Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 282

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 2
Chunk 282
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 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 as the exit price, representing the amount that would either be received
to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based
measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. There
were no Level 2, or 3 assets, nor any Level 1, or 2 liabilities measured at fair value on a recurring basis as of June 30, 2025.

Level 1 assets held as of June
30, 2025, consisted of an investment in equity securities related to an extension agreement entered on February 28, 2024.
The Company purchased 467,290 shares