Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 203

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 203
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 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. 

    F-13

There were no Level 2 and 3 assets,
or any Level 1 or 2 liabilities as of June 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 1 assets held as of June
30, 2025, consisted of an investment in equity securities related to an extension agreement entered on February 28, 2024.
The Company purchased 467,290 shares of common stock at a purchase price of $1.07 per share. The investment in equity securities was recorded
at a fair value of $500,000 at the time of purchase and is subsequently remeasured to fair value at the end of each reporting period.
As of June 30, 2025, the Company held 467,290 shares of common stock in connection with the investment in equity securities. 

Level 3 liabilities held as of
June 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) 70,834,183
shares of Common Stock, and (ii) the right to receive up to 11,899,545 contingent shares pro rata upon the exercise of convertible