What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-17 compared with 2025-11-14 · 161 added, 117 removed, 261 unchanged (52% of the section changed)

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Forward-Looking Statement Notice

Certain statements made in this

Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform

Act of 1995) regarding the plans and objectives of management for future operations.

Such statements involve known and unknown risks,

uncertainties and other factors that may cause actual results, performance, or achievements of Lunai Bioworks Inc.

and together with its subsidiaries, the “Company”, “we” or “us”) to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking statements.

The forward-looking statements included

herein are based on current expectations that involve numerous risks and uncertainties.

Our actual future results and trends may differ

materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in Part I, Item 1A,

“Risk Factors” in our Annual Report on Form 10-K as filed with the SEC on September 29, 2025.

The Company’s plans and

objectives are based, in part, on assumptions involving the continued expansion of the business.

Assumptions relating to the foregoing

involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions,

all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.

Although the Company

believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and,

therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate.

of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should

not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

September 30, 2025, Lunai Bioworks Inc.

Certain statements made in this Quarterly Report on

Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding

the plans and objectives of management for future operations.

Such statements involve known and unknown risks, uncertainties and other

factors that may cause actual results, performance, or achievements of Lunai Bioworks Inc.

(“Lunai,” and together with its

subsidiaries, the “Company”, “we” or “us”) to be materially different from any future results, performance

or achievements expressed or implied by such forward-looking statements.

The forward-looking statements included herein are based on current

expectations that involve numerous risks and uncertainties.

Our actual future results and trends may differ materially depending on a

variety of factors, including, but not limited to, the risks and uncertainties discussed in Part I, Item 1A, “Risk Factors”

in our Annual Report on Form 10-K as filed with the SEC on September 29, 2025.

The Company’s plans and objectives are based, in

part, on assumptions involving the continued expansion of the business.

Assumptions relating to the foregoing involve judgments with respect

to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or

impossible to predict accurately and many of which are beyond the control of the Company.

Although the Company believes its assumptions

underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no

assurance the forward-looking statements included in this Quarterly Report will prove to be accurate.

In light of the significant uncertainties

inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation

by the Company or any other person that the objectives and plans of the Company will be achieved

December 31, 2025, Lunai Bioworks Inc.

operates through two subsidiaries, Renovaro Biosciences and BioSymetrics.

BioSymetrics refers

to BioSymetrics Inc.

BioSymetrics refers to

BioSymetrics Inc.

and its wholly owned subsidiary BioSymetrics Corp., which were acquired on April 8, 2025.

During the quarter ended

September 30, 2025, GediCube, B.V., acquired on February 13, 2024, filed for bankruptcy and ceased operations.

As a result, beginning

in the second quarter of 2026, the Company will no longer report on its operations.

During the quarter ended September

30, 2025, GediCube, B.V., acquired on February 13, 2024, filed for bankruptcy and ceased operations.

As a result, beginning in the second

quarter of 2026, the Company will no longer report on its operations.

Renovaro Biosciences Overview

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in experiment interpretation and lead generation.

major component of BioSymetrics’ platform is the Phenograph.

The Phenograph TM is BioSymetrics’ proprietary knowledge

The purpose of the Phenograph TM is to map human genes and phenotypes to those of model systems, allowing virtual

phenotypic screening , target nomination, and active learning feedback.

The Phenograph TM contains 5,856 diseases associated

with one or more phenotypes in humans, and 16,676 human genes with one or more orthologous zebrafish genes.

Zebrafish genes are mapped

to phenotypic terms using over 300 individually-trained machine learning models, that fill in the gaps of known gene-phenotype associations.

Leveraging this platform, we can prioritize human genes on the basis of predicted experimental phenotype, reducing the number of required

experiments to produce human-informed in vivo disease models.

Finally, one important component of the BioSymetrics platform is that it couples AI-based prediction

with experimental validation.

BioSymetrics has designed deep learning-based computer vision software that automatically identifies and

characterizes organ systems relevant to neurological, cardiovascular, and muscle development ( Figure below ).

Additionally, BioSymetrics

has developed a proprietary light stimulus battery and characterized a small number of known CNS therapeutics and unknown compounds, providing

an initial basis for evaluation of chemical effects.

A large-scale behavioral profiling

platform for identification of neurotherapeutics.

(A) 96-well plate containing 8 zebrafish larvae per well, as used for behavioral

(B-C) Line plots showing activity over time for 48 replicate wells focusing in on a small (5 min) part of the behavioral profile.

Unlike control wells (B), drug-treated wells (C) show much higher activity levels.

(D-H) Example profiles for 5 different reference compounds

showing the average behavioral profiles for control and compound-treated wells (n= 4 wells;

Another major component of BioSymetrics’ platform

is the Phenograph.

The Phenograph TM is BioSymetrics’ proprietary knowledge graph.

The purpose of the Phenograph TM

is to map human genes and phenotypes to those of model systems, allowing virtual phenotypic screening , target nomination, and active

learning feedback.

The Phenograph TM contains 5,856 diseases associated with one or more phenotypes in humans, and 16,676 human

genes with one or more orthologous zebrafish genes.

Zebrafish genes are mapped to phenotypic terms using over 300 individually-trained

machine learning models, that fill in the gaps of known gene-phenotype associations.

Leveraging this platform, we can prioritize human

genes on the basis of predicted experimental phenotype, reducing the number of required experiments to produce human-informed in vivo

disease models.

Finally, one important component

of the BioSymetrics platform is that it couples AI-based prediction with experimental validation.

BioSymetrics has designed deep learning-based

computer vision software that automatically identifies and characterizes organ systems relevant to neurological, cardiovascular, and muscle

development ( Figure below ).

Additionally, BioSymetrics has developed a proprietary light stimulus battery and characterized a small

number of known CNS therapeutics and unknown compounds, providing an initial basis for evaluation of chemical effects.

A large-scale behavioral profiling platform for

identification of neurotherapeutics.

(A) 96-well plate containing 8 zebrafish larvae per well, as used for behavioral profiling.

Line plots showing activity over time for 48 replicate wells focusing in on a small (5 min) part of the behavioral profile.

Unlike control

wells (B), drug-treated wells (C) show much higher activity levels.

(D-H) Example profiles for 5 different reference compounds showing

the average behavioral profiles for control and compound-treated wells (n= 4 wells;

orange and blue lines, respectively).

that each of the 5 compounds causes a distinct behavioral profile.

Note that each

of the 5 compounds causes a distinct behavioral profile.

(I) Examples of morphological segmentation.

Colored micrographs of

laterally oriented zebrafish larvae show computer-vision-based organ segmentation using trained ML classifiers.

Colored micrographs of laterally

oriented zebrafish larvae show computer-vision-based organ segmentation using trained ML classifiers.

In prior work, we leveraged our

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financing to fund operations.

As of September 30, 2025, the Company had cash and cash equivalents of $624,808 and an accumulated deficit

of $507,643,549 and a working capital deficit of $18,922,114.

As of December 31, 2025, the Company had cash and cash equivalents of $491,645, an accumulated deficit of

$509,442,953 and a working capital deficit of $19,487,088.

These conditions raise substantial doubt about the Company’s ability

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Management has reduced overhead

and administrative costs by streamlining the organization to focus around the development and validation of its AI-driven cancer diagnostics

and administrative costs by streamlining the organization to focus around the development, validation, and commercialization of its AI-driven

neurology and oncology diagnostics and therapeutic development platform.

The Company has tailored its workforce to focus on these activities.

In addition, the Company intends to secure additional required

funding through equity or debt financing.

However, there can be no assurance that the Company will be able to obtain any sources of funding.

Such additional funding may not be available or may not be available on reasonable terms, and, in the case of equity financing transactions,

could result in significant additional dilution to our stockholders.

If we do not obtain required additional equity or debt funding, our

cash resources will be depleted and we could be required to materially reduce or suspend operations, which would likely have a material

adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least

until additional funding is obtained.

If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy

protection or other alternatives that could result in our stockholders losing some or all of their investment in us.

In addition, the Company intends to secure additional required funding through equity or debt financing.

However, there can be no assurance

that the Company will be able to obtain any sources of funding.

Such additional funding may not be available or may not be available on

reasonable terms, and, in the case of equity financing transactions, could result in significant additional dilution to our stockholders.

If we do not obtain required additional equity or debt funding, our cash resources will be depleted and we could be required to materially

reduce or suspend operations, which would likely have a material adverse effect on our business, stock price and our relationships with

third parties with whom we have business relationships, at least until additional funding is obtained.

If we do not have sufficient funds

to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders

losing some or all of their investment in us.

Funding that we may receive during

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working capital reserves.

Results of Operations for the Three Months ended September 30, 2025

Results of Operations for the Three and Six Months ended December 31,

2025 and 2024

The following table sets forth

our revenues, expenses and net income, loss for the three months ended September 30, 2025 and 2024.

The financial information below is

derived from our unaudited condensed consolidated financial statements.

our revenues, expenses and net income, loss for the three and six months ended December 31, 2025 and 2024.

The financial information below

is derived from our unaudited condensed consolidated financial statements.

For the Three Months Ended

September 30,

For the Six Months Ended

Increase/(Decrease)

Operating Expenses

General and administrative

$ (2,586,913 )

$ (5,477,647 )

Research and development

Goodwill impairment

(47,614,729 )

Long-lived asset impairment

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Total Operating Expenses

(52,753,095 )

LOSS FROM OPERATIONS

(57,884,869 )

Other Income (Expenses)

Change in fair value of contingent consideration

Change in fair value of equity securities

Gain on bankruptcy of subsidiary

Loss on extinguishment of debt

Changed in fair value of equity securities

Gain on bankruptcy of subsidiary

Interest expense

Interest income and other income (expense)

Interest and other income

Total Other Income (Expense)

NET INCOME (LOSS)

$ (1,799,404 )

$ (7,252,394 )

$ (51,464,429 )

We are a pre-revenue, pre-clinical

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We do not anticipate earning any revenues until our therapies or products are approved for marketing and sale.

Our operating expenses for the three months ended December 31, 2025 and 2024,

were $1,823,414 and $4,546,316 respectively, representing a decrease of $2,722,902 or approximately

The decrease in operating expenses primarily relates to the decrease in general and administrative expenses of $2,586,913

and research and development expenses of $115,212.

Our operating expenses for the

three months ended September 30, 2025 and 2024, were $3,308,360 and $53,338,554, respectively, representing a decrease of $50,030,194,

or approximately 94%.

The decrease in operating expenses primarily relates to the decrease in goodwill impairment of $47,614,729 and by

the decrease in general and administrative expenses of $2,890,735, partially offset by the impairment of fixed assets and right of

use assets of $831,915 due to no longer using assets.

and administrative expenses for the three months ended September 30, 2025, and 2024, were $2,410,516 and $5,301,251, respectively, representing

six months ended December 31, 2025 and 2024, were $5,131,774 and $57,884,869 respectively, representing

a decrease of $52,753,095, or approximately 91% .

The variance is primarily related to a decrease in consulting fees of $1,576,761, legal

expenses of $899,802 and compensation and related expenses of $205,381.

Research and development expenses

for the three months ended September 30, 2025, and 2024, were $24,407 and $390,189, respectively, representing a decrease of $365,782

The decrease in operating expenses primarily relates to the decrease in goodwill

impairment of $47,614,729, general and administrative expenses of $5,477,647, research and development expenses of $480,994, partially

offset by the increase in intangible asset impairment of $831,915.

General and administrative expenses

for the three months ended December 31, 2025, and 2024, were $1,766,210 and $4,353,123, respectively, representing a decrease of $2,586,913

or approximately 59%.

The variance is primarily driven by a decrease of $346,100 in consumables and reagents used in discontinued product

Company recorded other income of $6,127,381 for the three months ended September 30, 2025, compared to other income of $9,126,518 for

the three months ended September 30, 2024, representing a decrease in other income (expense) of $2,999,137 or 33%.

The variance is primarily

due to the decrease in fair value of contingent consideration of $8,880,000 and loss on extinguishment of debt of $6,329,592, partially

offset by the gain on the bankruptcy of Gedi Cube B.V.

of $12,019,227.

Net Income (Loss)

Net income (loss) for the three

months ended September 30, 2025, and 2024, was $2,819,021 and $(44,212,036), respectively, representing a decrease in net loss of $47,031,057

The variance is primarily related to a decrease in legal expenses of $717,092, compensation and related expenses

of $591,638, consulting fees expense of $383,735, non-cash stock-based compensation expense of $429,812 and rent expense of $136,365,

investor relation expenses of $86,243 and accounting related expense of $77,120.

General and administrative expenses

for the six months ended December 31, 2025, and 2024, were $4,176,726 and $9,654,373, respectively, representing a decrease of $5,477,647

or approximately 57%.

The decrease in net loss was primarily due to the decrease in goodwill impairment of $47,614,729 in the prior period.

The variance is related to a decrease in consulting fees expense of $1,960,495, legal expenses of $1,616,069, compensation

and relates expenses of $797,019,non-cash stock-based compensation expense of $606,148, travel and related expenses of $108,772 and information

technology expenses of $76,669.

Research and development expenses

for the three months ended December 31, 2025, and 2024, were $45,872 and $161,084, respectively, representing a decrease of $115,212 or

approximately 72%.

The variance is primarily driven by a decrease of $121,511 in consulting expenses and outside services related to pre-clinical

Research and development expenses

for the six months ended December 31, 2025, and 2024, were $70,279 and $551,273, respectively, representing a decrease of $480,994 or

approximately 87%.

The variance is primarily driven by a decrease of $344,382 in consumables and reagents, and $143,777 in consulting

The Company recorded other income

of $24,010 for the three months ended December 31, 2025, compared to other expense of $2,706,078 for the three months ended December 31,

2024, representing a decrease in other expense of $2,730,088 or 101%.

The variance is primarily due to a decrease of $2,730,000 in the

change in fair value of contingent consideration in the current period.

The Company recorded other income

of $6,151,391 for the six months ended December 31, 2025, compared to other income of $6,420,440 for the six months ended December 31,

2023, representing a decrease in other expense of $269,049 or 4%.

The variance is primarily due to the change in fair value of contingent

consideration liability of $6,150,000 in the current period, loss on extinguishment of debt of $6,329,592 in the current period, partially

offset by the gain on bankruptcy of subsidiary in the amount of $12,019,227.

Net Income (Loss)

Net loss for the three months ended

December 31, 2025, and 2024, was $1,799,404 and $7,252,394, respectively, representing an decrease in net loss of $5,452,990 or approximately

The decrease in net loss was primarily due to a decrease in the change in fair value of contingent consideration of $2,730,000, a

decrease in general and administrative expenses of $2,586,913 and a decrease in research and development expenses of $115,212.

Net income (loss) for the six months

ended December 31, 2025, and 2024, was $1,019,617 and $(51,464,429) respectively, representing a decrease in net loss of $52,484,046 or

approximately 102%.

The decrease in net loss was primarily due to decrease in goodwill impairment of $47,614,729, gain on bankruptcy of

subsidiary of 12,019,227 and a decrease in general and administrative expenses of $5,477,647.

Liquidity and Capital Resources

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As noted above under the heading

“Going Concern and Management’s Plans,” through September 30, 2025, we have incurred substantial losses.

“Going Concern and Management’s Plans,” through December 31, 2025, we have incurred substantial losses.

additional funds both in the next twelve months and beyond for (a) research and development, (b) increases in personnel, (c) the purchase

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to raise capital when needed could materially adversely affect our growth plans and our financial condition and results of operations.

As of September 30, 2025, the Company

As of December 31, 2025, the Company

had $491,645 in cash and working capital deficit of $19,487,088 as compared to $92,700 in cash and working capital deficit of $28,109,502

as of June 30, 2025, an increase of 430% and decrease of 31%, respectively.

Total assets at September 30, 2025,

Total assets at December 31, 2025,

were $6,666,446 compared to $8,230,840 as of June 30, 2025.

The decrease in assets is primarily due to the impairment of operating lease

right-of-use assets of $687,371, amortization of prepaid assets of $390,529, partially offset by the increase of cash of $532,108 in the

current period.

Total liabilities at September

right-of-use assets of $687,371, amortization of prepaid assets of $543,237, decrease of investment in equity securities of $387,851,

partially offset by the increase of cash of $398,945 in the current period.

Total liabilities at December 31,

2025, were $20,215,234 compared to $29,580,681 as of June 30, 2025.

The decrease in total liabilities was primarily related to the

decrease of $7,285,741 in notes payable – related parties, $974,383 in accrued expenses, $461,411 in accounts payable, $370,000

in contingent consideration liability and $306,853 in other current liabilities.

The decrease in total liabilities was primarily related to the decrease

of $7,045,741 in notes payable – related parties, $915,595 in accrued expenses, $216,220 in accounts payable, $510,000 in contingent

consideration liability and $303,937 in other current liabilities.

The following is a summary of the

Company’s cash flows (used in) or provided by operating, investing, and financing activities:

September 30,

Net Cash Used in Operating Activities

$ (2,420,323 )

$ (4,576,052 )

Net Cash Provided by Investing Activities

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Change in Cash and Cash Equivalents

The decrease in our cash used in

operating activities is primarily related to the changes in our operating assets and liabilities.

The change is primarily driven by our

net income offset by significant non-cash charges such as stock-based compensation, impairments and change in fair value of contingent

The decrease in our cash

used in operating activities is primarily related to the changes in our operating assets and liabilities.

The change is primarily driven

by our net income offset by significant non-cash charges such as stock-based compensation, impairments and change in fair value of contingent

consideration.

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other receivables, prepaid expenses and accounts payable.

Cash used provided by investing

activities during the period related to proceeds from the sale of equity securities of $544,700.

Cash provided by investing activities

during the period is primarily related to proceeds from the sale of equity securities of $544,700.

Cash provided by financing activities

during the period primarily related to net proceeds of $1,343,357 from issuance of $1,615,000, net of $18,495 placement costs, in notes

during the period primarily related to proceeds of $750,000 from a private placement, $1,815,000, net of $58,495 placement costs, in notes

payable that were partially offset by $271,643 in repayment of a finance agreement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis