Company: LNAI
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001731122-25-001316
Chunk: 79

Company: Lunai Bioworks Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 79
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 circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions
and conditions. Our most critical accounting estimates are detailed below, and our significant accounting policies are more fully described
in Note 1 of the accompanying consolidated financial statements.

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.

Goodwill - Goodwill is
not amortized but is evaluated for impairment annually as of June 30, 2025 or whenever events or changes in circumstances indicate the
carrying value may not be recoverable.

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. The annual fair value analysis performed on goodwill supported that
goodwill was impaired as of June 30, 2025. The Company recorded an impairment loss of $47,614,729 for the period ended September 30, 2024
and $122,804,700 for