Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 204

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 204
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 notes,
options, and warrants, which were outstanding at closing. The contingent consideration liability was recorded at fair value of $20,557,500
at the time of the Acquisition and is subsequently remeasured to fair value at the end of each reporting period. As of June 30, 2025,
there were 2,775,650 contingent shares issuable in connection with the Acquisition.

The Company’s assets and
liabilities measured at fair value on recurring bases as of June 30, 2025 were as follows:

    Schedule of assets and
liabilities measured at fair value on recurring bases 

    Fair Value Measurements at Reporting Date Using

    Level 1 
    Level 2 
    Level 3

    Assets: 

    Investment in equity securities 
     387,851  
     —  
     — 
  
    Total assets at fair value 
    $387,851  
     —  
    $— 
  
    Liabilities: 

     —  

    Contingent consideration 
     —  
     —  
     630,000 
  
    Total liabilities at fair value 
    $—  
     —  
    $630,000 

The fair value of the contingent
consideration liability is estimated using a Black-Scholes option-pricing model and a Monte-Carlo option pricing model. The key inputs
to the model are all contractual or observable with the exception being volatility, which is computed based on the volatility of the Company’s
underlying stock. The key inputs to valuing the contingent consideration liability as of June 30, 2025, were:

    Schedule of key input to valuing the
contingent consideration liability  

    Stock Price 
    $0.29 
  
    Exercise Price 
     $0.53 - $1.92 
  
    Volatility 
     116% - 141% 
  
    Risk Free Rate 
     3.61% - 4.02% 
  
    Expected Dividends 
     0%
  
    Discount Rate (Monte-Carlo model only) 
     0%
  
    Expected Term (years) 
     2.70 – 8.38 

At initial recognition of the contingent consideration,
the inputs were:

    Stock Price 
    $1.92 
  
    Exercise Price 
     $0.46 - $4.50