Company: LNAI
Filing Date: 2025-02-19
Form Type: 10-K/A
Source: 0001731122-25-000252
Chunk: 113

Company: Lunai Bioworks Inc.
Filing Date: 2025-02-19
Form: 10-K/A
Chunk 113
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. Intangible assets are recorded
at cost. Patent costs capitalized consist of costs incurred to acquire the underlying patent. If it is determined that a patent 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 license agreements and goodwill acquired in a business combination. The Company accounts for indefinite life intangible assets
in accordance with ASC 350. License agreement costs represent the fair value of the license agreement on the date acquired and are tested
annually for impairment.

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

Impairment 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, 2024. The Company recorded an impairment loss of $11,640,000 related to goodwill for the year ended June 30, 2024 (see
Note 6 to the financial statements).

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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 years ended June 30, 2024 and 2023, 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. Therefore, the Company recorded impairment losses
of $42,611,000 and $18,960,000 during the years ended June