Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 184

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 184
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 fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
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