Company: LNAI
Filing Date: 2025-02-19
Form Type: 10-K/A
Source: 0001731122-25-000252
Chunk: 107

Company: Lunai Bioworks Inc.
Filing Date: 2025-02-19
Form: 10-K/A
Chunk 107
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 discount. On February 16, 2024, the Company received
notice from the holder to exercise 471,699 warrants outstanding at $0.53 per share and apply $250,000 of the note balance to the exercise
price of the warrants. For the year ended June 30, 2024, discount amortization of $50,000 was charged to interest expense. As of June
30, 2024, the Company accrued $69,083 of interest expense that is included in accrued expenses on the balance sheet. The November 2023
Note balance, net of discount at June 30, 2024 is $750,000 (see Note 8 to the Financial Statements).

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Promissory Note —On
March 30, 2020 (the “Issuance Date”), the Company issued a Promissory Note in the principal amount of $5,000,000 (the “Promissory
Note”) to the Holder. The principal amount of the Promissory Note was originally payable on November 30, 2021 (the “Maturity
Date”). The Promissory Note bore interest at a fixed rate of 6% per annum, computed based on the number of days between the Issuance
Date and the Maturity Date, and the interest was prepaid by the Company in full on the Issuance Date through the issuance of 188,485 shares
of the Company’s Common Stock based on the closing market price on that date for a total value of $501,370. The Company evaluated
the Promissory Note and PIK interest in accordance with ASC 470-Debt and ASC 835-Interest, respectively. Pursuant to ASC 470-20, proceeds
received from the issuance are to be recognized at their relative fair value, thus the liability is shown net of the corresponding discount
of $493,192, which is the relative fair value of the shares issued for the PIK interest on the closing date using the effective interest
method. The discount of $493,192 will be accreted over the life of the Promissory Note.

On February 11, 2021, the Company
entered into an amendment to the Promissory Note that extended the Maturity Date to November 30, 2022. All other terms of the Promissory
Note remained the same. The change in Maturity Date required an additional year of interest at the fixed