Company: LNAI
Filing Date: 2025-02-19
Form Type: 10-Q
Source: 0001731122-25-000258
Chunk: 14

Company: Lunai Bioworks Inc.
Filing Date: 2025-02-19
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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shares of Common Stock, and (ii) the right to receive up to 11,899,545 contingent shares pro rata upon the exercise of convertible notes,
options, and warrants, which were outstanding at closing. The contingent consideration liability was recorded at fair value of $20,557,500
at the time of the Acquisition and is subsequently remeasured to fair value at the end of each reporting period. As of December 31, 2024,
there were 7,613,301 contingent shares issuable in connection with the Acquisition.

The fair value of the contingent
consideration liability is estimated using a Black-Scholes option-pricing model and a Monte-Carlo option pricing model. The key inputs
to the model are all contractual or observable with the exception being volatility, which is computed based on the volatility of the Company’s
underlying stock. The key inputs to valuing the contingent consideration liability as of December 31, 2024, were:

    Schedule of contingent consideration liability 

    Stock Price 
    $0.84 
  
    Exercise Price 
     $0.46 - $8.23 
  
    Volatility 
     120.1% - 158.2% 
  
    Risk Free Rate 
     0.28% - 4.45% 
  
    Expected Dividends 
     0%
  
    Expected Term (years) 
     0.01 – 8.99 

The following table sets forth
the Level 3 liability at December 31, 2024, which is recorded on the consolidated balance sheet at fair value on a recurring basis. As
required, this liability is classified based on the lowest level of input that is significant to the fair value measurement:

    10

Schedule of fair value measurement on recurring basis

Fair Value Measurements at
Reporting Date Using

Quoted Prices in  Active Markets for Identical Assets Inputs
 
Significant Other  Observable Inputs
 
Significant Other Unobservable Inputs

(Level 1)
 
(Level 2)
 
(Level 3)

The roll forward of the contingent consideration liability is as follows:

Balance June 30, 2024

—

—

$
12,310,000

Fair value adjustment

—

—

(6,660,000
)

Contingent Consideration Liability at December 31, 2024

—

—

$
5,650,000

NOTE 4 — INTANGIBLE ASSETS AND GOODWILL

On February