NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business – On August 20, 2025, the Company changed its corporate name from Renovaro Inc. to Lunai Bioworks Inc. (“Lunai”) On April 8, 2025, Lunai Bioworks Inc. acquired BioSymetrics, Inc. and its subsidiary (“BioSymetrics, Corp.”), as a wholly owned subsidiary pursuant to a stock purchase agreement. On February 13, 2024, the Company changed its corporate name from Renovaro Biosciences Inc. to Renovaro Inc. (“Renovaro”, and together with its subsidiaries, the “Company”, “we” or “us”) and acquired GEDi Cube Intl Ltd and its subsidiaries (“Renovaro Cube”), as a wholly owned subsidiary pursuant to a stock purchase agreement. In August 2023, the Company changed its corporate name from Enochian Biosciences Inc. to Renovaro Biosciences Inc. The Company is an AI-driven platform for precision medicine, diagnostics, and biodefense. Its proprietary technologies transform complex biomedical data into predictive insights, enabling faster discovery, greater accuracy, and strategic partnerships across the life sciences and government sectors.

Basis of Presentation – The Company prepares consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and follows the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

Principles of Consolidation – For the years ended June 30, 2026 and 2025, the consolidated financial statements include the accounts and operations of Lunai, and its wholly owned subsidiaries. All material inter-company transactions and accounts have been eliminated in the consolidation.

Subsidiaries – Renovaro Biosciences Inc. (“Renovaro Biosciences”), formerly Renovaro Biopharma Inc., was incorporated on May 19, 2017 in Delaware and is a 100% owned subsidiary of Lunai. Renovaro Biosciences owns a perpetual, fully paid-up, royalty-free, sublicensable, and sole and exclusive worldwide license to research, develop, use, sell, have sold, make, have made, offer for sale, import and otherwise commercialize certain intellectual property in cellular therapies for the prevention, treatment, amelioration of and/or therapy exclusively for HIV in humans, and research and development exclusively relating to HIV in humans.

Renovaro Biosciences Denmark ApS (“Renovaro Denmark”), formerly Enochian Biosciences Denmark ApS a Danish corporation was incorporated on April 1, 2001. On February 12, 2014, in accordance with the terms and conditions of a Share Exchange Agreement, the Company acquired Renovaro Denmark and it became a 100% owned subsidiary of Lunai subject to 185,053 pre-split shares of Common Stock of Lunai (2,313 shares as adjusted for the subsequent reverse stock splits) held in escrow according to Danish law (the “Escrow Shares”). As of June 30, 2026, there are 214 Escrow Shares remaining (see Note 9).

On February 13, 2024, the Company acquired 100% of Renovaro Cube. As a result of the acquisition, Renovaro Cube became a wholly-owned subsidiary of the Company (see Note 12).

On April 8, 2025, the Company acquired 100% of BioSymetrics, Corp. As a result of the acquisition, BioSymetrics, Corp. became a wholly-owned subsidiary of the Company (see Note 12).

On May 1, 2026, the Company, through its wholly owned subsidiary Lunai Bioworks IP, Inc., a Delaware corporation, acquired Neurobridge IP Holdings Incorporated pursuant to an Agreement and Plan of Merger dated April 27, 2026, under which Neurobridge merged with and into Lunai Bioworks IP, Inc., with Lunai Bioworks IP, Inc. continuing as the surviving corporation (see Note 12).

Use of Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates include the fair value of assets acquired in a business acquisition, contingent consideration, and equity instruments issued for goods or services.

Functional Currency and Foreign Currency Translation – The functional currency of Renovaro Denmark is the Danish Kroner (“DKK”), the functional currency of Renovaro Cube is the Euro (“EUR”) and the functional currency of BioSymetrics Corp. is Canadian Dollar (“CAD”). The Company’s reporting currency is the U.S. Dollar for the purpose of these financial statements. The Company’s balance sheet accounts are translated into U.S. dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the years ended June 30, 2026, and 2025. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.

Cash and Cash Equivalents – The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in financial institutions, which, at times, exceed the amount of deposit insurance provided within the relevant jurisdiction where the deposits are held. As of June 30, 2026, and June 30, 2025, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Investment in Equity Securities – The Company accounts for investments in equity securities in accordance with ASC 321, Investments—Equity Securities. Equity securities with readily determinable fair values are measured at fair value, with changes in fair value recognized in net income or loss. Equity securities without readily determinable fair values are measured at cost, less impairment, if any, and adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company evaluates such investments at each reporting period for impairment or other observable transactions that would require adjustment. On February 28, 2025, the Company purchased $500,000 of equity securities and subsequently sold for proceeds of $544,700 in 2025. During the years ended June 30, 2026 and 2025, the Company recorded a change in fair value of equity securities for $156,849 and ($112,149), respectively (see Note 3). The investment in equity securities balance at June 30, 2026 and June 30, 2025, was 0 zero and $387,851, respectively.

Insurance Receivable – The Company recognizes insurance receivables associated with expected recoveries of costs incurred for litigation which is probable of incurring a loss and for which it is probable the Company will receive coverage under its existing insurance policies. The Company records any such recoveries on a gross basis and does not net such amounts against any related loss contingency accruals.

Property and Equipment - Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized and depreciated upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets, which range from four to ten years (see Note 4).

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

Definite life intangible assets relate to patents and intellectual property. 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.

Revenue Recognition – The Company recognizes revenue in accordance with ASC 606 when control of promised services is transferred to the customer. During the year ended June 30, 2026 the Company began providing research services under a fixed fee services agreement with a single customer. The agreement represents a single performance obligation satisfied over time, and revenue is recognized ratably over the 18-month service period. Amounts billed in advance of performance are recorded as deferred revenue. Revenue for the years ended June 30, 2026 and June 30, 2025 was $51,992 and zero, respectively.

Impairment of Goodwill – 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 unit. The Company recorded an impairment loss of $47,614,729 for the period ended September 30, 2024 and $122,804,700 for the period ended June 30, 2025. During the year ended June 30, 2026, the Company recorded no impairment loss as the asset was fully impaired.

The carrying value of goodwill at June 30, 2026 and 2025 was $5,963,000 and $5,963,000, respectively.

 Impairment of Long-Lived Assets - Long-lived assets, such as property and equipment and definite life intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectations 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. Impairment of these assets for the years ended June 30, 2026 and 2025 was $831,915 and 0 zero respectively.

 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 over the lease term unless the related operating lease right-of-use asset has been impaired. Following an impairment of an operating lease right-of-use asset, the Company recognizes a single lease cost consisting of the straight-line amortization of the remaining right-of-use asset balance, if any, together with the accretion of the related lease liability using the discount rate established for the lease. Lease expense is included in general and administrative expenses in the consolidated statements of operations.

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, 2026 and 2025 amounted to $24,518, and $537,428 respectively.

Income Taxes - The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes, which requires an asset and liability approach for accounting for income taxes (see Note 8).

Loss Per Share - The Company calculates earnings (loss) per share in accordance with FASB ASC 260 Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of shares of Common Stock outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as for basic EPS) and potentially dilutive common shares. Potential shares of Common Stock included in the diluted earnings per share calculation include in-the-money stock options that have been granted but have not been exercised. The shares of Common Stock outstanding at June 30, 2026 and 2025 were 4,615,503 and 2,217,411, respectively. Because of the net loss for each of the years ended June 30, 2025 and June 30, 2026, dilutive shares for both periods were excluded from the diluted EPS calculation, as the effect of these potential shares of Common Stock is anti-dilutive. The Company had 170,864 and 111,670 potential shares of Common Stock excluded from the diluted EPS calculation for the years ended June 30, 2025 and 2026, respectively. In addition, 1,666,666 shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock (as adjusted for the May 2026 Reverse Stock Split; 13,333,333 before such adjustment) were excluded from the diluted EPS calculation for the year ended June 30, 2026 because the Series B Preferred Stock is not convertible prior to receipt of the Stockholder Approval described in Note 9 and the effect of such shares would be anti-dilutive.

Fair Value of Financial Instruments – The Company accounts for fair value measurements for financial assets and financial liabilities in 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.

 Stock-Based Compensation - The Company has granted stock options, restricted share units (“RSUs”) and warrants to certain employees, officers, directors, and consultants. The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Stock based compensation costs for the vesting of options and RSUs granted to certain employees, officers, directors, and consultants for the years ended June 30, 2026 and 2025 were $630,389 and $3,313,291, respectively.

The Company recognizes compensation costs for stock option awards to employees, officers and directors based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used to estimate the fair value of the stock options granted using the Black-Scholes option-pricing model are the expected term of the award, the underlying stock price volatility, the risk-free interest rate, and the expected dividend yield. The Company accounts for forfeitures as they occur.

The Company records stock-based compensation for services received from non-employees in accordance with ASC 718, Compensation—Stock Compensation Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to consultants and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the consultants’ required service period, which is generally the vesting period.

The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Accordingly, the Company has elected to use the “simplified method” to estimate the expected term of its share-based awards. The simplified method computes the expected term as the sum of the award’s vesting term plus the original contractual term divided by two.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which the Company adopted for the year ended June 30, 2025 (see Note 13). In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is effective for the Company for the year ended June 30, 2026 and requires disaggregated rate-reconciliation and income-taxes-paid disclosures (see Note 8). In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which is effective for the Company for the year ending June 30, 2028; the Company is evaluating its impact. Other recent accounting pronouncements issued by the FASB that have not yet been adopted by the Company are not expected to have a material impact on the Company’s present or future consolidated financial statements. 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which amends Income Taxes (Topic 740). The FASB issued this update to improve annual basis income tax disclosures related to (1) rate reconciliation, (2) income taxes paid, and (3) other disclosures related to pretax income (or loss) and income tax expense (or benefit) from continuing operations. We adopted this ASU on January 1, 2025, and applied the amendments retrospectively to all prior periods presented in our consolidated financial statements (see Note 6, Income Taxes). The adoption of this guidance did not have an impact on our consolidated financial position, results of operations or cash flows.