Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 839

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 7A
Chunk 839
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 information
available at the commencement date in determining the present value of the future payments.

Rent expense for operating leases
is recognized on a straight-line basis, unless the operating lease right-of-use assets have been impaired, over the reasonably assured
lease term based on the total lease payments and is included in general and administrative expenses in the consolidated statements of
operations. For operating leases that reflect impairment, the Company will recognize the amortization of the operating lease right-of-use
assets on a straight-line basis over the remaining lease term with rent expense still included in general and administrative expenses
in the consolidated statements of operations.

    F-11

Research and Development Expenses
– The Company expenses research and development costs incurred in formulating, improving, validating, and creating alternative
or modified processes related to and expanding the use of the Company’s technologies. Research and development expenses for the
years ended June 30, 2025 and 2024 amounted to $537,428, and $2,708,829 respectively.

Income Taxes - The Company
accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes, which requires an asset and liability approach
for accounting for income taxes (see Note 9).

Loss Per Share - The Company
calculates earnings (loss) per share in accordance with FASB ASC 260 Earnings Per Share. Basic earnings per common share (EPS) are based
on the weighted average number of shares of Common Stock outstanding during each period. Diluted earnings per common share are based on
shares outstanding (computed as for basic EPS) and potentially dilutive common shares. Potential shares of Common Stock included in the
diluted earnings per share calculation include in-the-money stock options that have been granted but have not been exercised. The shares
of Common Stock outstanding at June 30, 2025 and 2024 were 177,392,907 and 158,452,644, respectively. Because of the net loss for each
of the years ended June 30, 2025 and June 30, 2024, dilutive shares for both periods were excluded from the diluted EPS calculation, as
the effect of these potential shares of Common Stock is anti-dilutive. The Company had 13,669,140 and 17,146,315 potential shares of Common
Stock excluded from the diluted EPS calculation for the years ended June 30, 2025 and 2024, respectively.

Fair Value of Financial Instruments
– The Company