Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 286

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 2
Chunk 286
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estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

Critical
Audit Matters

The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Goodwill
Impairment Assessment

Critical
Audit Matter Description

During
the year ended June 30, 2025, the Company fully impaired previously recorded goodwill of approximately $170 million, exchange rate adjusted,
related to the Company’s RenC reporting unit. As described in notes 1 and 5 to the consolidated financial statements, the Company
tests goodwill for impairment annually on June 30 at the reporting unit level, or more frequently if events or circumstances indicate
it is more likely than not that the fair value of a reporting unit is less than it’s carrying amount. The Company recognized an
impairment loss of approximately $48 million during the three months ended September 30, 2024 with the remaining goodwill amount being
impaired at June 30, 2025. The determination of the fair value of the reporting unit on September 30, 2024, and June 30, 2025, required
management to make significant estimates and assumptions.

How
the Critical Audit Matter was Addressed in the Audit

We
identified the evaluation of the impairment analysis for goodwill as a critical audit matter because of the significant estimates and
assumptions management makes in performing impairment tests for the RenC reporting unit. These required a high degree of auditor judgment
and an increased extent of effort when performing audit procedures to evaluate the reasonableness of such estimates and assumptions.

Our
audit procedures related to the following:

●We
                                            tested management’s processes for estimating the fair value of the reporting unit at
                                            each respective date

●We
                                            evaluated whether the valuation techniques used were appropriate and reasonable and

●We
                                            evaluated the significant assumptions and underlying data used in developing the