data has commenced.
Other psychedelic therapy clinical programs are being investigated by the Company. One initiative includes a R&D program that combines virtual reality exposure response therapy in conjunction with a psychedelic medicine.
Capital Management
The Group raised A$13,000,000 in new capital (before costs) during the period through an institutional placement – significantly enhancing its working capital position – refer to note 9 for further detail.
Subsequent Events
Other than the above items, and in the period between the end of the half-year and the date of this report there has not arisen any other item, transaction or event of a material or unusual nature likely, in the opinion of the directors of the Company, to significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, PKF Brisbane Audit, to provide the directors of the Company with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on the next page and forms part of this Directors’ Report for the half-year ended 31 December 2022.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to s306(3) of the Corporations Act 2001.
| /s/ Troy Valentine |
Troy Valentine
Non-executive Chairman
Melbourne
27 February 2023
5
| PKF Brisbane Audit |  |
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF
INCANNEX HEALTHCARE LIMITED
I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2022, there have been:
| (a) | no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and |
| (b) | no contraventions of any applicable code of professional conduct in relation to the review. |
This declaration is in respect of Incannex Healthcare Limited and the entities it controlled during the half year.
pkf Brisbane Audit
Liam Murphy
Partner
27 February 2023
Brisbane
PKF Brisbane Audit ABN 33 873 151 348
Level 6, 10 Eagle Street, Brisbane, QLD 4000 | GPO Box 1568, Brisbane, QLD 4001 | T: +61 7 3839 9733
Brisbane | Rockhampton www .pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PKF Brisbane Pty Ltd. is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2022
| Consolidated | ||||||||||
| Note | 31 December 2022 $ | 31 December 2021 $ | ||||||||
| Cost of sales | (174,294 | ) | ||||||||
| (174,294 | ) | |||||||||
| Other income | 2(a) | 1,134,748 | 783,288 | |||||||
| Administration expenses | (281,226 | ) | (130,591 | ) | ||||||
| Advertising and investor relations | (636,367 | ) | (847,967 | ) | ||||||
| Bad debt expense | - | (134,626 | ) | |||||||
| Consulting, legal and regulatory | (1,035,504 | ) | (1,368,561 | ) | ||||||
| Depreciation expense | (50,544 | ) | - | |||||||
| Research and development costs | (4,413,647 | ) | (2,401,520 | ) | ||||||
| Occupancy expenses | (51,950 | ) | (53,341 | ) | ||||||
| Salaries and employee benefit expense | (1,554,955 | ) | (871,753 | ) | ||||||
| Share based payment expense | 5 | (1,639,570 | ) | (45,509 | ) | |||||
| Loss before tax | (8,529,015 | ) | (5,244,874 | ) | ||||||
| Income tax benefit (expense) | ||||||||||
| Net loss for the period | (8,529,015 | ) | (5,244,874 | ) | ||||||
| Total comprehensive loss for the period | (8,529,015 | ) | (5,244,874 | ) | ||||||
| Earnings per share | ||||||||||
| Basic loss per share (cents per share) | 3 | (0.61 | ) | (0.47 | ) | |||||
| Diluted loss per share (cents per share) | 3 | (0.61 | ) | (0.47 | ) | |||||
The accompanying notes form part of these financial statements
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
| Consolidated | ||||||||||
| Note | 31 December 2022 | 30 June 2022 | ||||||||
| Assets | $ | |||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 41,423,744 | 37,500,931 | ||||||||
| Trade and other receivables | 449,843 | 294,717 | ||||||||
| Other financial assets | 258,797 | 83,960 | ||||||||
| Total current assets | 42,132,384 | 37,879,608 | ||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 8 | 146,535 | - | |||||||
| Right-of-use assets | 7 | 223,840 | - | |||||||
| Intangible assets | 6 | 52,717,427 | - | |||||||
| Total non-current assets | 53,087,802 | - | ||||||||
| Total assets | 95,220,186 | 37,879,608 | ||||||||
| Liabilities | ||||||||||
| Current liabilities | ||||||||||
| Trade and other payables | 1,069,115 | 2,010,533 | ||||||||
| Lease liabilities | 7 | 50,468 | - | |||||||
| Total current liabilities | 1,119,583 | 2,010,533 | ||||||||
| Non-current liabilities | ||||||||||
| Lease liabilities | 7 | 181,519 | ||||||||
| Total non-liabilities | 181,519 | |||||||||
| Total liabilities | 1,301,102 | 2,010,533 | ||||||||
| Net assets | 93,919,084 | 35,869,075 | ||||||||
| Equity | ||||||||||
| Issued capital | 9 | 150,842,248 | 86,586,794 | |||||||
| Reserves | 10,400,761 | 8,077,191 | ||||||||
| Accumulated losses | (67,323,925 | ) | (58,794,910 | ) | ||||||
| Total equity | 93,919,084 | 35,869,075 | ||||||||
The accompanying notes form part of these financial statements
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022
| Consolidated | ||||||||
| 31 December | 31 December | ||||||
| $ | $ | |||||||
| Cash flows from operating activities | ||||||||
| Payment to suppliers and employees | (9,239,347 | ) | (6,151,612 | ) | ||||
| R&D tax refund | 1,013,757 | 782,383 | ||||||
| Net interest received | 110,014 | 1,002 | ||||||
| Net cash used in operating activities | (8,115,576 | ) | (5,368,227 | ) | ||||
| Cash flows from investing activities | ||||||||
| Property, plant, and equipment additions | (165,845 | ) | ||||||
| Net cash used in investing activities | (165,845 | ) | ||||||
Cash flows from financing activities | ||||||||
| Proceeds from share issues | 13,002,027 | 16,129,282 | ||||||
| Share issue costs paid | (780,000 | ) | (32,891 | ) | ||||
| Repayment of lease liabilities | (23,087 | ) | ||||||
| Net cash provided by financing activities | 12,198,940 | 16,096,391 | ||||||
Net increase in cash and cash equivalents | 3,917,519 | 10,728,164 | ||||||
| Cash and cash equivalents at beginning of period | 37,500,931 | 9,123,617 | ||||||
| Effect of exchange rate fluctuations on cash held | 5,294 | (81,276 | ) | |||||
| Cash and cash equivalents at end of period | 41,423,744 | 19,770,505 | ||||||
The accompanying notes form part of these financial statements
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2022
| Consolidated | Note | Issued Capital $ | Reserves $ | Accumulated
Losses $ | Total
Equity $ | |||||||||||||||
| Balance at 1 July 2021 | 45,852,107 | 6,612,641 | (43,891,002 | ) | 8,573,746 | |||||||||||||||
| Loss for the period | (5,244,874 | ) | (5,244,874 | ) | ||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||
| Total comprehensive loss for the period | (5,244,874 | ) | (5,244,874 | ) | ||||||||||||||||
| Shares issued on exercise of options | 16,129,282 | 16,129,282 | ||||||||||||||||||
| Options granted | ||||||||||||||||||||
| Share based payments | 45,509 | 45,509 | ||||||||||||||||||
| Share issue costs | (32,891 | ) | (32,891 | ) | ||||||||||||||||
| Balance at 31 December 2021 | 61,948,498 | 6,658,151 | (49,135,876 | ) | 19,470,772 | |||||||||||||||
| Issued Capital | Reserves | Accumulated Losses | Total Equity | |||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||||||
| Balance at 1 July 2022 | 86,586,794 | 8,077,191 | (58,794,910 | ) | 35,869,075 | |||||||||||||||
| Loss for the period | (8,529,015 | ) | (8,529,015 | ) | ||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||
| Total comprehensive loss for the period | (8,529,015 | ) | (8,529,015 | ) | ||||||||||||||||
| Asset acquisition shares issued | 49,088,139 | 49,088,139 | ||||||||||||||||||
| Placement shares issued | 13,000,000 | 13,000,000 | ||||||||||||||||||
| Shares issued to advisors | 2,945,288 | 2,945,288 | ||||||||||||||||||
| Shares issued on exercise of options | 2,027 | 2,027 | ||||||||||||||||||
| Options issued to advisors | 5 | 684,000 | 684,000 | |||||||||||||||||
| Share based payments | 5 | 1,639,570 | 1,639,570 | |||||||||||||||||
| Share issue costs | (780,000 | ) | (780,000 | ) | ||||||||||||||||
| Balance at 31 December 2022 | 150,842,248 | 10,400,761 | (67,323,925 | ) | 93,919,084 | |||||||||||||||
The accompanying notes form part of these financial statements
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Incannex Healthcare Limited (the “Company”) and its consolidated subsidiaries (collectively, the “Group”) is a clinical stage pharmaceutical development company that is developing unique medicinal cannabis pharmaceutical products and psychedelic medicine therapies.
(a) Statement of compliance
The interim consolidated financial statements (the interim financial statements) are general purpose interim financial statements and have been have prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134 Interim Financial Reporting, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’.
The interim financial statements comprise the interim financial statements for the Group. For the purposes of preparing the interim financial statements, the Group is a for-profit entity.
The interim financial statements do not include full disclosures of the type normally included in the full financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Group as in the full financial report. It is recommended interim financial statements be read in conjunction with the full financial report for the year ended 30 June 2022 and any public announcements made by Incannex Healthcare Limited and its subsidiaries during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules.
The accounting policies and methods of computation adopted are consistent with those of the previous financial year and corresponding half-year except for the impact of the new standards and interpretations effective 1 July 2022 as outlined below and accounting for leases set out in note 7. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. To ensure comparability with current year disclosures, some presentation changes have been made to comparative information.
The interim financial statements were authorised for issue on 27 February 2022.
The interim financial statements comply with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the interim financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
(b) Basis of preparation
The interim financial statements have been prepared on a historical cost basis, except for the revaluation of certain financial instruments to fair value. Cost is based on the fair value of the consideration given in exchange for assets.
The Group is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.
For the purpose of preparing the interim financial statements, the half-year has been treated as a discrete reporting period.
(c) Adoption of new and revised standards
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Significant accounting estimates and judgements
The preparation of the interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.
The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group’s last annual financial statements for the year ended 30 June 2022 – excepting the accounting for the acquisition of APIRX Pharmaceuticals as set out below.
Acquisition of APIRx Pharmaceuticals
The Group has determined that the acquisition of APIRx Pharameticals (“APIRx”) in August 2022 is not deemed a business combination as the acquired set of activities and assets of APIRx did not meet the definition of a business under AASB 3 Business Combinations. Therefore, the transaction has been accounted for as an asset acquisition.
In an asset acquisition , the assets acquired are assigned a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the acquired assets and assumed liabilities as per the initial recognition exemption under AASB 112 Income Taxes.
Furthermore, no goodwill arises on acquisition and transaction costs of the acquisition are included in the capitalised cost of the asset.
In determining when an transaction is an asset acquisition and not a business, significant judgment is required to assess whether the assets acquired constitute a business in accordance with AASB 3. Under AASB 3 a business is an integrated set of activities and assets that is capable of being conducted or managed for the purposes of providing a return, and consists of inputs and processes which, when applied to those inputs has the ability to create outputs.
(e) Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 2: REVENUE
(a) Other income
| Interest | 120,990 | 905 | ||||||
| Refundable R&D tax offset | 1,103,758 | 782,383 | ||||||
| Total other income | 1,134,748 | 783,288 |
NOTE 3: LOSS PER SHARE
Basic loss per share has been calculated using the loss attributable to shareholders of the Parent Company and the weighted average number of ordinary shares on issue.
| 31 December 2022 | 31 December 2021 | |||||||
| Weighted average number of shares | 1,391,098,095 | 1,147,811,124 | ||||||
NOTE 4: SEGMENT REPORTING
AASB 8 Operating Segments (“AASB 8”) requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance.
The Group’s operating segments have been determined with reference to the monthly management accounts used by the Chief Operating Decision maker to make decisions regarding the Group’s operations and allocation of working capital. Due to the size and nature of the Group, the Board as a whole has been determined as the Chief Operating Decision Maker.
Based on the quantitative thresholds included in AASB 8, for the current reporting period, the Group has two reportable segments, being (1) distribution of medicinal cannabis products; and (2), development of psychedelic medicines and therapies - and currently one geographical segment, namely Australia.
The revenues and results of these segments of the Group as a whole are set out in the statement of comprehensive income and the assets and liabilities of the Group as a whole are set out in the statement of financial position.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 4: SEGMENT REPORTING (continued)
A summary of revenue and expenses for the period and assets and liabilities at the end of the period for each segment is shown below:
| 6 months ended 31 December 2022 | ||||||||||||||||
Cannabinoid products | Psychedelic products | Corporate | Consolidated | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cost of sales | ||||||||||||||||
| Other revenue | 1,013,757 | 120,990 | 1,134,748 | |||||||||||||
| Other expenses | (3,683,810 | ) | (971,459 | ) | (5,008,494 | ) | (9,663,763 | ) | ||||||||
| Loss before tax | (2,670,052 | ) | (971,459 | ) | (4,887,504 | ) | (8,529,015 | ) | ||||||||
| Segment assets | 53,557,517 | 140,418 | 41,522,251 | 95,220,186 | ||||||||||||
| Segment liabilities | (383,643 | ) | (94,505 | ) | (822,954 | ) | (1,301,102 | ) | ||||||||
| 6 months ended 31 December 2021 | ||||||||||||||||
Cannabinoid products | Psychedelic products | Corporate | Consolidated | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cost of sales | (174,294 | ) | (174,294 | ) | ||||||||||||
| Other revenue | 97 | 783,191 | 783,288 | |||||||||||||
| Other expenses | (2,161,705 | ) | (280,045 | ) | (3,412,118 | ) | (5,853,868 | ) | ||||||||
| Loss before tax | (2,335,902 | ) | (280,045 | ) | (2,628,927 | ) | (5,244,874 | ) | ||||||||
| Segment assets | 697,073 | 7,374 | 19,314,107 | 20,018,554 | ||||||||||||
| Segment liabilities | (155,467 | ) | (11,000 | ) | (381,315 | ) | (547,782 | ) | ||||||||
NOTE 5: SHARE BASED PAYMENTS
(a) Recognised share-based payment expense
| 31 December 2022 | 31 December 2021 | |||||||
| $ | $ | |||||||
| Expense arising from equity settled share-based payment transactions | 1,639,567 | 45,509 | ||||||
| Total share-based payment expense | 1,639,567 | 45,509 | ||||||
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 5: SHARE BASED PAYMENTS (continued)
(b) Share options
The following table illustrates the number and movements in unlisted options during the period.
| 31 December 2022 | ||||
| No. | ||||
| At 1 July 2022 | 82,995,314 | |||
| Options exercised during the period | (2,027 | ) | ||
| Options issued to management and directors during the period (1) | 5,000,000 | |||
| Options issued to advisors during the period (2) | 9,000,000 | |||
| Other options issued during the period (3) | 63,414,635 | |||
| Outstanding at the end of the period | 160,407,922 | |||
| 1. | As part of Mr Robert Clark’s appointment to the board and remuneration he was issued 5,000,000 options. |
| 2. | On 4 August 2022, the Company issued 9,000,000 options to Ryba LLC pursuant to the mandate executed between the companies in November 2021. The options were issued as the transaction between the Company and APIRx was deemed complete on 04 August 2022. |
| 3. | On 5 December 2022, the Company issued 63,414,635 free attaching options as part of the $13m institutional share placement agreement. These options are not share based payments however are included in the table above to provide an accurate representation of the options outstanding at the end of the period. |
The following table provides assumptions made in determining the fair value of the options granted during the year.
$1.000 Options | $1.500 Options | $0.612 Options | $0.690 Options | $0.765 Options | ||||||||||||||||
| Number | 2,500,000 | 2,500,000 | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||||||||
| Expected volatility (%) | 90 | 90 | 90 | 90 | 90 | |||||||||||||||
| Risk-free interest rate (%) | 3.18 | 3.18 | 2.86 | 2.86 | 2.86 | |||||||||||||||
| Expected life of option (years) | 1.5 | 1.5 | 3 | 3 | 3 | |||||||||||||||
| Exercise price (dollars) | 1.000 | 1.500 | 0.612 | 0.690 | 0.765 | |||||||||||||||
| Grant date share price (dollars) | 0.235 | 0.235 | 0.225 | 0.225 | 0.225 | |||||||||||||||
| Vesting date | 29-Nov-22 | 29-Nov-22 | 04-Aug-22 | 04-Aug-22 | 04-Aug-22 | |||||||||||||||
| Valuation | $ | 57,500 | $ | 30,000 | $ | 243,000 | $ | 228,000 | $ | 213,000 | ||||||||||
(c) Performance rights
There were no Performance Shares and Performance Rights on issued at the beginning of the period and no new Performance Shares and Performance Rights issued during the period.
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 5: SHARE BASED PAYMENTS (continued)
(d) Ordinary shares
There were 218,169,506 IHL ordinary shares issued to the vendors APIRx as part of the asset acquisition, in addition the Company issued 13,090,170 IHL ordinary shares to Ryba LLC as lead M&A advisors. The fair value of the shares was determined with reference to the ASX share price at the date at which the shares were granted. Refer to note 6 & 9 for further details.
NOTE 6: INTANGIBLE ASSETS
31 December | 30
June | |||||||
| $ | $ | |||||||
| Patents at cost | 22,822,185 | |||||||
| Trademarks at cost | 28,904,234 | |||||||
| Other intangible assets at cost | 991,008 | |||||||
| Accumulated amortisation (2) | ||||||||
| Total intangible assets (1) | 52,717,427 | |||||||
| 1. | On 5 August 2022, the Company completed the acquisition on APIRx Pharmaceuticals via the issuance of 218,169,506 IHL ordinary shares to the stakeholders of APIRx in an all–scrip transaction. As substantially all of the fair value of the assets acquired in the transaction relates to intangible assets (patents, trademarks, active clinical and pre-clinical research and development projects), the transaction has been determined to be an asset acquisition and not a business combination. In addition to the shares issued to APIRx, the Company issued 13,090,170 IHL ordinary shares & 9,000,000 IHL options to Ryba LLC as part of their engagement terms as lead M&A advisors, which were included in the cost of the assets acquired. The total cost was allocated to the acquired assets on the basis of the assets’ relative fair values. Refer to note 5 & 9 for further details. |
| 2. | Patents have been assessed to have a 13-year useful life; trademarks have an indefinite useful life. There has been no amortisation at period end as the assets are not available for use yet. |
| 31 December 2022 | 30 June 2022 | |||||||
| Movements: | $ | $ | ||||||
| Carrying amount at the beginning of the year | ||||||||
| Acquired intangibles (1) | 52,717,427 | |||||||
| Amortisation | ||||||||
| Carrying amount at the end of the year | 52,717,427 | |||||||
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 7: LEASES
| 31 December 2022 | 30 June 2022 | |||||||
| $ | $ | |||||||
| Amounts recognised in statement of financial position | ||||||||
| Right-of-use assets | ||||||||
| Right-of-use assets (1) | 255,074 | |||||||
| Depreciation | (31,234 | ) | ||||||
| Net carrying amount | 223,840 | |||||||
| 1. | During the half year ended 31 December 2022, the Company entered into a new lease agreement for its corporate head office. The lease has a four-year term. |
| 31 December 2022 | 30 June 2022 | |||||||
| $ | $ | |||||||
| Lease liabilities | ||||||||
| Current | 50,468 | |||||||
| Non-current | 181,519 | |||||||
| Total lease liabilities | 231,987 | |||||||
31 December | 30
June | |||||||
| $ | $ | |||||||
Amounts recognized in statement of comprehensive income | ||||||||
| Depreciation charge of right-of-use assets | 31,234 | |||||||
| Net finance expenses | 10,976 | |||||||
| 42,210 | ||||||||
Accounting Policy
Right-of-use leased assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Company has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
17
Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 7: LEASES (continued)
Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
| Office Equipment and Fittings | ||||
| $ | ||||
| At 1 July 2022 | ||||
| Additions | 165,845 | |||
| Depreciation charge for the period | (19,311 | ) | ||
| Net book value at 31 December 2022 | 146,534 | |||
NOTE 9: ISSUED CAPITAL
(a) Issued capital
| 31 December 2022 | 30 June 2022 | |||||||
| $ | $ | |||||||
| Ordinary shares | 150,842,248 | 86,586,794 | ||||||
| Total ordinary shares | 150,842,248 | 86,586,794 | ||||||
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Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 9: ISSUED CAPITAL (continued)
(b) Ordinary shares — movements during years
| 31 December 2022 $ | 31 December 2022 No. | 30 June 2022 $ | 30 June 2022 No. | |||||||||||||
| At beginning of year | 86,586,794 | 1,292,334,028 | 45,852,107 | 1,068,411,224 | ||||||||||||
| Issue of new shares - placements | 13,000,000 | 63,414,635 | 400,000 | 5,000,000 | ||||||||||||
| Issue of new shares – share based payments | 10,000,000 | |||||||||||||||
| Issue of new shares –APIRx acquisition | 49,088,139 | 218,169,506 | ||||||||||||||
| Exercise of options | 2,027 | 2,027 | 40,274,243 | 207,650,638 | ||||||||||||
| Shares in lieu of advisor fees | 2,945,288 | 13,090,170 | 450,000 | 1,272,166 | ||||||||||||
| Share issue costs | (780,000 | ) | (389,555 | ) | ||||||||||||
| At end of year | 150,842,248 | 1,587,010,366 | 86,586,794 | 1,292,334,028 | ||||||||||||
NOTE 10: CONTINGENCIES
There has been no change in contingent liabilities since the last annual reporting date.
NOTE 11: FINANCIAL INSTRUMENTS
The Company has a number of financial instruments which are not measured at fair value in the statement of financial position.
The Directors consider that the carrying amounts of current receivables, current payables and current borrowings are considered to be a reasonable approximation of their fair values.
19
Incannex Healthcare Limited
Interim Financial Report 31 December 2022
NOTE 12: RELATED PARTY DISCLOSURES
Directors’ holdings in securities
31 December 2022 | Options No. | Ordinary Shares No. | ||||||
| Mr Troy Valentine | 2,800,000 | 36,651,198 | ||||||
| Mr Peter Widdows | 16,573,685 | |||||||
| Mr Robert Clark | 5,000,000 | |||||||
| Dr George Anastassov | 66,972,077 | |||||||
| Mr Joel Latham | 10,100,000 | 23,748,414 | ||||||
31 December 2021 | Options No. | Ordinary Shares No. | ||||||
| Mr Troy Valentine | 33,851,198 | |||||||
| Mr Peter Widdows | 16,573,685 | |||||||
| Dr Sud Agarwal | 107,303,093 | |||||||
| Mr Joel Latham | 4,500,000 | 18,148,414 | ||||||
NOTE 13: SIGNIFICANT EVENTS AFTER BALANCE DATE
No matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
20
Incannex Healthcare Limited
Interim Financial Report 31 December 2022
DIRECTORS’ DECLARATION
In the opinion of the directors of Incannex Healthcare Limited (‘the Company’):
| 1. | The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including: |
| a. | complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and | |
| b. | giving a true and fair view of the Company’s financial position as at 31 December 2022 and of its performance for the half-year then ended; and | |
| 2. | There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. |
This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001.
| /s/ Troy Valentine |
Troy Valentine
Non-executive Chairman Melbourne
27 February 2023
21
| PKF Brisbane Audit | |
INDEPENDENT AUDITOR’S REVIEW REPORT
TO THE MEMBERS OF INCANNEX HEALTHCARE LIMITED
Conclusion
We have reviewed the accompanying half-year financial report of Incannex Healthcare Limited (“the company”), which comprises the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes, and the directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the half-year’s end or from time to time during the financial half-year.
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Incannex Healthcare Limited is not in accordance with the Corporations Act 2001 including:-
| (a) | giving a true and fair view of the consolidated entity’s financial position as at 31 December 2022, and of its financial performance for the half-year ended on that date; and | |
| (b) | complying with the Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. |
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the consolidated entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Independence
In conducting our review, we have complied with the auditor independence requirements of the Corporations Act 2001. In accordance with the Corporations Act 2001, we have given the directors of the company a written Auditor’s Independence Declaration.
Responsibility of the Directors for the Financial Report
The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Regulations 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.
PKF Brisbane Audit ABN 33 873 151 348
Level 6, 10 Eagle Street, Brisbane, QLD 4000 | GPO Box 1568, Brisbane, QLD 4001 | T: +61 7 3839 9733
Brisbane | Rockhampton www .pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PKF Brisbane Pty Ltd. is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
22
Auditor’s Responsibilities for the Review of the Financial Report
Our responsibility is to express a conclusion on the half year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2022 and its performance for the half year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
pkf Brisbane Audit
Liam Murphy
Partner
27 February 2023
Brisbane
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