Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 199

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 199
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 that the asset will more likely than not be sold or disposed of significantly
before the end of its estimated useful life.

Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would
be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and would
no longer be depreciated. The depreciable basis of assets that are impaired and continue in use are their respective fair values. No impairment
of these assets was recorded during the year ended June 30, 2025 or 2024.

 Leases - In accordance
with ASC Topic 842, the Company determined the initial classification and measurement of its right-of-use assets and lease liabilities
at the lease commencement date and thereafter. The lease terms include any renewal options and termination options that the Company is
reasonably assured to exercise, if applicable. The present value of lease payments is determined by using the implicit interest rate in
the lease, if that rate is readily determinable; otherwise, the Company develops an incremental borrowing rate based on the 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 FAS