Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 97

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 97
---
 to ten years (see Note 5).

Intangible Assets - The
Company has both definite and indefinite life intangible assets.

Definite life intangible assets
relate to patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 350, Goodwill and Other Intangible Assets. 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 on June 30 or whenever events or changes in circumstances indicate the fair value of the license is less than
the carrying amount.

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 of the reporting unit may be less than the fair value of the reporting unit.

    F-10

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.

During the year ended June 30, 2025, the results of the assessment indicated that
the carrying value of the RENC reporting unit exceeded its fair value, due to the decline in the estimated fair value of the reporting
unit based on the Company’s market capitalization. Management concluded the significant driver for the change in the economic benefits
was due to the Company’s continued inability to raise capital for the further development of the technologies within this reporting