Company: LNAI
Filing Date: 2025-02-19
Form Type: 10-K/A
Source: 0001731122-25-000252
Chunk: 118

Company: Lunai Bioworks Inc.
Filing Date: 2025-02-19
Form: 10-K/A
Chunk 118
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 goodwill totaling $11,640,000
related to the Company’s legacy RenB reporting unit. As described in notes 1 and 6 to the consolidated financial statements, the
Company tests goodwill for impairment annually 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’s annual assessment
date is June 30, 2024. In relation to goodwill related to the GediCube acquisition, the Company performed a qualitative assessment on
such date and concluded that it was not more likely than not that the reporting unit’s fair value was less than its carrying amount.
To assess the goodwill of the RenB reporting unit for impairment, management estimated the fair value of goodwill using a discounted cash
flow model. The determination of the fair value requires management to make significant estimates and assumptions.

How the Critical Audit Matter was Addressed in the Audit

We identified the evaluation of the impairment
analysis for goodwill as a critical audit matter because of the significant estimates and assumptions management makes in performing both
the qualitative assessment on goodwill for the GediCube related goodwill and determining the fair value of the goodwill for the RenB reporting
unit. These required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate
the reasonableness of such estimates and assumptions.

Our audit procedures related to the following:

| ● | In                                                                                                 
 relation to the GediCube goodwill, we evaluated the Company’s qualitative assessment               
 by considering macroeconomic conditions, industry and market conditions, and other relevant        
 entity specific factors.                                                                           |
| ● | In                                                                                                 
 relation to RenB goodwill, (1) we tested and evaluated the methods, data and significant           
 assumptions used in developing the fair value of goodwill; and (2) we evaluated the reasonableness 
 and consistency of the selected valuation methodology and assumptions utilized by the Company      
 including the Company’s intent and ability to carry out a particular course of action.             |

In addition, professionals with specialized skill and knowledge were utilized
by the Firm to assist in the performance of these procedures.

Business Combination

Critical Audit Matter Description

On February 13, 2024, the Company completed a business
acquisition acquiring GediCube Intl Ltd. for consideration with a fair value of $156,599,131. The Company accounted for this acquisition
as a business combination and accordingly, the purchase price was allocated to the assets acquired and liabilities