Company: LNAI
Filing Date: 2025-02-19
Form Type: 10-Q/A
Source: 0001731122-25-000250
Chunk: 12

Company: Lunai Bioworks Inc.
Filing Date: 2025-02-19
Form: 10-Q/A
Chunk 12
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will not be issued, the related remaining capitalized patent costs are charged to expense. Definite life intangible assets are amortized
on a straight-line basis over their estimated useful life. The estimated useful life of patents is twenty years from the date of application.

Indefinite life intangible assets
include in-process research and development (“IPR&D”) and goodwill. The Company accounts for indefinite life intangible
assets in accordance with ASC 350, “Goodwill and Other Intangible Assets”. IPR&D represents the fair value of the technology
on the date acquired and is tested annually for impairment, as well as whenever events or changes in circumstances indicate the carrying
value may not be recoverable.

Goodwill– Goodwill
is not amortized but is evaluated for impairment annually as of June 30 of each fiscal year or whenever events or changes
in circumstances indicate the carrying value may not be recoverable.

Impairment of Goodwill and Indefinite Life 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 Company has elected to perform its annual analysis on June 30th.
The annual fair value analysis performed on goodwill supported that goodwill was not impaired as of June 30, 2023. There have been no
events which have caused the Company to conduct an interim evaluation of its goodwill through March 31, 2024 (see Note 6.)

For indefinite life intangible assets, such as IPR&D, on an annual basis
on June 30th 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, 2023, the carrying value of the IPR&D exceeded its fair value. Therefore, the
Company recorded an impairment loss of $18,960,000 during the year ended June 30, 2023. During the quarter ended March 31, 2024, the Company
recorded an impairment loss of $42,611,