Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 180

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 180
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ment of Goodwill and
Indefinite Lived Intangible Assets – We test for goodwill impairment at the reporting unit level, which is one
level below the operating segment level. Our detailed impairment testing involves comparing the fair value of each reporting unit to its
carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of
the reporting unit and is based on discounted cash flows or relative market-based approaches. If the carrying value of the reporting unit
exceeds its fair value, we record an impairment loss for such excess. The annual fair value analysis performed on goodwill supported that
goodwill was impaired as of June 30, 2025. The Company recorded an impairment loss of $47,614,729 for the period ended September 30, 2024
and $122,804,700 for the period ended June 30, 2025, related to goodwill during the year ended June 30, 2025 (see Note 6 to the financial
statements).

For indefinite-lived intangible
assets, such as licenses acquired as an In-Process Research and Development (“IPR&D”) asset, on an annual basis we determine
the fair value of the asset and record an impairment loss, if any, for the excess of the carrying value of the asset over its fair value.
For the year ended June 30, 2025, the carrying value of IPR&D was zero. For the year ended June 30, 2024, the carrying value of the
licenses acquired as an IPR&D asset exceeded its fair value, due to changes in the projected economic benefits to be realized from
these assets. The Company recorded impairment losses of zero and $42,611,000 during the years ended June 30, 2025 and 2024, respectively
(see Note 6 to the financial statements).

62

The carrying values of IPR&D
and goodwill at June 30, 2025, were zero and $5,963,000, respectively.

 Fair Value of Financial
Instruments – The Company accounts for fair value measurements for financial assets and financial liabilities in accordance
with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance, among other things, defines fair value, establishes
a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value
on either a recurring or nonrecurring basis. Fair value is defined