LNAI — FY2026 Financial Report Analysis

Overview

Lunai Bioworks (formerly Renovaro, and before that Enochian Biosciences) is a pre-clinical biotech: none of its drug or diagnostic candidates has reached the market, and its only revenue so far is a small research-services fee. Its fiscal year ends June 30. In fiscal 2026 the net loss fell 98%, from $178.0 million to $3.56 million. That figure is almost entirely accounting. A year ago the company wrote off $170.4 million of goodwill. This year it booked a $12.0 million non-cash gain when its bankrupt Dutch subsidiary, GEDi Cube, left its books. The figures that matter more point the other way: $1.71 million of cash against $18.97 million of liabilities, and management's own statement that as of October 13, 2026 it has "less than one month of available cash resources." The auditor, Sadler, Gibb & Associates, added a going-concern paragraph, meaning it has substantial doubt the company can keep operating for another year without new money.

At a glance

• Net loss: $3.56M, down from $178.0M. Most of the change comes from a write-off in 2025 that didn't repeat and a one-time paper gain in 2026. Neither involved cash.
• Cash used by operations: $5.29M, down 33% from $7.87M. The company really did cut costs, but it still spends about three times its year-end cash balance in a year.
• Shares outstanding: 4.62M at June 30, up 108% from 2.22M (both adjusted for two reverse splits during the year). Selling new shares and turning debt into shares is how the company stays funded, so each existing share owns a shrinking slice of the company.

The numbers

Operating margin is left out on purpose. With $52,000 of revenue against $8.7 million of operating costs, the ratio would mean nothing.

Takeaway: The 98% smaller loss is not a turnaround. It is a write-off that didn't repeat plus a one-time paper gain. What decides this company's next quarter is money: $1.71M of cash, $12.39M of unpaid supplier bills and less than a month of funding left as of the filing date. Whatever the science is worth, shareholders now face a near-term choice between another heavily dilutive raise and the company cutting back or stopping operations.

Where the loss actually went

The income statement mixes real spending with large non-cash accounting entries, so it helps to take them apart.

• The 2025 write-off didn't repeat. In fiscal 2025 the company recorded a $170.4 million goodwill impairment. Goodwill is the premium paid for past acquisitions above the value of their identifiable assets, and an impairment admits that premium is no longer worth what was paid. Note 5 says $122.8 million of it related to the Netherlands (RENC) reporting unit and was driven by "the Company's continued inability to raise capital for the further development of the technologies within this reporting unit." No goodwill impairment was taken in fiscal 2026. The remaining $5.96 million of goodwill on the balance sheet was unchanged.
• A $12.0M gain from a bankrupt subsidiary. GEDi Cube B.V., acquired in February 2024, was declared bankrupt by the Court of Amsterdam on September 2, 2025. Once the company lost control, it took GEDi off its books ("deconsolidation") and recorded a $12,019,227 gain. That kind of gain usually reflects liabilities leaving the balance sheet. It did not bring in any cash.
• A $7.4M loss from swapping debt for shares. In July 2025 about $9.7 million of secured notes were exchanged for $16.1 million of convertible notes, which were immediately converted into 669,477 shares (split-adjusted). Bridge notes were also swapped for shares in March 2026. Exchanging debt on terms worth more than its book value produces an accounting loss, which here was $7,415,708 in total. It is non-cash, but it reflects how expensive these terms were for existing shareholders.
• Smaller items: a $590,000 gain from lowering the estimated value of an acquisition earn-out, a $156,849 gain on equity securities, and an $831,915 impairment of long-lived assets. Of that impairment, $509,884 wrote down office leases the company is now in default on: unpaid rent on its Century City (Los Angeles) and Boca Raton offices, both no longer used.

Taking out impairments, operating costs (G&A, R&D and depreciation) were about $7.9M versus $18.5M a year earlier, a 57% drop by our calculation from the income statement. That reduction is real. The MD&A explains that G&A fell $10.1 million mainly through lower legal fees (-$2.41M), stock-based compensation (-$2.68M), consulting (-$2.14M), salaries (-$1.80M) and rent (-$0.37M). The company had 12 full-time employees at year end, 9 of them at BioSymetrics.

R&D spending was close to zero. Research and development expense was $24,518 for the whole year, down from $537,428, mainly because the company bought fewer lab consumables. For a company describing itself as developing therapies, diagnostics and biodefense countermeasures, that is the clearest sign of how far the cash squeeze has gone: almost all spending went to running the company (G&A), not to research.

What the headline numbers hide

• Cash burn was larger than the reported loss. Operations used $5.29 million of cash against a $3.56 million net loss. The gap mostly comes from the $12.0 million GEDi gain, which brought in no cash. Burn would have been higher still if the company had paid its bills: accounts payable increased the cash line by $1.13 million and accrued expenses by $0.41 million. In effect, unpaid suppliers financed part of the year.
• Payables are seven times cash. Trade accounts payable were $12.39 million at June 30 against $1.71 million of cash. Working capital (short-term assets minus short-term liabilities) was a deficit of $16.87 million, an improvement from $28.11 million mainly because notes payable were converted into shares.
• Where the cash came from. Cash rose $1.62 million only because of $8.12 million of gross financing: $5.05 million net from at-the-market (ATM) share sales (selling new shares gradually into the open market) at roughly $3.02–$5.57 per share, $2.32 million of new notes, and $750,000 from a November 2025 private placement. Of that private placement, only $750,000 of the $3.13 million agreed had arrived by June 30. The company also repaid $1.0 million of notes and $0.73 million under a finance agreement.
• Per-share figures are distorted by reverse splits. The company did a 1-for-10 reverse split in September 2025 and a 1-for-8 split in May 2026, partly to keep its Nasdaq listing above the $1.00 minimum bid price. A reverse split merges several old shares into one. All per-share figures are restated, which is why last year's loss per share shows as $86.27. Weighted shares rose 63% (3.36M vs 2.06M), so per-share comparisons depend on both the accounting gain and the dilution.
• Comprehensive loss was four times the net loss. Including currency translation, the comprehensive loss was $14.53 million, because a $10.97 million translation loss went through other comprehensive income. That balance went from +$10.81 million to -$0.16 million.
• More dilution is already arranged. The May 2026 Neurobridge acquisition was paid for with 8 shares of Series B convertible preferred stock with a stated value of $20.0 million. Once shareholders approve, they can convert into up to 1,666,666 common shares at $12.00. The 10-K says that would add about 36% to the 4,615,503 shares outstanding at June 30. The preferred also ranks ahead of common shareholders for its $20.0 million in a liquidation. With a $9.02 million stockholders' deficit, the company states that common holders "would likely receive" little or nothing in that scenario. After year end the share count kept rising, to 5,034,452 by October 13, as debt and supplier bills were settled in stock.
• Controls and legal overhang. Management concluded internal control over financial reporting was not effective, citing a material weakness: "not having adequate resources to address complex accounting matters." A 2022 securities class action and related shareholder lawsuits tied to the company's former relationship with Serhat Gümrükcü have settlements awaiting final court approval.

What the business is now

After GEDi Cube's exit, the company has three parts:

• BioSymetrics (acquired April 2025): an AI and machine-learning platform for biomarker discovery and drug screening. One example is zebrafish-based behavioral profiling, which the company now also applies to chemical-threat assessment. The company signed its first commercial agreement in this biodefense area in April 2026, a multi-year collaboration, and says it is pursuing BARDA and U.S. Department of Defense funding, with "no assurance" of any award. The $51,992 of revenue came from a single research-services customer.
• Renovaro Biosciences: allogeneic ("off-the-shelf," donor-derived) cell and gene therapy ideas for cancer and HIV. The 10-K says it intends to develop these "if the necessary funding is obtained."
• Neurobridge N2B platform (acquired May 2026, held by Lunai Bioworks IP): an intranasal "nose-to-brain" drug delivery technology previously tested in Phase I and II studies of intranasal apomorphine in healthy volunteers and Parkinson's patients. Lunai's rights cover only biodefense countermeasures and Alzheimer's disease. Valuing the preferred stock used to pay for it (about $1.84 million fair value against $20.0 million stated value) was flagged by the auditor as a critical audit matter, because it relied on judgment-heavy assumptions about shareholder approval, volatility and marketability discounts. The acquisition is the main reason definite-life intangible assets rose from $15,000 to $1.82 million.

Outlook and what to watch

Management gives no financial guidance. Its stated plan is to raise equity or debt and, if it cannot, it "may be required to significantly reduce, temporarily suspend, or permanently cease some or all of its operations." After year end, the company converted about $672,000 of debt and payables owed to related party René Sindlev into 239,025 shares at $2.81. It issued 180,000 shares worth $432,000 to an advisory firm, partly for past invoices. A former CEO and a former director waived $434,949 of accrued pay, which should show up as a small gain in the September quarter.

Two listing-related issues are open. As of June 30, stockholders' equity was a $9.02 million deficit, below Nasdaq's $2.5 million minimum, and the company is under a one-year Nasdaq panel monitor for the bid-price rule. Separately, in an October 9, 2026 Form 8-K, the company said it had asked Nasdaq to suspend trading in its own shares. It cited trading records from its pending lawsuit against Seven Points Capital, which it says show heavy short selling and failures to deliver. Those allegations have not been decided by the court.

Our read: the cost cuts are real, but the company has no near-term product and no meaningful revenue, and its R&D has almost stopped. It is surviving by repeatedly issuing shares at falling prices. Over the next one or two quarters, watch four things: whether new funding closes and at what price; whether the Series B conversion is approved, adding up to 36% more shares; whether the biodefense agreement or any BARDA/DoD award produces revenue beyond the single $52,000 customer; and whether Nasdaq acts on either the equity deficit or the company's own suspension request. The next filing should be the 10-Q for the quarter ending September 30, 2026. Last year's equivalent was filed on November 14.