Company: LNAI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001731122-25-001544
Chunk: 9

Company: Lunai Bioworks Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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 accordance with FASB ASC Topic 820, “Fair Value Measurements”.
The authoritative guidance among other things, defines fair value, establishes a consistent framework for measuring fair value and expands
disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value
is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability
in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based
on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance
establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

    ●
    Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; 

    ●
    Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and 

    ●
    Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. 

There were no Level 1, 2 or 3 assets,
nor any Level 1 or 2 liabilities as of September 30, 2025.

Unless otherwise disclosed, the
fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, accounts payable, accrued
expenses, lease obligations and notes payable approximate their recorded values due to their short-term maturities.

Level 3 liabilities held as of
September 30, 2025, consisted of a contingent consideration liability related to the February 13, 2024 acquisition of Renovaro
Cube, (the “Acquisition”). As consideration for the Acquisition, the stockholders of Renovaro Cube received (i) 7,083,418
shares of Common Stock, and (ii) the right to receive up to 1,189,954 contingent shares pro rata upon the exercise of convertible 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 September 30, 2025,
there were 267,695 contingent shares issuable in connection with the Acquisition.