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What changed in bioAffinity Technologies, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of bioAffinity Technologies, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+337 added−371 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in bioAffinity Technologies, Inc.'s 2024 10-K

337 paragraphs added · 371 removed · 246 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+40 added−66 removed186 unchanged
Biggest changeRecent Developments Registered Direct Offering On March 6, 2024, we raised $2.5 million in gross proceeds from the sale to four institutional investors of (1) 1,600,000 shares of our common stock (the “Shares”), par value $0.007 per share (“Common Stock”) in a registered direct offering, and (2) warrants to purchase an aggregate of 1,600,000 shares of Common Stock (the “Common Warrants”) with an exercise price of $1.64 in a concurrent private placement.
Biggest changeOn October 21, 2024, we issued to certain institutional investors (i) in a registered direct offering, 2,048,294 shares of our Common Stock, and (ii) in a concurrent private placement, common warrants to purchase an aggregate of 2,662,782 shares of Common Stock, with an exercise price of $1.50, pursuant to a securities purchase agreement, dated October 18, 2024, that we entered into with such institutional investors, and received aggregate gross proceeds from the offerings of approximately $2.7 million, before deducting placement agent fees and other offering expenses payable by us.
CyPath ® Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor. The flow cytometer is a well-established instrument used in many commercial laboratories.
CyPath ® Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor. The flow cytometer is a well-established instrument used in many commercial laboratories.
Flow cytometry collects data pertaining to properties of single cells labeled with antibodies and dyes specific to cell types and characteristics. Sputum is an excellent sample for analysis because it is in direct contact with any malignancy in the lungs and can provide information about its area of field cancerization and the lung microenvironment.
Flow cytometry collects data pertaining to properties of single cells labeled with antibodies and dyes specific to cell types and characteristics. Sputum is an excellent sample for analysis because it is in direct contact with any malignancy in the lungs and can provide information about its area of field cancerization and the lung microenvironment.
In November 2023, the American Cancer Society updated its guidelines for lung cancer screening to include all former smokers over the age of 50 regardless of when they quit, increasing the number of American adults eligible for screening to 19 million. China has an estimated 300 million smokers, according to the World Health Organization.
In November 2023, the American Cancer Society updated its guidelines for lung cancer screening to include all former smokers over the age of 50 regardless of when they quit, increasing the estimated number of American adults eligible for screening to 19 million. China has an estimated 300 million smokers, according to the World Health Organization.
European Data Collection The collection and use of personal data (including health data) in the European Economic Area (the “EEA”) are governed by the EU General Data Protection Regulations (the “EU GDPR”) and national implementing legislation in EEA member states.
European Data Collection The collection and use of personal data (including health data) in the European Economic Area (“EEA”) are governed by the EU General Data Protection Regulations (“EU GDPR”) and national implementing legislation in EEA member states.
The results of a large national clinical trial that was reported in the New England Journal of Medicine in an article dated August 4, 2011, titled “Reduced Lung-Cancer Mortality with Low-Dose Computed Tomographic Screening” showed that screening for lung cancer using low-dose computed tomography (“LDCT”) resulted in a reduction of the mortality rate by 20% as compared to screening by X-ray if LDCT screening is used by patients at high risk for lung cancer on an annual basis.
The results of a large national clinical trial that was reported in the New England Journal of Medicine in an article dated August 4, 2011, titled “Reduced Lung-Cancer Mortality with Low-Dose Computed Tomographic Screening” showed that screening for lung cancer using low-dose computed tomography (“LDCT”) resulted in a reduction of the mortality rate by up to 20% as compared to screening by X-ray if LDCT screening is used by patients at high risk for lung cancer on an annual basis.
In addition, Nodify XL-2 reported an AUC of 0.62 (unacceptable) and 0.76 (acceptable) for their two clinical trials, as compared to CyPath ® Lung with an AUC of 0.89 and 0.90 in two independent study groups (excellent). Finally, the Percepta nasal swab test offered by Veracyte is not widely available and is seeking a reimbursement code.
In addition, Nodify XL-2 reported an AUC of 0.62 (unacceptable) and 0.76 (acceptable) for their two clinical trials, as compared to CyPath ® Lung with an AUC of 0.89 and 0.90 in two independent study groups (excellent). Finally, the Percepta nasal swab test offered by Veracyte is not widely available and reportedly is seeking a reimbursement code.
Phase 2 of our business plan anticipates entering the EU market with CyPath ® Lung as a CE-marked IVD test with sales in the Netherlands, followed by a staged EU expansion. Phase 3 of our business plan focuses on the marketing of an FDA-cleared CyPath ® Lung test, beginning with a pivotal clinical trial in the U.S.
Phase 2 of our business plan anticipates entering the EU market with CyPath ® Lung as a CE-marked IVD test beginning with sales in the Netherlands, followed by a staged EU expansion. Phase 3 of our business plan focuses on the marketing of an FDA-cleared CyPath ® Lung test, beginning with conducting a pivotal clinical trial in the U.S.
These provisions include, but are not limited to: ● reduced obligations with respect to financial data, including presenting only two years of audited financial statements and selected financial data, and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure in our initial registration statement; 20 ● an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended (“SOX”); ● reduced disclosure about executive compensation arrangements in our periodic reports, registration statements, and proxy statements; and ● exemptions from the requirements to seek non-binding advisory votes on executive compensation or stockholder approval of any golden parachute arrangements.
These provisions include, but are not limited to: ● reduced obligations with respect to financial data, including presenting only two years of audited financial statements and selected financial data, and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure in our initial registration statement; 21 ● an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended (“SOX”); ● reduced disclosure about executive compensation arrangements in our periodic reports, registration statements, and proxy statements; and ● exemptions from the requirements to seek non-binding advisory votes on executive compensation or stockholder approval of any golden parachute arrangements.
While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure. 18 After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.
While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure. 19 After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.
This limited test market launch is designed to evaluate our marketing program and help us ensure each step in the care pathway – from the initial order by physicians to sputum collection and processing, to generating and delivering the patient report – is efficient and effective.
This limited test market launch was designed to evaluate our marketing program and help us ensure each step in the care pathway – from the initial order by physicians to sputum collection and processing, to generating and delivering the patient report – is efficient and effective.
Reveles is board certified by the American Society of Clinical Pathology as a clinical specialist in cytogenetics who has successfully launched multiple diagnostics and commercial laboratories. We have recently attracted experienced salespeople with a proven record in the pulmonary field.
Reveles is board certified by the American Society of Clinical Pathology as a clinical specialist in cytogenetics who has successfully launched multiple diagnostics and commercial laboratories. We have attracted experienced salespeople with a proven record in the pulmonary field.
In addition, we have multiple domestic and foreign patent applications to protect the use of flow cytometry and our AI-developed automated analysis platform in the detection of lung cancer and other lung diseases using sputum as a sample. 8 We developed an algorithm as part of a test validation trial that used machine learning to distinguish samples from high-risk patients who had lung cancer from those who are cancer-free.
In addition, we have multiple domestic and foreign patent applications to protect the use of flow cytometry and our AI-developed automated analysis platform in the detection of lung cancer and other lung diseases using sputum as a sample. 9 We developed an algorithm as part of a test validation trial that used machine learning to distinguish samples from high-risk patients who had lung cancer from those who are cancer-free.
After completion of clinical testing, a PMA including the results of all non-clinical, clinical, and other testing and information relating to the product’s marketing history, design, labeling, manufacture, and controls, is prepared and submitted to the FDA. 16 The PMA approval process is generally more expensive, rigorous, lengthy, and uncertain than the 510(k) premarket notification process and de novo classification process and requires proof of the safety and effectiveness of the device to the FDA’s satisfaction.
After completion of clinical testing, a PMA including the results of all non-clinical, clinical, and other testing and information relating to the product’s marketing history, design, labeling, manufacture, and controls, is prepared and submitted to the FDA. 17 The PMA approval process is generally more expensive, rigorous, lengthy, and uncertain than the 510(k) premarket notification process and de novo classification process and requires proof of the safety and effectiveness of the device to the FDA’s satisfaction.
In addition, we plan to rely on regulatory protection based on orphan drug exclusivities, data exclusivities, and market exclusivities. 14 Government Regulation United States Diagnostic Products (including Medical Devices and Tests) In the U.S., medical devices, including IVDs are subject to extensive regulation by the FDA, under the federal Food, Drug and Cosmetic Act (“FDCA”) and its implementing regulations, and certain other federal and state statutes and regulations.
In addition, we plan to rely on regulatory protection based on orphan drug exclusivities, data exclusivities, and market exclusivities. 15 Government Regulation United States Diagnostic Products (including Medical Devices and Tests) In the U.S., medical devices, including IVDs are subject to extensive regulation by the FDA, under the federal Food, Drug and Cosmetic Act (“FDCA”) and its implementing regulations, and certain other federal and state statutes and regulations.
Furthermore, CyPath ® Lung is noninvasive – not even requiring a needle stick – and cost effective, and processing and analysis procedures are easy to perform. 11 Published data and the results of clinical trials allow us to group lung cancer diagnostic tests into three categories: (1) balanced tests;( 2) rule-out tests, and (3) rule-in tests.
Furthermore, CyPath ® Lung is noninvasive – not even requiring a needle stick – and cost effective, and processing and analysis procedures are easy to perform. 12 Published data and the results of clinical trials allow us to group lung cancer diagnostic tests into three categories: (1) balanced tests;( 2) rule-out tests, and (3) rule-in tests.
They also must provide the FDA with a list of the devices that they design and/or manufacture at their facilities. 15 The FDA enforces its requirements by market surveillance and periodic inspections, both announced and unannounced, to review records, equipment, facilities, laboratories, and processes to confirm regulatory compliance. These inspections may include the manufacturing facilities of subcontractors.
They also must provide the FDA with a list of the devices that they design and/or manufacture at their facilities. 16 The FDA enforces its requirements by market surveillance and periodic inspections, both announced and unannounced, to review records, equipment, facilities, laboratories, and processes to confirm regulatory compliance. These inspections may include the manufacturing facilities of subcontractors.
Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered. 19 European Union A medical device or diagnostic test must be CE marked to be sold in the EU.
Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered. 20 European Union A medical device or diagnostic test must be CE marked to be sold in the EU.
The patent positions for biotechnology companies like us are generally uncertain and can involve complex legal, scientific, and factual issues. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope can be reinterpreted and even challenged after issuance.
The patent positions for biotechnology companies like ours are generally uncertain and can involve complex legal, scientific, and factual issues. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope can be reinterpreted and even challenged after issuance.
Our first diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
Our first diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment and care of patients who are at high risk for lung cancer.
The Patriquin trial required participants to provide a sputum sample and CT imaging of the lungs. Those in the cancer cohort underwent a biopsy to confirm lung cancer. High-risk patients displaying indeterminate nodules were followed for 18 months to confirm they were cancer-free.
The earlier trial required participants to provide a sputum sample and CT imaging of the lungs. Those in the cancer cohort underwent a biopsy to confirm lung cancer. High-risk patients displaying indeterminate nodules were followed for 18 months to confirm they were cancer-free.
In this 19-month test validation trial participants provided a sputum sample and were released from the study after a physician either confirmed the individual was cancer-free by examination of CT imaging or confirmed the presence of lung cancer by biopsy.
In this 19-month trial, participants provided a sputum sample and were released from the study after a physician either confirmed the individual was cancer-free by examination of CT imaging or confirmed the presence of lung cancer by biopsy.
The U.S. Preventive Services Task Force recommended new guidelines for screening in March 2021, nearly doubling the number of Americans at high risk for lung cancer who are recommended for annual screening to 14 million people, according to the ALA.
Preventive Services Task Force recommended new guidelines for screening in March 2021, nearly doubling the number of Americans at high risk for lung cancer who are recommended for annual screening to 14 million people, according to the ALA.
The FDA may withdraw product approvals or recommend or require product recalls if a company fails to comply with regulatory requirements. 17 Therapeutic Products FDA Approval Process In the U.S., therapeutic products are subject to extensive regulation by the FDA.
The FDA may withdraw product approvals or recommend or require product recalls if a company fails to comply with regulatory requirements. 18 Therapeutic Products FDA Approval Process In the U.S., therapeutic products are subject to extensive regulation by the FDA.
In a recently published paper of the test validation trial, the sensitivity and specificity for low-risk classification was 97% and 40%, respectively, with those at low risk having an 8% calculated risk of having a malignancy.
In a 2023 published paper of the test validation trial, the sensitivity and specificity for low-risk classification was 97% and 40%, respectively, with those at low risk having an 8% calculated risk of having a malignancy.
The FDA has agreed to certain performance goals to complete the review of NDAs. Most applications are classified as Standard Review products that are reviewed within ten months of the date the FDA files the NDA; applications classified as Priority Review are reviewed within six months of the date the FDA files the NDA.
The FDA has agreed to certain performance goals to complete the review of NDAs. Most applications are classified as Standard Review products that are reviewed within 10 months of the date the FDA files the NDA. Applications classified as Priority Review are reviewed within six months of the date the FDA files the NDA.
For example, during test development, we discovered that viability staining density suggests a link with apoptosis, or cell death, that is linked to many cancers, including lung cancer. Our model also suggests that specific markers of immune cell populations may be informative as to the presence of cancer in the lung.
For example, during test development, we discovered that viability staining density suggests a link with apoptosis, or cell death, that is linked to many cancers, including lung cancer. Our model also suggests that specific markers of immune cell populations are informative as to the presence of cancer in the lung.
The Patriquin study concluded that optimizing the test to provide for analysis of the entire sputum sample would improve results. 9 On January 1, 2024, the Medicare reimbursement code 0406U specific for CyPath ® Lung became effective after multiple regulatory decisions in 2023 leading to approval.
The study concluded that optimizing the test to provide for analysis of the entire sputum sample would improve results. 10 On January 1, 2024, the Medicare reimbursement code 0406U specific for CyPath ® Lung became effective after multiple regulatory decisions in 2023 leading to approval.
Clinical trials, for both significant and nonsignificant risk devices, as well as exempt studies, must be approved by an institutional review board (“IRB”), an appropriately constituted group that has been formally designated to review and monitor biomedical research involving human subjects and which has the authority to approve, require modifications in, or disapprove research to protect the rights, safety, and welfare of the human research subject.
Clinical trials, for both significant and nonsignificant risk devices, as well as exempt studies, must be approved by an IRB, an appropriately constituted group that has been formally designated to review and monitor biomedical research involving human subjects and which has the authority to approve, require modifications in, or disapprove research to protect the rights, safety, and welfare of the human research subject.
The numerical analysis developed with machine learning captures complex interactions between lung cancer, the microenvironment, and areas of field cancerization that would be difficult if not impossible for individuals to predict or detect reliably by eye.
The numerical analysis developed with machine learning captures complex interactions between lung cancer, the microenvironment, and areas of field cancerization that would be impossible for individuals to predict or detect reliably by eye.
CyPath ® Lung can be put into routine lab use without requiring expert evaluation of samples or being subject to operator bias. Our approach allows the entire sputum sample to be rapidly analyzed.
CyPath ® Lung has been put into routine lab use without requiring expert evaluation of samples or being subject to operator bias. Our approach allows the entire sputum sample to be rapidly analyzed.
Continuation of Department of Defense Research In the fourth quarter of 2023, we began selling CyPath ® Lung tests to the Department of Defense (DOD) to conduct an observational study, “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay,” and for research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post COVID-19 infection.
Continuation of Department of Defense Research Beginning in the fourth quarter of 2023 and through 2024, we have been selling CyPath ® Lung tests to the Department of Defense (DOD) to conduct an observational study, “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay,” and for research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post COVID-19 infection.
For the subset of patients in this trial who had lung nodules 20 mm or smaller or no nodules at all, this trial resulted in 92% sensitivity, 87% specificity, 99% negative predictive value, and 88% accuracy. In this subset of 132 individuals with small nodules, 119 patients were cancer-free and 13 had confirmed lung cancer.
For the subset of patients in this trial who had lung nodules 20 mm or smaller or no nodules detected by imaging, this trial resulted in 92% sensitivity, 87% specificity, 99% negative predictive value, and 88% accuracy. In this subset of 132 individuals with small nodules, 119 patients were cancer-free and 13 had confirmed lung cancer.
With regard to our diagnostic patent portfolio, we have one issued U.S. patent and nine foreign counterpart patents in Canada, China, France, Germany, Hong Kong, Italy, Spain, Sweden, and the United Kingdom.
With regard to our diagnostic patent portfolio, we have one issued U.S. patent and nine foreign counterpart patents in Canada, China, France, Germany, Hong Kong, Italy, Spain, Sweden, and the United Kingdom with another recently awarded diagnostic patent in Japan.
Patient enrollment is scheduled to begin in 2024 at up to 20 collection sites. Assuming the study is successful, we intend to submit a de novo classification request to the FDA within six months of study completion.
Patient enrollment is scheduled to begin in the second quarter of 2025 at up to 20 collection sites. Assuming the study is successful, we intend to submit a de novo classification request to the FDA within six months of study completion.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution. Human Capital We employ 75 employees at the time of this filing, 22 employed by bioAffinity and 53 employed by PPLS.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution. Human Capital We employ 57 employees at the time of this filing, 21 employed by bioAffinity and 36 employed by PPLS.
We and OncoSelect ® own all patents and trademarks in our intellectual property portfolio. One U.S. patent and nine counterpart foreign patents directed at diagnostic applications expire in 2030. One U.S. patent and five counterpart foreign patents directed at therapeutic applications expire in 2037.
We and OncoSelect® own all patents and trademarks in our intellectual property portfolio. One U.S. patent and nine counterpart foreign patents directed at diagnostic applications expire in 2030 and one foreign patent directed at a diagnostic application expires in 2039. One U.S. patent and five counterpart foreign patents directed at therapeutic applications expire in 2037.
A study published in the New England Journal of Medicine titled “Survival of patients with stage I lung cancer detected on CT screening” dated October 26, 2006, reported that the survival rate of individuals with Stage I lung cancer who underwent surgical resection within one month after diagnosis had a ten-year survival rate of 92%, as compared to the overall five-year survival rate in the U.S. of 26.5% as reported by the ALA.
A study published in the New England Journal of Medicine titled “Survival of patients with stage I lung cancer detected on CT screening” dated October 26, 2006, reported that the survival rate of individuals with Stage I lung cancer who underwent surgical resection within one month after diagnosis had a ten-year survival rate of 92%, as compared to the overall five-year survival rate in the U.S. of 28.4% as reported by the ALA in its 2024 “State of Lung Cancer” report.
We will also work with lung cancer advocacy groups throughout all phases to support the message that routine screening can save lives by diagnosing cancer at an early stage.
We are also working with lung cancer advocacy groups throughout all phases to support the message that routine lung cancer screening can save lives by diagnosing cancer at an early stage.
With regard to our therapeutic product candidates, we have one issued U.S. patent, five issued foreign patents in Australia, China, Hong Kong, India and Mexico, two pending U.S. applications, and 10 foreign applications pending in Canada, China, European Patent Office, Hong Kong, India, and Japan and one pending International Patent Application filed in 2022.
With regard to our therapeutic product candidates, we have one issued U.S. patent, five issued foreign patents in Australia, China, Hong Kong, India and Mexico, two pending U.S. applications, and 10 foreign applications pending in Canada, China, European Patent Office, and Hong Kong.
Results of the trial were published January 21, 2023, in the peer-reviewed journal Respiratory Research. Village Oaks developed CyPath ® Lung for sale as an LDT in accordance with the standards of the CAP and the regulations and guidance of the CLIA program, which is administered by CMS.
Results of the trial were published January 21, 2023, in the peer-reviewed journal Respiratory Research. Village Oaks developed CyPath ® Lung for sale as an LDT in accordance with the standards of the CAP and the regulations and guidance of the CLIA program, which is administered by the Centers for Medicare and Medicaid Services (“CMS”).
Phase 4 of our business plan accelerates the market presence of CyPath ® Lung in countries in Asia, Eastern Europe, and Australia after obtaining FDA marketing authorization.
Phase 4 of our business plan accelerates the market presence of CyPath ® Lung in the U.S. as well as countries in Asia, Eastern Europe, and Australia after obtaining FDA marketing authorization.
This limited test market approach allows us to refine future positioning and develop strategic insight for our CyPath ® Lung test before expanding to a larger market. We believe that our strategy related to a limited market launch is proving successful.
This limited test market approach allowed us to refine future positioning and develop strategic insight for our CyPath ® Lung test before expanding to a larger market. We believe that our strategy related to a limited market launch proved successful.
These findings are the result of our machine learning approach to automated analysis. CyPath ® Lung uses sputum that is obtained noninvasively by patients in the privacy of their home. Physicians most often order the test for patients after CT imaging reveals one or more pulmonary nodules that are suspected to be lung cancer.
These findings are the result of our machine learning approach to automated analysis. CyPath ® Lung uses sputum that is obtained noninvasively by patients in the privacy of their home. Physicians most often order the test for patients after CT imaging reveals one or more pulmonary nodules that have a higher risk but are not certain to be lung cancer.
We place significant emphasis on the recruitment, development, and retention of our employees who include award-winning scientists dedicated to advancing scientific discovery from bench to bedside. Of our nine employees engaged in research and development, all of whom are employed full-time, one holds an M.D. and six hold Ph.Ds in biology or medicinal chemistry.
We place significant emphasis on the recruitment, development, and retention of our employees who include award-winning scientists dedicated to advancing scientific discovery from bench to bedside. Of our seven employees engaged in research and development, all of whom are employed full-time, three hold Ph.Ds in biology or medicinal chemistry.
We attribute the growth in sales to three 2023 initiatives that came to fruition early in 2024: (1) CMS’ inclusion of reimbursement for CyPath ® Lung on its 2024 clinical laboratory fee schedule; (2) the hiring of our new National Director of Sales, Dallas Coleman, who is experienced and well respected in the pulmonary field; and (3) marketing materials for the newly branded CyPath ® Lung that emphasize our test’s ability to assist physicians with next steps in patient care.
We attribute the growth in sales to three 2023 initiatives that came to fruition in 2024: (1) CMS’ inclusion of reimbursement for CyPath ® Lung on its 2024 clinical laboratory fee schedule and subsequent reimbursement by Medicare and private insurance carriers; (2) the hiring of our new National Director of Sales in late 2023 and subsequent sales persons in 2024 who are experienced and well respected in the pulmonary field; and (3) marketing materials for the newly branded CyPath ® Lung that emphasize our test’s ability to assist physicians with next steps in patient care.
As of April 1, 2024, we and our OncoSelect ® subsidiary have a patent estate that includes 16 issued U.S. and foreign counterpart patents including two U.S. patents and 14 foreign counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, India, Italy, Mexico, Spain, Sweden, and the United Kingdom.
As of December 31, 2024, we and our OncoSelect® subsidiary have a patent estate that includes 17 issued U.S. and foreign counterpart patents including two U.S. patents and 15 foreign counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, India, Italy, Mexico, Japan, Spain, Sweden, and the United Kingdom.
Similar to the test validation trial, the planned pivotal trial will analyze flow cytometry and patient data including (1) the proportion of cells with a high ratio of high TCPP fluorescence intensity over cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity caused by the viability dye (FVS510) over cell size; (3) the proportion of cells that were CD206 negative but positive for one or more of the following markers: CD66b (granulocytes), CD3 (T cells), and CD19 (B cells); and (4) patient age.
The pivotal trial will analyze sputum using flow cytometry data and patient data using the algorithm used for our LDT CyPath ® Lung, including (1) the proportion of cells with a high ratio of high TCPP fluorescence intensity over cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity caused by the viability dye (FVS510) over cell size; (3) the proportion of cells that were CD206 negative but positive for one or more of the following markers: CD66b (granulocytes), CD3 (T cells), and CD19 (B cells); and (4) patient age.
Our principal executive office is located at 22211 West Interstate 10, Suite 1206, San Antonio, Texas 78257, and our telephone number at that address is (210) 698-5334. Our website address is https://www.bioaffinitytech.com/. Information contained on or that can be accessed through our website is not incorporated by reference into this Annual Report.
Our principal executive office is located at 3300 Nacogdoches, Suite 216, San Antonio, Texas 78217, and our telephone number at that address is (210) 698-5334. Our website address is https://www.bioaffinitytech.com/. Information contained on or that can be accessed through our website is not incorporated by reference into this Annual Report.
We completed a competitive analysis in 2022 of 67 companies that published research sufficient to provide a scientific basis for evaluation. We found only seven tests, including CyPath ® Lung, that represent a balanced test for early lung cancer detection and have advanced to the point that there is sufficient data for evaluation.
Our competitive analysis reviewed published research that was sufficient to provide a scientific basis for evaluation. We found only seven tests, including CyPath ® Lung, that represent a balanced test for early lung cancer detection and have advanced to the point that there is sufficient data for evaluation.
Interestingly, in some cell lines, when either CD320 or LRP2 were silenced individually, a concurrent increase in protein expression of the other receptor was observed, suggesting that CD320 and LRP2 compensate for each other’s function; hence, silencing both receptors is required for optimal cell killing.
Interestingly, in some cell lines, when either CD320 or LRP2 were silenced individually, a concurrent increase in protein expression of the other receptor was observed, suggesting that CD320 and LRP2 compensate for each other’s function; hence, silencing both receptors is required for optimal cell killing. 14 Corporate Information We were incorporated in the State of Delaware on March 26, 2014.
Simultaneous siRNA knock-down of CD320 and LRP2 in normal cells, including skin fibroblasts and breast epithelial cells, did not affect cell growth. However, knock-down of CD320 and LRP2 in cancer cell lines derived from diverse tissues (lung, breast, prostate, brain, and skin cancers) inhibited cell growth or killed the cells, in some cases up to 80%.
However, knock-down of CD320 and LRP2 in cancer cell lines derived from diverse tissues (lung, breast, prostate, brain, and skin cancers) inhibited cell growth or killed the cells, in some cases up to 80%.
The diagnostic family of pending patent applications is directed at diagnosing lung health and includes one pending non-provisional U.S. patent application and eight foreign counterpart patent applications in Australia, Canada, China, European Patent Office, Japan, Hong Kong, Mexico, and Singapore filed in 2019, one International Patent Application filed in 2022 and one International Patent Application filed in 2023.
The diagnostic family of pending patent applications is directed at diagnosing lung health and includes three pending non-provisional U.S. patent applications and 18 foreign counterpart patent applications in Australia, Canada, China, European Patent Office, Hong Kong, Japan, Mexico, and Singapore filed in 2019 and 2024, one non-provisional U.S. patent application directed to compensation beads for flow cytometry and one International Patent Application filed in 2023 directed to diagnosing lung health.
Comparison of CyPath ® Lung to Current Standards of Care Diagnostic Test or Procedure Intended Patient Sensitivity Specificity Procedural Risk Source CyPath ® Lung ‌ High risk 82% 88% None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 CyPath ® Lung High risk – nodules less than 20 mm 92% 87% None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 Low-dose CT screening High risk 93.8% 73.4% Radiation exposure “Results of initial low dose computed tomographic screening for lung cancer,” published in the New England Journal of Medicine on May 23, 2013 FDG PET imaging Suspicious lung nodules 89% 75% Radiation exposure “Accuracy of FDG-PET to diagnose lung cancer in areas with infectious lung disease: a meta-analysis,” published in JAMA in September 2014 Bronchoscopy Suspicious lung nodules – central lesions 88% 47% Invasive; risk of collapsed/bleeding lung; infection “A bronchial genomic classifier for the diagnostic evaluation of lung cancer,” published in the New England Journal of Medicine on July 16, 2015 Fine needle biopsy Suspicious lung nodules 90.4% 75.4% Invasive; risk of collapsed/bleeding lung; infection “Fine-needle aspiration biopsy versus core-needle biopsy in diagnosing lung cancer: a systemic review,” published in Current Oncology in February 2012 Core needle biopsy 21 Suspicious lung nodules 89.1% 88.6% Invasive; risk of collapsed/bleeding lung; infection “Global patterns and trends in lung cancer incidence: a population-based study,” published in the Journal of Thoracic Oncology on February 16, 2021 10 Our business model is to immediately address the need for a quick-to-market, noninvasive, cost-effective lung cancer diagnostic that will save lives and reduce medical costs.
Comparison of CyPath ® Lung to Current Standards of Care Diagnostic Test or Procedure Intended Patient Sensitivity Specificity Procedural Risk Source CyPath ® Lung ‌ High risk 82 % 88 % None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 CyPath ® Lung High risk – nodules less than 20 mm 92 % 87 % None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 Low-dose CT screening High risk 94 % 73 % Radiation exposure “Results of initial low dose computed tomographic screening for lung cancer,” published in the New England Journal of Medicine on May 23, 2013 FDG PET imaging Suspicious lung nodules 89 % 75 % Radiation exposure “Accuracy of FDG-PET to diagnose lung cancer in areas with infectious lung disease: a meta-analysis,” published in JAMA in September 2014 Bronchoscopy Suspicious lung nodules – central lesions 88 % 47 % Invasive; risk of collapsed/bleeding lung; infection “A bronchial genomic classifier for the diagnostic evaluation of lung cancer,” published in the New England Journal of Medicine on July 16, 2015 Fine needle biopsy Suspicious lung nodules 90 % 75 % Invasive; risk of collapsed/bleeding lung; infection “Fine-needle aspiration biopsy versus core-needle biopsy in diagnosing lung cancer: a systemic review,” published in Current Oncology in February 2012 Core needle biopsy 21 Suspicious lung nodules 89 % 89 % Invasive; risk of collapsed/bleeding lung; infection “Global patterns and trends in lung cancer incidence: a population-based study,” published in the Journal of Thoracic Oncology on February 16, 2021 11 As seen in the above table, CyPath ® Lung performs similar to current Standard of Care, including more invasive and riskier diagnostic procedures.
According to the American Lung Association (“ALA”), screening for individuals at high risk for lung cancer has the potential to improve lung cancer survival rates by finding disease at an earlier stage when it is more likely to be curable.
According to the American Lung Association (“ALA”), screening for individuals at high risk for lung cancer has the potential to improve lung cancer survival rates by finding disease at an earlier stage when it is more likely to be curable. An estimated 19.3 million Americans should have annual screening for lung cancer, according to American Cancer Society recommendations.
The second rule-out test, Nodify-XL2, is used only by people with a pre-test probability of cancer less than 50%. As with the REVEAL test, a large number of patients were excluded from analysis.
The tests had negative predictive values of 98% and 97.8%, respectively. The second rule-out test, Nodify-XL2, is used only by people with a pre-test probability of cancer less than 50%. As with the REVEAL test, a large number of patients were excluded from analysis.
CyPath ® Lung Business Development Plan We believe in the viability of our business plan based on the circumstances surrounding our business that are known to us as of the date of this Annual Report.
We expect to pursue CE marking of CyPath ® Lung for sale in the European Union (“EU”). CyPath ® Lung Business Development Plan We believe in the viability of our business plan based on the circumstances surrounding our business that are known to us as of the date of this Annual Report.
With regard to our diagnostic patent applications, there are two families of which one is directed at diagnosing lung health using flow cytometry and the other is directed at proprietary compensation beads used in analysis by flow cytometry.
Our diagnostic patent applications, fall into one of two families: one directed at diagnosing lung health using flow cytometry and the other directed at proprietary compensation beads used in analysis by flow cytometry.
On June 6, 2023, the American Medical Association (“AMA”) approved a Current Procedural Terminology (“CPT”) Proprietary Laboratory Analysis (“PLA”) code specifically for use with CyPath ® Lung, which was publicly released on June 30, 2023. The new CPT code became effective for use on October 1, 2023.
On June 6, 2023, the American Medical Association (“AMA”) approved a Current Procedural Terminology (“CPT”) Proprietary Laboratory Analysis (“PLA”) code specifically for use with CyPath ® Lung, which was publicly released on June 30, 2023. CyPath ® Lung is on CMS’ clinical laboratory fee schedule.
The length of the study and specific follow-up was not reported, but researchers did report that one patient entering the study as a healthy subject was correctly diagnosed with cancer by the test.
The length of the study and specific follow-up was not reported, but researchers did report that one patient in the study who had been incorrectly considered to be a healthy subject was correctly diagnosed with cancer by the test.
Phase 1 of our business plan has already begun with a limited market launch of our LDT CyPath ® Lung in Texas.
Phase 1 of our business plan was completed in 2024 with a limited market launch of our LDT CyPath ® Lung in Texas.
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.
In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.
The FDA has a user fee goal to apply no more than 90 calendar review days to 510(k) submissions. During the process, the FDA may issue an Additional Information request, which stops the clock.
The FDA has a user fee goal to apply no more than 90 calendar review days to 510(k) submissions. During the process, the FDA may issue an Additional Information request, which stops the clock. The applicant has 180 days to respond, although during the COVID-19 Public Health Emergency, the FDA permitted companies an additional 180 days in which to respond.
When CyPath ® Lung sample analysis determines a patient is unlikely or very unlikely to have lung cancer, the result can serve to support a physician’s decision to monitor this patient by following a recommended LDCT screening routine.
When CyPath ® Lung sample analysis determines a patient is unlikely or very unlikely to have lung cancer, the result can serve to guide and support a physician’s decision to monitor the patient using LDCT or CT imaging.
We pursue research based on our own scientific discoveries demonstrating that inhibition of the expression of two specific cell membrane proteins results in the selective killing of various cancer cell types grown in the laboratory with little or no effect on normal (non-cancerous) cells.
OncoSelect ® Therapeutics Research We have completed and expect to report at one or more scientific conferences our findings describing the results of our research to advance our own scientific discoveries demonstrating that inhibition of the expression of two specific cell membrane proteins results in the selective killing of various cancer cell types grown in the laboratory with little or no effect on normal (non-cancerous) cells.
We conducted research to better understand the mechanism of TCPP’s selective uptake in cancer cells. Our research identified receptors, cell-membrane proteins which capture small molecules outside of the cell and bring them inside the cell, that are associated with TCPP.
Our research identified receptors, cell-membrane proteins which capture small molecules outside of the cell and bring them inside the cell, that are associated with TCPP. Experiments that we conducted confirmed that at least two of these receptors, CD320 and LRP2, contributed to TCPP uptake by cancer cells.
Although it is a patient-friendly test, a major limitation of the test is that nearly half of all patients who took part in the validation trial could not be classified as either low- or high-risk; instead, they are considered “intermediate risk” with a 50:50 chance of having cancer.
In addition, nearly half of all patients who took part in the validation trial could not be classified as either low- or high-risk; instead, they are considered “intermediate risk” with a 50:50 chance of having cancer. Thus, in nearly half of the patients who received the Percepta nasal swab test, the results would not help advance the diagnostic process.
The Cancer Diagnostics Market and CyPath ® Lung The global cancer diagnostic market is projected to grow from an estimated $102.24 billion in 2022 to $162.57 billion in 2030, with a compound annual growth rate (“CAGR”) of 6.1%, according to a market research report issued by Research and Markets in June 2023.
The Cancer Diagnostics Market and CyPath ® Lung The global lung cancer diagnostic market is projected to grow from an estimated $15.1 billion in 2023 to $34.8 billion by the end of 2034, with a compound annual growth rate (“CAGR”) of 7.9%, according to a market research report issued by Transparency Market Research in October 2024.
We conducted a 150-patient test validation trial of people at high risk for lung cancer including patients with the disease (N=28) and those who were cancer-free (N=122) that resulted in CyPath ® Lung’s overall 88% specificity, meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer in a person with the disease.
CyPath ® Lung uses automated data analysis developed by machine learning, a form of AI, that allows data collection and analysis of an entire sample of sputum in less than 30 minutes, allowing for cost-effective, large-scale commercialization. 7 We conducted a 150-patient test validation trial of people at high risk for lung cancer including patients with the disease (N=28) and those who were cancer-free (N=122) that resulted in CyPath ® Lung’s overall 88% specificity, meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer in a person with the disease.
An siRNA is a small, chemically synthesized piece of RNA that specifically binds to mRNA, prohibiting the further production of the corresponding proteins. Thus, the reduction of CD320 or LRP2 mRNAs reduced the CD320 or LRP2 protein, respectively, and resulted in decreased TCPP uptake in a variety of cancer cells, with a larger decrease observed when CD320 was knocked down.
Thus, the reduction of CD320 or LRP2 mRNAs reduced the CD320 or LRP2 protein, respectively, and resulted in decreased TCPP uptake in a variety of cancer cells, with a larger decrease observed when CD320 was knocked down.
On August 14, 2023, we formed Precision Pathology Laboratory Services, LLC (“PPLS”), a Texas limited liability company and our wholly owned subsidiary. Research and optimization of our platform technologies for in vitro diagnostics and technologies are conducted in laboratories at The University of Texas at San Antonio and PPLS in San Antonio, Texas.
Research and optimization of our platform technologies for in vitro diagnostics and therapeutic technologies are conducted in laboratories at The University of Texas at San Antonio and PPLS in San Antonio, Texas. In September 2023, through our wholly owned subsidiary PPLS, we acquired the assets of Village Oaks Pathology Services, P.A.
The sputum sample is shipped overnight by the patient to PPLS and processed into a single-cell suspension, then labeled with antibodies that distinguish different cell types and the synthetic porphyrin TCPP that identifies cancer cells and/or cancer-associated cells.
The Acapella ® Choice Blue has been 510(k)-cleared by the FDA as a positive expiratory pressure device to help mobilize lung secretions in people with certain lung conditions The sputum sample is shipped overnight by the patient to PPLS and processed into a single-cell suspension, then labeled with antibodies that distinguish different cell types and the synthetic porphyrin TCPP that identifies cancer cells and/or cancer-associated cells.
The applicant has 180 days to respond, although during the COVID-19 Public Health Emergency, the FDA has permitted companies an additional 180 days in which to respond. Therefore, the total review time absent the Public Health Emergency could be up to 270 days, and in practice may be longer.
Therefore, the total review time absent the Public Health Emergency could be up to 270 days, and in practice may be longer.
Those patients deemed “likely or very likely” to have cancer may benefit from aggressive intervention. Those “unlikely or very unlikely” to have a malignancy may continue imaging surveillance. The physician also receives a numerical score between 0.1 to 1.0, with 0.1-0.49 being a negative result and 0.5 to 1.0 considered positive for lung cancer.
Those “unlikely or very unlikely” to have a malignancy may continue imaging surveillance in accordance with local standard of care. The physician’s report also shows a numerical score between 0.1 to 1.0, with 0.1 to less than 0.5 being a negative result and 0.5 to 1.0 considered positive for lung cancer.
The respiratory diagnostics market was valued at $5.6 billion in 2023 and is expected to reach $8.2 billion by 2029, according to a market research study published by Research and Markets in November 2023. The World Health Organization reports that COPD is the third leading cause of death in the world, causing nearly 3.23 million deaths in 2019.
The diagnostics market for COPD alone was valued at $5.6 billion in 2023 and is expected to reach $8.2 billion by 2029, according to a market research study published by Research and Markets in November 2023.
Experiments that we conducted confirmed that at least two of these receptors, CD320 and LRP2, contributed to TCPP uptake by cancer cells. When these receptors were individually “knocked down” in cancer cells and therefore could not be made by the cell, TCPP uptake was significantly decreased.
When these receptors were individually “knocked down” in cancer cells and therefore could not be made by the cell, TCPP uptake was significantly decreased. Knock-down of CD320 and LRP2 receptors was achieved by introducing siRNA molecules into the cells that cause the destruction of CD320 and LRP2 gene products.
The therapeutic intellectual property is made up of two families, including one family directed at our siRNA product candidates for the treatment of cancer, and another family directed at our porphyrin conjugates for treating cancer. One therapeutic patent application has been granted in China that expires in 2037.
The therapeutic intellectual property is made up of two families, including one family directed at our siRNA product candidates for the treatment of cancer, and another family directed at our porphyrin conjugates for treating cancer. The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.
Laboratory Developed Tests CyPath ® Lung has entered the U.S. market as an LDT. The FDA considers LDTs to be tests that are developed, validated, and performed within a single laboratory.
Laboratory Developed Tests CyPath ® Lung completed its certification as an LDT in accordance with CAP and CLIA regulations and guidance in 2023. The FDA considers LDTs to be tests that are developed, validated, and performed within a single laboratory.
At each phase of commercialization, we plan to develop messaging and marketing programs, including key convention attendance, digital marketing, social media presence, and advertising, to create an “inbound” lead generation mechanism that delivers our message to our target audience. In addition, we plan to collaborate with key opinion leaders (“KOLs”) to expand our pool of third-party experts and speakers.
We have developed messaging and marketing programs that will continue to grow both in size and scope with each phase of development, including key convention attendance, digital marketing, social media presence, and advertising, to create an “inbound” lead generation mechanism that delivers our message to our target audience.
We develop proprietary noninvasive diagnostic tests using flow cytometry and automated analysis developed by artificial intelligence (“AI”). Our diagnostic tests analyze cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state. We were formed as a Delaware corporation on March 26, 2014.
Item 1. Business Business Overview We develop proprietary noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung using flow cytometry and automated analysis developed by machine learning, a form of artificial intelligence (“AI”). Our diagnostic tests analyze cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong other things, these provisions: ● allow the authorized number of our directors to be changed only by resolution of our Board; ● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our Board; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● prohibit our stockholders from calling a special meeting of our stockholders; and ● authorize our Board to issue Preferred Stock without stockholder approval, which could be used to institute a stockholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our Board.
Biggest changeAmong other things, these provisions: ● allow the authorized number of our directors to be changed only by resolution of our Board; ● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our Board; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● prohibit our stockholders from calling a special meeting of our stockholders; ● provide that the Board is expressly authorized to adopt, amend, alter, or repeal our bylaws; ● establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and . ● authorize our Board to issue Preferred Stock without stockholder approval, which could be used to institute a stockholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our Board. 49 Any provision in our Charter or A&R Bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.
Risks Related to our Diagnostic Product Until we secure FDA clearance for our CyPath ® Lung as a Class II in vitro diagnostic, we may encounter physicians who will not order an LDT.
Risks Related to our Diagnostic Product Until we secure FDA clearance for CyPath ® Lung as a Class II in vitro diagnostic, we may encounter physicians who will not order an LDT.
A substantial number of the companies against which we are competing or we may compete against in the future may have significantly greater financial resources, established presence in the market, and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved diagnostic tests or therapeutic products.
A substantial number of the companies against which we are competing or may compete against in the future may have significantly greater financial resources, established presence in the market, and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved diagnostic tests or therapeutic products.
Thus the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Any failure by our laboratory licensee to comply with CLIA/CAP requirements could result in adverse findings on inspection that, if not timely corrected, could result in loss of accreditation and the inability to perform laboratory testing.
Any failure by our laboratory licensee to comply with CAP/CLIA requirements could result in adverse findings on inspection that, if not timely corrected, could result in loss of accreditation and the inability to perform laboratory testing.
Patent and Trademark Office (“USPTO”) and foreign governmental patent agencies requirement for a number of procedural, documentary, fee payment, and other provisions during the patent process can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction; ● it is possible that our pending patent applications will not lead to issued patents; 35 ● issued patents that we own or have exclusively licensed may be revoked, modified, or held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive tests and products for sale in our major commercial markets; ● we may not develop additional proprietary technologies that are patentable; ● we cannot predict the scope of protection of any patent issuing based on our patent applications, including whether the patent applications that we own or in-license will result in issued patents with claims that are directed to our diagnostic tests and product candidates or uses thereof in the U.S. or foreign countries; ● there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; ● countries other than the U.S. may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing diagnostic tests and product candidates; ● the claims of any patent issuing based on our patent applications may not provide protection against competitors or any competitive advantages, or may be challenged by third parties; and ● if enforced, a court may not hold that our patents are valid, enforceable, and infringed.
Patent and Trademark Office (“USPTO”) and foreign governmental patent agencies requirement for a number of procedural, documentary, fee payment, and other provisions during the patent process can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction; ● it is possible that our pending patent applications will not lead to issued patents; 37 ● issued patents that we own or have exclusively licensed may be revoked, modified, or held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive tests and products for sale in our major commercial markets; ● we may not develop additional proprietary technologies that are patentable; ● we cannot predict the scope of protection of any patent issuing based on our patent applications, including whether the patent applications that we own or in-license will result in issued patents with claims that are directed to our diagnostic tests and product candidates or uses thereof in the U.S. or foreign countries; ● there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; ● countries other than the U.S. may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing diagnostic tests and product candidates; ● the claims of any patent issuing based on our patent applications may not provide protection against competitors or any competitive advantages, or may be challenged by third parties; and ● if enforced, a court may not hold that our patents are valid, enforceable, and infringed.
The projections that we provide herein or our management may provide from time to time (including, but not limited to, those relating to potential peak sales amounts, clinical and regulatory timelines, production and supply matters, commercial launch dates, and other financial or operational matters) reflect numerous assumptions made by management, including assumptions with respect to our specific as well as general business, regulatory, economic, market, and financial conditions and other matters, all of which are difficult to predict and many of which are beyond our control.
The projections that we provide herein or our management may provide from time to time (including, but not limited to, those relating to potential peak sales amounts, clinical and regulatory timelines, production and supply matters, commercial launch dates, and other financial or operational matters) reflect numerous assumptions made by management, including assumptions with respect to our specific as well as general business, regulatory issues, economic, market, and financial conditions and other matters, all of which are difficult to predict and many of which are beyond our control.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any test or product, including the following: ● the results of pre-clinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; ● safety and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials; ● after reviewing test results, we may abandon projects that we might previously have believed to be promising; ● we or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and ● our test or product candidates may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved. 25 Even if our diagnostic tests or therapeutic products receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any test or product, including the following: ● the results of pre-clinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; ● safety and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials; ● after reviewing test results, we may abandon projects that we might previously have believed to be promising; ● we or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and ● our test or product candidates may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved. 26 Even if our diagnostic tests or therapeutic products receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.
We have also outsourced elements of our operations to third parties, and as a result we manage a number of third-party contractors who have access to our confidential information. 31 Despite the implementation of security measures, given their size and complexity and the increasing amounts of confidential information that they maintain, our internal information technology systems and those of our third-party clinical research organizations and other contractors and consultants are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our employees, contractors, consultants, business partners, and/or other third parties, or from cyberattacks by malicious third parties (including the deployment of harmful malware, ransomware, extortion, account takeover attacks, degradation of service attacks, denial-of-service attacks, “phishing,” or social engineering and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), which may compromise our system infrastructure or lead to data leakage.
We have also outsourced elements of our operations to third parties, and as a result we manage a number of third-party contractors who have access to our confidential information. 32 Despite the implementation of security measures, given their size and complexity and the increasing amounts of confidential information that they maintain, our internal information technology systems and those of our third-party clinical research organizations and other contractors and consultants are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our employees, contractors, consultants, business partners, and/or other third parties, or from cyberattacks by malicious third parties (including the deployment of harmful malware, ransomware, extortion, account takeover attacks, degradation of service attacks, denial-of-service attacks, “phishing,” or social engineering and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), which may compromise our system infrastructure or lead to data leakage.
Acquisitions of, or investments in, competing diagnostic, pharmaceutical, or biotechnology companies by large corporations could increase such competitors’ financial, marketing, manufacturing, and other resources. The market for our proposed tests and products is competitive and rapidly changing, and new diagnostic technologies which may be developed by others could impair our ability to maintain and grow our business and remain competitive.
Acquisitions of, or investments in, competing diagnostic, pharmaceutical, or biotechnology companies by large corporations could increase such competitors’ financial, marketing, manufacturing, and other resources. 31 The market for our proposed tests and products is competitive and rapidly changing, and new diagnostic technologies which may be developed by others could impair our ability to maintain and grow our business and remain competitive.
Complying with these various laws could cause us to incur substantial costs or require PPLS to change its business practices and compliance procedures in a manner adverse to our business. If PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages. PPLS’ activities currently require the controlled use of potentially harmful chemicals.
Complying with these various laws could cause us to incur substantial costs or require PPLS to change its business practices and compliance procedures in a manner adverse to our business. 35 If PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages. PPLS’ activities currently require the controlled use of potentially harmful chemicals.
PPLS may also face increased risk in its collection efforts, including potential write-offs of doubtful accounts and long collection cycles, which could adversely affect its business, results of operations, and financial condition. 34 Several factors make the billing process complex, including: ● the reimbursement rates of payors; ● compliance with complex federal and state regulations related to billing Medicare; ● risk of government audits related to billing Medicare; ● disputes among payors as to which party is responsible for payment; ● differences in coverage and in information and billing requirements among payors, including the need for prior authorization and/or advanced notification; ● the effect of patient co-payments or co-insurance; ● changes to billing codes and/or coverage policies that apply to PPLS’ assays; ● incorrect or missing billing information; and ● the resources required to manage the billing and claims appeals process.
PPLS may also face increased risk in its collection efforts, including potential write-offs of doubtful accounts and long collection cycles, which could adversely affect its business, results of operations, and financial condition. 36 Several factors make the billing process complex, including: ● the reimbursement rates of payors; ● compliance with complex federal and state regulations related to billing Medicare; ● risk of government audits related to billing Medicare; ● disputes among payors as to which party is responsible for payment; ● differences in coverage and in information and billing requirements among payors, including the need for prior authorization and/or advanced notification; ● the effect of patient co-payments or co-insurance; ● changes to billing codes and/or coverage policies that apply to PPLS’ assays; ● incorrect or missing billing information; and ● the resources required to manage the billing and claims appeals process.
An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely affect us. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely affect us. 39 If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
If we are required to conduct additional clinical trials or other testing beyond those that we currently contemplate, if we are unable to successfully complete clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive, or if there are safety concerns, we may: ● be delayed in obtaining marketing approval; ● not obtain marketing approval at all, which would seriously impair our viability; 24 ● obtain marketing approval in some countries and not in others; ● obtain approval for indications or patient populations that are not as broad as we intend or desire; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the diagnostic test or therapeutic product removed from the market after obtaining marketing approval.
If we are required to conduct additional clinical trials or other testing beyond those that we currently contemplate, if we are unable to successfully complete clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive, or if there are safety concerns, we may: ● be delayed in obtaining marketing approval; ● not obtain marketing approval at all, which would seriously impair our viability; 25 ● obtain marketing approval in some countries and not in others; ● obtain approval for indications or patient populations that are not as broad as we intend or desire; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the diagnostic test or therapeutic product removed from the market after obtaining marketing approval.
Misconduct by these parties could include intentional, reckless, and/or negligent conduct that fails to (1) comply with the regulations of the FDA or foreign health authorities; (2) provide true, complete, and accurate information to the FDA or foreign health authorities; (3) comply with manufacturing standards we have established; (4) comply with healthcare fraud and abuse laws in the U.S. and similar foreign fraudulent misconduct laws; or (5) report financial information or data accurately or to disclose unauthorized activities to us. 29 Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors, and customers are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, and other healthcare laws and regulations.
Misconduct by these parties could include intentional, reckless, and/or negligent conduct that fails to (1) comply with the regulations of the FDA or foreign health authorities; (2) provide true, complete, and accurate information to the FDA or foreign health authorities; (3) comply with manufacturing standards we have established; (4) comply with healthcare fraud and abuse laws in the U.S. and similar foreign fraudulent misconduct laws; or (5) report financial information or data accurately or to disclose unauthorized activities to us. 30 Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors, and customers are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, and other healthcare laws and regulations.
PPLS also generates revenue related to the use of CyPath ® Lung tests for a DOD observational study titled “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay,” and when performed for DOD research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post COVID-19 infection. 26 If we are unable to convince physicians of the benefits of our proposed diagnostic tests or therapeutic products, we may incur delays or additional expense in our attempt to establish market acceptance.
PPLS also generates revenue related to the use of CyPath ® Lung tests for a DOD observational study titled “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay,” and when performed for DOD research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post COVID-19 infection. 27 If we are unable to convince physicians of the benefits of our proposed diagnostic tests or therapeutic products, we may incur delays or additional expense in our attempt to establish market acceptance.
The market price of our Common Stock could be subject to wide fluctuations in response to quarterly variations in our revenues and operating expenses, announcements of new products or services by us, significant sales of our Common Stock, including “short” sales, the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends in our markets or general economic conditions. 43 An investment in our Company may involve tax implications, and you are encouraged to consult your own advisors as neither we nor any related party is offering any tax assurances or guidance regarding our Company or your investment.
The market price of our Common Stock could be subject to wide fluctuations in response to quarterly variations in our revenues and operating expenses, announcements of new products or services by us, significant sales of our Common Stock, including “short” sales, the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends in our markets or general economic conditions. 48 An investment in our Company may involve tax implications, and you are encouraged to consult your own advisors as neither we nor any related party is offering any tax assurances or guidance regarding our Company or your investment.
While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, Congress or the USPTO may impact the value of our patents. 36 Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, Congress or the USPTO may impact the value of our patents. 40 Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: ● any breach of the director’s duty of loyalty to us or our stockholders; 45 ● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; ● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or ● any transaction from which the director derived an improper personal benefit.
Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: ● any breach of the director’s duty of loyalty to us or our stockholders; 50 ● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; ● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or ● any transaction from which the director derived an improper personal benefit.
To become profitable, we must develop our diagnostic tests and therapeutic products, which will depend in large part on our ability to: ● Develop, enhance, and protect our diagnostic tests and therapeutic products; ● Raise sufficient funding to support our diagnostic tests and therapeutic product development program(s); ● Complete pre-clinical testing; ● Work with our partners to expand commercialization of our first diagnostic test, CyPath ® Lung, as an LDT under the CAP/CLIA guidelines and regulations administered by CMS and CAP; ● Obtain de novo classification from FDA for our CyPath ® Lung as a Class II in vitro diagnostic 21 ● Work with our partners to develop and commercialize our first diagnostic test, CyPath ® Lung, as a CE-marked test in accordance with the IVDR of the EU; ● Synthesize, test, and attract licensing partners for drug conjugates, siRNAs, and other therapeutics (and methods for their use) developed by us; ● Develop and conduct human clinical studies to support the regulatory approval and marketing of our diagnostic test(s) and therapeutic product(s); ● Develop and manufacture the test(s) and product(s) to FDA standards, appropriate EU standards, and appropriate standards required for the commercialization of our tests and products in countries in which we seek to sell our diagnostic test(s) and therapeutic product(s); ● Obtain the necessary regulatory approvals to market our diagnostic test(s) and therapeutic product(s); ● Secure the necessary personnel and infrastructure to support the development, commercialization, and marketing of our diagnostic test(s) and therapeutic product(s); and ● Develop strategic relationships to support development, manufacturing, and marketing of our diagnostic test(s) and therapeutic product(s).
To become profitable, we must develop our diagnostic tests and therapeutic products, which will depend in large part on our ability to: ● Develop, enhance, and protect our diagnostic tests and therapeutic products; ● Raise sufficient funding to support our diagnostic tests and therapeutic product development program(s); ● Complete pre-clinical testing; ● Work with our partners to expand commercialization of our first diagnostic test, CyPath ® Lung, as an LDT under the CAP/CLIA guidelines and regulations administered by CMS and CAP; ● Obtain de novo classification from FDA for our CyPath ® Lung as a Class II in vitro diagnostic 22 ● Work with our partners to develop and commercialize our first diagnostic test, CyPath ® Lung, as a CE-marked test in accordance with the IVDR of the EU; ● Synthesize, test, and attract licensing partners for drug conjugates, siRNAs, and other therapeutics (and methods for their use) developed by the Company; ● Develop and conduct human clinical studies to support the regulatory approval and marketing of our diagnostic test(s) and therapeutic product(s); ● Develop and manufacture the test(s) and product(s) to FDA standards, appropriate EU standards, and appropriate standards required for the commercialization of our tests and products in countries in which we seek to sell our diagnostic test(s) and therapeutic product(s); ● Obtain the necessary regulatory approvals to market our diagnostic test(s) and therapeutic product(s); ● Secure the necessary personnel and infrastructure to support the development, commercialization, and marketing of our diagnostic test(s) and therapeutic product(s); and ● Develop strategic relationships to support development, manufacturing, and marketing of our diagnostic test(s) and therapeutic product(s).
These diagnostic tests and products may compete with our diagnostic tests and therapeutic product candidates, and our or our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 37 The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or regulations in the U.S. and Europe, and many companies have encountered significant difficulties in protecting and defending proprietary rights in such jurisdictions.
These diagnostic tests and products may compete with our diagnostic tests and therapeutic product candidates, and our or our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 41 The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or regulations in the U.S. and Europe, and many companies have encountered significant difficulties in protecting and defending proprietary rights in such jurisdictions.
There can be no assurance that the anticipated benefits of PPLS will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company. 22 We will require additional financing to implement our business plan, which may not be available on favorable terms or at all, and we may have to accept financing terms that would place restrictions on us.
There can be no assurance that the anticipated benefits of PPLS will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company. 23 We will require additional financing to implement our business plan, which may not be available on favorable terms or at all, and we may have to accept financing terms that would place restrictions on us.
In addition, if PPLS is unable to continue to obtain expedited delivery services on commercially reasonable terms, its operating results may be adversely affected. 33 Security breaches, loss of data, and other disruptions could compromise sensitive information related to PPLS’ business or prevent it from accessing critical information and expose it to liability, which could adversely affect its business and reputation.
In addition, if PPLS is unable to continue to obtain expedited delivery services on commercially reasonable terms, its operating results may be adversely affected. 34 Security breaches, loss of data, and other disruptions could compromise sensitive information related to PPLS’ business or prevent it from accessing critical information and expose it to liability, which could adversely affect its business and reputation.
Our management collectively owns a substantial percentage of our Common Stock. Based on the provisions for determining beneficial ownership in accordance with Rule 13d-3 and Item 403 of Regulation S-K under the Exchange Act, immediately after this Offering, our officers and directors will own or exercise control of approximately 36% of the voting power of our outstanding Common Stock.
Our management collectively owns a substantial percentage of our Common Stock. Based on the provisions for determining beneficial ownership in accordance with Rule 13d-3 and Item 403 of Regulation S-K under the Exchange Act, immediately after this Offering, our officers and directors will own or exercise control of approximately 24% of the voting power of our outstanding Common Stock.
WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in its opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.
WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal year ended December 31, 2024, has included an explanatory paragraph in its opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2024, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.
If the FDA were to conclude that we are required to obtain premarket authorization for the software, our ability to offer CyPath ® Lung as an LDT could be delayed or prevented, which would adversely affect our business. 39 The third-party licensors of our future therapeutic products, when ready, may be unable to obtain regulatory approval.
If the FDA were to conclude that we are required to obtain premarket authorization for the software, our ability to offer CyPath ® Lung as an LDT could be delayed or prevented, which would adversely affect our business. 43 The third-party licensors of our future therapeutic products, when ready, may be unable to obtain regulatory approval.
Patent reform legislation in the U.S. and other countries, including the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith Act includes a number of significant changes to U.S. patent law.
Patent reform legislation in the U.S. and other countries, including the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith Act included a number of significant changes to U.S. patent law.
Approval by the FDA does not ensure approval by regulatory or payor authorities in other countries or jurisdictions, and approval by one regulatory or payor authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.
Clearance by the FDA does not ensure approval by regulatory or payor authorities in other countries or jurisdictions, and approval by one regulatory or payor authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.
If we are unable to obtain approval of any of our diagnostic tests or therapeutic product candidates by regulatory or payor authorities in the EU, Asia, or elsewhere, or if we fail to comply with the regulatory requirements in foreign jurisdictions, the commercial prospects of that diagnostic test or therapeutic product candidate may be significantly diminished, and our target market will be reduced and our ability to realize the full market potential of our diagnostic tests or therapeutic product candidates will be harmed. 40 Even if we obtain FDA approval of any of our diagnostic tests or therapeutic product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential.
If we are unable to obtain approval of any of our diagnostic tests or therapeutic product candidates by regulatory or payor authorities in the EU, Asia, or elsewhere, or if we fail to comply with the regulatory requirements in foreign jurisdictions, the commercial prospects of that diagnostic test or therapeutic product candidate may be significantly diminished, and our target market will be reduced and our ability to realize the full market potential of our diagnostic tests or therapeutic product candidates will be harmed. 44 Even if we obtain FDA clearance of any of our diagnostic tests or therapeutic product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential.
We may rely on third parties from whom we license proprietary technology to file and prosecute patent applications and maintain patents and otherwise protect the intellectual property we license from them. We may have limited control over these activities or any other intellectual property that may be related to our in-licensed intellectual property.
We may in the future rely on third parties from whom we license proprietary technology to file and prosecute patent applications and maintain patents and otherwise protect the intellectual property we license from them. We may have limited control over these activities or any other intellectual property that may be related to future in-licensed intellectual property.
Our dependence on independent parties and clinical sites involves risks, including reduced control over the timing and other aspects of our clinical trials. 28 We are exposed to product liability and pre-clinical and clinical liability risks which could place a substantial financial burden upon us should we be sued.
Our dependence on independent parties and clinical sites involves risks, including reduced control over the timing and other aspects of our clinical trials. 29 We are exposed to product liability and pre-clinical and clinical liability risks which could place a substantial financial burden upon us should we be sued.
In the event of an accident or if PPLS otherwise fails to comply with applicable regulations, it could lose its permits or approvals or be held liable for damages or penalized with fines. If PPLS are unable to successfully scale its operations to support demand for CyPath ® Lung, its business could suffer.
In the event of an accident or if PPLS otherwise fails to comply with applicable regulations, it could lose its permits or approvals or be held liable for damages or penalized with fines. If PPLS is unable to successfully scale its operations to support demand for CyPath ® Lung, its business could suffer.
In the event our Common Stock price does not exceed the exercise price of the Warrants during the period when they are exercisable, the Warrants may not have any value. 41 Holders of Warrants have no rights as stockholders other than as set forth in the Warrants until such holders exercise their Warrants and acquire our shares of Common Stock.
In the event our Common Stock price does not exceed the exercise price of the warrants during the period when they are exercisable, the warrants may not have any value. 46 Holders of warrants have no rights as stockholders other than as set forth in the warrants until such holders exercise their warrants and acquire our shares of Common Stock.
Ownership of a CAP/CLIA laboratory and related services business may not have the clinical value and commercial potential which we envision. Any substantive failure of PPLSlaboratory to meet our expectations could have a material negative effect on our results of operations.
Ownership of a CAP/CLIA laboratory and related services business may not have the clinical value and commercial potential which we envision. Any substantive failure of PPLS laboratory to meet our expectations could have a material negative effect on our results of operations.
Such a de-listing or even notification of failure to comply with such requirements would likely have a negative effect on the price of our Common Stock and Warrants and would impair your ability to sell or purchase our Common Stock when you wish to do so.
Such a de-listing or even notification of failure to comply with such requirements would likely have a negative effect on the price of our Common Stock and Tradeable Warrants and would impair the ability to sell or purchase our Common Stock when you wish to do so.
Without clearance of CyPath ® Lung by the FDA, some physicians may not order the test. 23 If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
Without clearance of CyPath ® Lung by the FDA, some physicians may not order the test. 24 If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
We intend to launch a pivotal trial later this year in an effort to attain such classification; however, there can be no assurance that the trial will have favorable results or that it will generate the results necessary to obtain such classification.
Subject to obtaining necessary financing, we intend to launch a pivotal trial later this year in an effort to attain such classification; however, there can be no assurance that the trial will have favorable results or that it will generate the results necessary to obtain such classification.
While we have obtained product liability insurance covering CyPath ® Lung as a commercialized LDT to be sold by a CAP-accredited, CLIA-certified clinical pathology laboratory (previously Village Oaks and currently PPLS), in the future we may not be able to obtain or maintain adequate product liability insurance, when needed, on acceptable terms, if at all, or such insurance may not provide adequate coverage against our potential liabilities.
While we have obtained product liability insurance covering CyPath ® Lung as a commercialized LDT to be sold by our CAP-accredited, CLIA-certified clinical pathology laboratory PPLS, in the future we may not be able to obtain or maintain adequate product liability insurance, when needed, on acceptable terms, if at all, or such insurance may not provide adequate coverage against our potential liabilities.
The formation of our Company, as well as an investment in our Company generally, involves complex federal, state, and local income tax considerations. Neither the Internal Revenue Service nor any state or local taxing authority has reviewed the transactions described herein and may take different positions than the ones contemplated by management.
An investment in our Company generally, involves complex federal, state, and local income tax considerations. Neither the Internal Revenue Service nor any state or local taxing authority has reviewed the transactions described herein and may take different positions than the ones contemplated by management.
Without funding from the proceeds of a capital raise or strategic relationship or grant, management anticipates that our cash resources are sufficient to continue operations through September 2024. Our future is dependent upon the ability to obtain financing and upon future profitable operations from the development of new business opportunities.
Without funding from the proceeds of a capital raise or strategic relationship or grant, management anticipates that our cash resources are sufficient to continue operations through April 2025. Our future is dependent upon the ability to obtain financing and upon future profitable operations from the development of new business opportunities.
If we do not obtain patent term extension in the United States under the Hatch-Waxman Act and in foreign countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our diagnostic tests or therapeutic product candidates, our business may be harmed.
If we do not obtain patent term extension in the U.S. under the Hatch-Waxman Act and in foreign countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our diagnostic tests or therapeutic product candidates, our business may be harmed.
Since its acquisition in September 2023, we have generated $2.5 million in revenue from PPLS. Once we begin to generate such profit, there is no guarantee that it will be sufficient to realize the expected financial benefits of the acquisition.
Since its acquisition in September 2023, we have generated $2.5 million in 2023 and $9.4 million in 2024 in revenue from PPLS. Once we begin to generate such profit, there is no guarantee that it will be sufficient to realize the expected financial benefits of the acquisition.
Any delay by or failure of the FDA to grant our de novo request or PMA could adversely affect our consolidated revenues, results of operation,s and financial condition.
Any delay by or failure of the FDA to grant our de novo request or PMA could adversely affect our consolidated revenues, results of operations, and financial condition.
In addition, since we have limited experience operating a clinical laboratory, we may not accurately estimate the expenses we will incur. Operating a clinical laboratory is a new business for us, and the members of our management team have limited experience operating a CAP-accredited, CLIA-certified laboratory, which may limit the ability of investors to make an informed investment decision.
In addition, since we have limited experience operating a clinical laboratory, we may not accurately estimate the expenses we will incur. We have a limited operating history operating a clinical laboratory, and the members of our management team have limited experience operating a CAP-accredited, CLIA-certified laboratory, which may limit the ability of investors to make an informed investment decision.
Declining general economic or business conditions may have a negative impact on our business. Continuing concerns over U.S. healthcare reform legislation and energy costs, geopolitical issues, the availability and cost of credit and government stimulus programs in the U.S. and other countries have contributed to increased volatility and diminished expectations for the global economy.
Declining general economic or business conditions, including tariff and customs regulations, may have a negative impact on our business. Continuing concerns over the U.S. healthcare system and energy costs, geopolitical issues, the availability and cost of credit and government stimulus programs in the U.S. and other countries have contributed to increased volatility and diminished expectations for the global economy.
Even if we or our licensors obtain patents covering our diagnostic tests and therapeutic product candidates, when the terms of all patents covering a diagnostic test or therapeutic product expire, our business may become subject to competition from competitive medications, including generic medications.
Even if we or our licensors obtain patents covering our diagnostic tests and therapeutic product candidates, when the terms of all patents covering a diagnostic test or therapeutic product expire, our business may become subject to competition from competitive diagnostics or therapeutics.
A decline in the value of our Company could also cause you to lose all or part of your investment. We must raise additional capital to fund our operations in order to continue as a going concern. As of December 31, 2023, we had an accumulated deficit of $44.6 million and $2.8 million cash on hand.
A decline in the value of our Company could also cause you to lose all or part of your investment. We must raise additional capital to fund our operations in order to continue as a going concern. As of December 31, 2024, we had an accumulated deficit of $53.6 million and $1.1 million cash on hand.
Prior to 2022, we had not generated any revenue. During the years ended December 31, 2023, and December 31, 2022, we generated revenue of approximately $2.5 million and $5,000, respectively.
Prior to 2022, we had not generated any revenue. During the years ended December 31, 2024, and December 31, 2023, we generated revenue of approximately $9.4 million and $2.5 million, respectively.
Our inability to secure any future license agreements necessary for development of our products would reduce or eliminate our rights under these agreements and may result in our having to negotiate new or reinstated agreements with less favorable terms or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.
Our inability to secure any future license agreements necessary for development of our products would reduce or eliminate our rights under these agreements on which we rely that include license provisions and may result in our having to negotiate new or reinstated agreements with less favorable terms or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.
Further, if we were to be delisted from The Nasdaq Capital Market, our Common Stock would cease to be recognized as a covered security and we would be subject to regulation in each state in which we offer our securities.
Further, if we were to be delisted from The Nasdaq Capital Market, our Common Stock would cease to be recognized as a covered security and we would be subject to regulation in each state in which we offer our securities. We do not expect to pay dividends in the foreseeable future.
For the year 2023, cash used in operations was $6.0 million and net loss was $7.9 million.
For the year 2024, cash used in operations was $7.1 million and net loss was $9.0 million.
The impact of recent healthcare reform legislation, other changes in the healthcare industry, and in healthcare spending is currently unknown and may adversely affect our business model. Our revenue prospects could be affected by changes in healthcare spending and policy in the U.S. and abroad.
The impact of changes to healthcare law and guidance, as well as other changes in the healthcare industry, and changes in healthcare spending is currently unknown and may adversely affect our business model. Our revenue prospects could be affected by changes in healthcare spending and policy in the U.S. and abroad.
Pursuant to the terms of the Securities Purchase Agreement that we entered into with certain purchasers in March 2024, we are obligated to file a registration statement to register the shares of Common Stock issuable upon exercise of the Warrants within 30 days of the date of such agreement and to use commercially reasonable efforts to keep the registration statement effective at all times while the purchasers own any Warrants or shares of Common Stock issuable upon exercise of the Warrants.
Pursuant to the terms of the warrant inducement agreement that we entered into with certain investors in February 2025, we are obligated to file a registration statement to register the shares of Common Stock issuable upon exercise of the new warrants within 45 days of the date of such agreement and to use commercially reasonable efforts to keep the registration statement effective at all times while the investors own any warrants or shares of Common Stock issuable upon exercise of the warrants.
Therefore, we cannot be certain that the prosecution, maintenance, and enforcement of these patent rights will be in a manner consistent with the best interests of our business.
Therefore, we cannot be certain that the prosecution, maintenance, and enforcement of such patent rights dependent on third-party licenses will be in a manner consistent with the best interests of our business.
We are highly dependent on the principal members of our management, scientific, and clinical teams, including Maria Zannes, J.D., our President and Chief Executive Officer, Vivienne Rebel, M.D., Ph.D., our Chief Science and Medical Officer and Executive Vice President, Xavier Reveles, MS, CG(ASCP) cm , our Chief Operating Officer, and Michael Dougherty, CPA, MBA, our Chief Financial Officer, as well as Roby Joyce, M.D., the Medical Director and Laboratory Director of PPLS and the principal of Village Oaks.
We are highly dependent on the principal members of our management, scientific, and clinical teams, including Maria Zannes, J.D., our President and Chief Executive Officer, Xavier Reveles, MS, CG(ASCP) cm , our Chief Operating Officer, and Michael Edwards, our Chief Financial Officer, as well as Roby Joyce, M.D., the Medical Director of PPLS.
If rapid growth occurs, it may strain our operational, managerial, and financial resources. 27 If we fail to comply with our obligations imposed by any intellectual property licenses with third parties that we may need in the future, we could lose rights that are important to our business. We may in the future require licenses to third-party technology and materials.
If we fail to comply with our obligations imposed by any intellectual property licenses with third parties that we may need in the future, we could lose rights that are important to our business. We may in the future require licenses to third-party technology and materials.
Despite raising an additional $2.5 million in gross proceeds in March 2024 through the offering of our securities, we may need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or other arrangements to support our future operations.
Despite raising an additional $1.4 million in gross proceeds in February 2025 through a private placement offering, we may need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or other arrangements to support our future operations.
The FDCA requires that medical devices introduced to the U.S. market, unless exempted by regulation, be authorized by the FDA pursuant to either the premarket notification pathway, known as 510(k) clearance, the de novo classification pathway, or the premarket approval (“PMA”) pathway.
The FDCA requires that medical devices introduced to the U.S. market, unless exempted by regulation, be authorized by the FDA pursuant to either the premarket notification pathway, known as 510(k) clearance, the de novo classification pathway, or the premarket approval (“PMA”) pathway. We plan to seek de novo classification for the CyPath ® Lung test in fiscal year 2028.
The shares of our Common Stock are listed for trading on The Nasdaq Capital Market under the symbol “BIAF” and our Tradeable Warrants are listed under the symbol “BIAFW.” If we fail to satisfy the continued listing requirements of The Nasdaq Capital Market, such as the corporate governance requirements, the stockholder’s equity requirement, or the minimum closing bid price requirement, The Nasdaq Capital Market may take steps to de-list our Common Stock or Warrants.
If we fail to satisfy the continued listing requirements of The Nasdaq Capital Market, such as the corporate governance requirements, the stockholder’s equity requirement, or the minimum closing bid price requirement, The Nasdaq Capital Market may take steps to de-list our Common Stock or Tradeable Warrants.
We have never operated a clinical laboratory. To date, only our Chief Operating Officer, Xavier Reveles, has operated a CAP-accredited, CLIA-certified clinical laboratory and therefore it may be difficult for investors to analyze our ability to successfully operate a clinical laboratory.
We began operating a clinical laboratory in September 2023. Previously, only our Chief Operating Officer, Xavier Reveles, had operated a CAP-accredited, CLIA-certified clinical laboratory and therefore it may be difficult for investors to analyze our ability to successfully operate a clinical laboratory.
In addition, legislation and regulations affecting the pricing of diagnostic tests, pharmaceuticals, or healthcare services may change in ways adverse to us before or after any of our proposed tests and products are approved for marketing. 30 Our competitive position depends on protection of our intellectual property. Development and protection of our intellectual property are critical to our business.
In addition, legislation and regulations affecting the pricing of diagnostic tests, pharmaceuticals, or healthcare services may change in ways adverse to us before or after any of our proposed tests and products are approved for marketing.
We do not have a sales or marketing infrastructure and have limited experience in the sale, marketing, or distribution of our diagnostic tests and therapeutic products.
We are building our sales and marketing organizations and have limited experience in the sale, marketing, or distribution of our diagnostic tests and therapeutic products.
Risks Related to the Operation of a CAP/CLIA Laboratory The operations of PPLS will depend in part upon Roby Joyce, M.D., and his relationship with existing customers and our ability to establish relationships with these customers.
Risks Related to the Operation of a CAP/CLIA Laboratory The operations of PPLS will depend in part upon prior relationships with existing customers and our ability to continue such relationships with these customers.
In the event of a de-listing, we would take actions to restore our compliance with The Nasdaq Capital Market’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Common Stock to become listed again, stabilize the market price, improve the liquidity of our Common Stock, prevent our Common Stock from dropping below The Nasdaq Capital Market minimum bid price requirement, or prevent future non-compliance with The Nasdaq Capital Market’s listing requirements. 42 The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our Common Stock is listed on The Nasdaq Capital Market, it is a covered security.
In the event of a de-listing, we would take actions to restore our compliance with The Nasdaq Capital Market’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Common Stock to become listed again, stabilize the market price, improve the liquidity of our Common Stock, prevent our Common Stock from dropping below The Nasdaq Capital Market minimum bid price requirement, or prevent future non-compliance with The Nasdaq Capital Market’s listing requirements.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability. Risks Related to Ownership of Our Common Stock and Warrants We do not expect to pay dividends in the foreseeable future.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability. Risks Related to Ownership of Our Common Stock and Warrants Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our Common Stock.
Although we have entered into a three-year employment agreement with him, there can be no assurance that the agreement will not be terminated prior to its expiration. We do not have an insurance policy on the life of Dr. Joyce, and we do not have “key person” life insurance policies for any of our other officers or advisors.
We cannot be assured that we will be able to retain his services. Although we have entered into a three-year employment agreement with him, there can be no assurance that the agreement will not be terminated prior to its expiration. We do not have an insurance policy on the life of Dr.
The actions of our licensors may therefore affect our rights to use our sublicensed intellectual property, even if we are in compliance with all of the obligations under our license agreements.
In addition, intellectual property rights that we in-license in the future may be sublicenses under intellectual property owned by third parties, in some cases through multiple tiers. The actions of our licensors may therefore affect our rights to use our sublicensed intellectual property, even if we are in compliance with all of the obligations under our license agreements.
Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses.
There may be differences between actual and projected results, and actual results may be materially different from those contained in the projections. 47 Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses.
From time to time, in order to avoid infringing these third-party patents, we may be required to license technology from additional third parties to further develop or commercialize our diagnostic tests or therapeutic product candidates.
Other pharmaceutical companies and academic institutions may also have filed or are planning to file patent applications potentially relevant to our business. From time to time, in order to avoid infringing these third-party patents, we may be required to license technology from additional third parties to further develop or commercialize our diagnostic tests or therapeutic product candidates.
If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will occur only if our stock price appreciates. Our Warrants may never have a market price that exceeds the exercise price. Each Tradeable Warrant and Non-Tradeable Warrant that we issued in our initial public offering has an exercise price of $3.0625.
If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will occur only if our stock price appreciates. Our Common Stock market price may never exceed the exercise price of our outstanding warrants.
Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.
As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.
Our failure to file a registration statement to register the shares of Common Stock issuable upon exercise of the Warrants that we issued in March 2024, or to timely hold a stockholders’ meeting to obtain stockholder approval of the issuance of shares of Common Stock upon the exercise of the Warrants that we issued in March 2024, will result in a breach of the terms of the Securities Purchase Agreement.
Our failure to file a registration statement to register the shares of Common Stock issuable upon exercise of the warrants that we issued in February 2025 will result in a breach of the terms of the warrant inducement agreement.
Timely, effective service is essential to maintaining the reputation and high use rates of our CAP/CLIA laboratory, PPLS.
PPLS may be unable to effectively maintain equipment or generate revenue when its equipment is not operational. Timely, effective service is essential to maintaining the reputation and high use rates of our CAP/CLIA laboratory, PPLS.
Any of the foregoing could prevent us from commercializing our other diagnostic tests or therapeutic product candidates, which could have a material adverse effect on our operating results and overall financial condition. In addition, intellectual property rights that we in-license in the future may be sublicenses under intellectual property owned by third parties, in some cases through multiple tiers.
Any of the foregoing could prevent us from commercializing our other diagnostic tests or therapeutic product candidates that are dependent on third-part license agreements which could have a material adverse effect on our operating results and overall financial condition.
PPLS’ future success will depend in significant part upon the continued relationships with existing customers, many of whom have developed professional relationships with Roby Joyce, M.D. While Dr. Joyce is the Medical Director and Laboratory Director of PPLS and a member of our Board of Directors, we cannot assure you that we will be able to retain his services.
PPLS’ future success will depend in part upon the continued relationships with existing customers, many of whom have developed professional relationships with pathologists who have established relationships with our customers. In particular, Roby Joyce, M.D. who is the Medical Director of PPLS and a member of our Board of Directors, has a long-term relationship with certain PPLS clients.
Accordingly, there is a risk that the assumptions made in preparing the projections, or the projections themselves, will prove inaccurate. There may be differences between actual and projected results, and actual results may be materially different from those contained in the projections.
Accordingly, there is a risk that the assumptions made in preparing the projections, or the projections themselves, will prove inaccurate.
Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects. We will depend on third parties to manufacture our kits, reagents and supplies and help in marketing our diagnostic tests and to design trial protocols, arrange for and monitor the clinical trials, and collect and analyze data.
If rapid growth occurs, it may strain our operational, managerial, and financial resources. 28 We will depend on third parties to manufacture our kits, reagents and supplies and help in marketing our diagnostic tests and to design trial protocols, arrange for and monitor the clinical trials, and collect and analyze data.
The financial and operational projections that we may make from time to time are subject to inherent risks.
The failure to take any of these actions will constitute a default under the warrant inducement agreement. The financial and operational projections that we may make from time to time are subject to inherent risks.
Should our licensors or any of the upstream licensors fail to comply with their obligations under the agreements pursuant to which they obtain the rights that are sublicensed to us, or should such agreements be terminated or amended, our ability to develop and commercialize our diagnostic tests or therapeutic product candidates may be materially harmed.
Should our licensors or any of the upstream licensors fail to comply with their obligations under the agreements pursuant to which they obtain the rights that are sublicensed to us, or should such agreements be terminated or amended, our ability to develop and commercialize our diagnostic tests or therapeutic product candidates may be materially harmed. 38 In the future, we may need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated We currently own intellectual property directed to our diagnostic tests, therapeutic product candidates and other proprietary technologies.
The FDA has, on occasion, sent warning letters to laboratories offering LDTs that the agency believed were not eligible for enforcement discretion because of how they were developed, validated, performed, or marketed and consequent risks to the public. 38 In September 2023, the FDA announced a proposed rule to ensure the safety and effectiveness of LDTs by amending regulations to explicitly say that IVDs offered as LDTs fall under the FDCA and phase out its general enforcement discretion approach for most LDTs.
The FDA has, on occasion, sent warning letters to laboratories offering LDTs that the agency believed were not eligible for enforcement discretion because of how they were developed, validated, performed, or marketed and consequent risks to the public. 42 On May 6, 2024, FDA promulgated a final rule phasing out over four years its enforcement discretion over LDTs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee of the Board of Directors oversees bioAffinity cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
Biggest changeOur management team has prior experience selecting, deploying, and overseeing cybersecurity technologies, initiatives, and processes and relies on threat intelligence as well as other information obtained from governmental, public, or private sources. The Audit Committee of the Board of Directors oversees bioAffinity cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks .
“Risk Factors – Our internal information technology systems, or those of our third-party clinical research organizations or other contractors or consultants, may fail or suffer security breaches, loss or leakage of data, and other disruptions, which could result in a material disruption of our diagnostic tests’ or therapeutic product candidates’ development programs, compromise sensitive information related to our business or prevent us from accessing critical information, potentially exposing us to liability or otherwise adversely affecting our business.”
“Risk Factors – Our internal information technology systems, or those of our third-party clinical research organizations or other contractors or consultants, may fail or suffer security breaches, loss or leakage of data, and other disruptions, which could result in a material disruption of our diagnostic tests’ or therapeutic product candidates’ development programs, compromise sensitive information related to our business, or prevent us from accessing critical information, potentially exposing us to liability or otherwise adversely affecting our business.” 52

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe are in negotiations to extend the lease for 6 years at a rate similar to the current rent. Management believes that the combination of our rented and licensed office and laboratory spaces are adequate to meet our current needs and expected level of operations.
Biggest changeManagement believes that the combination of our rented and licensed office and laboratory spaces are adequate to meet our current needs and expected level of operations. We do not own any real property.
Pursuant to the terms of a license agreement, UTSA grants us a license for the temporary use of approximately 1,250 square feet of laboratory and office space in room SRL 1.424 inside the Science Research Laboratories on UTSA’s campus. In exchange, we pay a licensing fee of $3,081 per month.
Pursuant to the terms of a license agreement, UTSA grants us a license for the temporary use of approximately 1,250 square feet of laboratory and office space in room SRL 1.424 inside the Science Research Laboratories on UTSA’s campus. In exchange, we pay a licensing fee of $5,300 per month.
The license agreement has a one-year term that we can extend by requesting a term extension from UTSA. Since 2016, UTSA has granted each of our annual requests for a license extension. We rent additional corporate office space located at Venture Point (formerly WorkHub Elite Business Center) pursuant to a membership agreement that is renewable in September 2024.
The license agreement has a one-year term that we can extend by requesting a term extension from UTSA. Since 2016, UTSA has granted each of our annual requests for a license extension. PPLS leases a premises in San Antonio, Texas, used in connection with operation of the CAP-accredited, CLIA-certified clinical pathology laboratory.
Removed
Currently, we rent several office suites for a monthly fee of approximately $7,000 per month. We do not own any real property. PPLS leases a premises in San Antonio, Texas, used in connection with operation of the CAP-accredited, CLIA-certified clinical pathology laboratory. The rent is currently $10,143.83 per month, and the term of the lease expires in October 2024.
Added
The rent is currently $10,144 per month, and the term of the lease expires in October 2027. We rent additional corporate office space located near the PPLS lease. The rent is currently $2,970 per month, and the term of the lease expires in August 2030.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−4 removed4 unchanged
Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1) (a) (b) (c) Equity compensation plans approved by security holders 676,553 $ 3.98 683,175 Equity compensation plans not approved by security holders Total 676,553 $ 3.98 683,175 (1) The number of shares of Common Stock that may be issued pursuant to awards under the 2014 Equity Incentive Plan shall not exceed in the aggregate the greater of (i) 8,000,000 shares of Common Stock, or (ii) that number of shares equal to 20% of the total issued and outstanding shares of Common Stock.
Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2024 Equity Incentive Plan 519,792 $ 2.00 1,480,208 2014 Equity Incentive Plan 380,132 $ 5.78 — Equity compensation plans not approved by security holders — — — Total 899,924 $ 3.59 1,480,208 Item 6. [Reserved.]
Securities Authorized for Issuance Under Equity Compensation Plans The following table presents information as of December 31, 2023, with respect to shares of our Common Stock that may be issued under our 2014 Equity Incentive Plan.
Securities Authorized for Issuance Under Equity Compensation Plans The following table presents information as of December 31, 2024, with respect to shares of our Common Stock that may be issued under our equity incentive plans.
Holders of Record As of March 20, 2024, there were approximately 79 holders of record of shares of our Common Stock. This number does not reflect the beneficial holders of our common stock who hold shares in street name through brokerage accounts or other nominees. Dividends We have never declared or paid any cash dividends on our capital stock.
Holders of Record As of March 17, 2025, there were approximately 92 holders of record of shares of our Common Stock. This number does not reflect the beneficial holders of our Common Stock who hold shares in street name through brokerage accounts or other nominees. Dividends We have never declared or paid any cash dividends on our capital stock.
Unregistered Sales of Equity Securities We did not sell any equity securities during the quarter ended December 31, 2023, in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC and as described below.
Unregistered Sales of Equity Securities We did not sell any equity securities during the quarter ended December 31, 2024, in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC.
Removed
We believe that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof.
Removed
On October 1, 2023, we issued an aggregate of 94,936 restricted shares of our Common Stock to our seven directors, which shares of restricted stock will vest ratably over three months of continued service and which represents a restricted stock award to each director valued at $18,750 granted by us to each of our directors each quarter during the calendar year as part of our director compensation policy.
Removed
On October 1, 2023, we issued 3,164 shares of our Common Stock to a consultant pursuant to the terms of a consulting agreement in consideration of services provided. In November 2023 to an investor relations firm of 50,000 shares of common stock for services provided.
Removed
The investor relations firm was a sophisticated investor, received shares that had a restricted legend and had adequate access, though their relationships with the Company, to information about the Company.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

16 edited+2 added−3 removed11 unchanged
Biggest changeRisks Related to Our Diagnostic Tests ● If our tests do not perform as expected, our operating results, reputation, and business will suffer. ● We may experience delays in development, introduction, or marketing of enhanced or new tests. ● If clinical testing does not yield successful results, we will be unable to commercialize that test or product candidate. ● Even if our tests or products receive marketing approval, they may fail to achieve market acceptance. ● We may not be successful in commercializing our diagnostic tests or therapeutic products. ● We are currently dependent upon PPLS to offer and perform CyPath ® Lung. ● Market acceptance may depend upon our ability to convince physicians of benefits of our tests or products. ● We face substantial competition. ● Our success depends upon our ability to retain and attract key executives and qualified personnel. ● Our lack of operating experience may make it difficult to manage our growth. ● Failure to comply with obligations imposed by intellectual property licenses could result in loss of rights. ● We may need to obtain additional licenses of technology that may not be available to us. ● We will depend on third parties to manufacture and market our diagnostic tests and to design trial protocols. ● We are exposed to product liability and pre-clinical and clinical liability risks. ● Our failure to comply with privacy and security regulations could result in significant liability. ● Our ability to obtain adequate reimbursement from third-party payors may impact our revenues. ● Our employees, consultants, partners, and vendors may engage in misconduct or other improper activities. ● Failure to comply with healthcare fraud and abuse laws and regulations could result in penalties. ● We face intense competition in the biotechnology and pharmaceutical industries. ● The market for our proposed tests and products is competitive and rapidly changing. ● Healthcare cost containment initiatives and the growth of managed care may limit our returns. ● Our competitive position depends on protection of our intellectual property. ● Diagnostic tests and therapeutic products we develop could be subject to infringement claims. 4 ● We may become involved in lawsuits to protect or enforce our intellectual property. ● If we are unable to protect our trade secrets, our business and competitive position could be harmed. ● Disruption of our internal information technology systems will adversely affect our business. ● Declining general economic or business conditions may have a negative impact on our business. ● Global climate change and related regulations could negatively affect our business.
Biggest changeRisks Related to Our Diagnostic Tests ● If our tests do not perform as expected, our operating results, reputation, and business will suffer. ● We may experience difficulties that delay or prevent our development, introduction, or marketing of enhanced or new tests. ● If clinical testing of a particular diagnostic test or therapeutic product candidate does not yield successful results, we will be unable to commercialize that test or product candidate. ● Even if our diagnostic tests or therapeutic products receive marketing approval, we may not be successful in commercializing them or they may fail to achieve market acceptance. ● We are currently dependent upon PPLS to offer and perform CyPath ® Lung. ● If we are unable to convince physicians of the benefits of our proposed diagnostic tests or therapeutic products, we may incur delays or additional expense in our attempt to establish market acceptance. ● We face substantial competition. ● Our success depends upon our ability to retain key executives and attract and retain qualified personnel. ● Our lack of operating experience may make it difficult to manage our growth. ● We will depend on third parties to manufacture and market our diagnostic tests and to design trial protocols and monitor clinical trials. ● We are exposed to product liability and pre-clinical and clinical liability risks. ● Our failure to comply with privacy and security regulations could result in liability or reputational harm. ● Our ability to obtain adequate reimbursement for our diagnostic tests may impact our revenues. ● Our employees, consultants, partners, and vendors may engage in misconduct or other improper activities. ● Failure to comply with healthcare laws and regulations could result in substantial penalties. ● We face intense competition in the biotechnology and pharmaceutical industries. ● The market for our proposed tests and products is competitive and rapidly changing. ● Healthcare cost containment initiatives and the growth of managed care may limit our returns. ● Disruption of internal information technology systems will adversely affect our business. ● Declining general economic or business conditions may have a negative impact on our business. ● Global climate change and related regulations could negatively affect our business. 5 Risks Related to the Operation of a CAP/CLIA Laboratory ● PPLS’s operations depend upon the relationship of certain of our pathologists with existing customers. ● PPLS may be unable to maintain equipment or generate revenue when its equipment is not operational. ● If our sole laboratory facility becomes damaged or inoperable, loses its accreditation, or is required to vacate the facility, PPLS’ ability to sell its products or provide diagnostic assays and pursue its research and development efforts may be jeopardized. ● PPLS relies on commercial courier delivery services to transport sputum samples for CyPath ® Lung, the disruption of which could harm its business. ● Security breaches, data loss, and other disruptions could compromise sensitive information of PPLS’ business. ● If PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages. ● If PPLS is unable to successfully scale its operations to support demand its business could suffer. ● PPLS must dedicate substantial time and resources to its complex billing process to be paid. ● Delays of third-party billing and collection providers and an in-house billing function to transmit claims to payors could have an adverse effect on PPLS.
The factors that may affect our expectations regarding our operations include, among others, the following: ● our projected financial position and estimated cash burn rate; ● our estimates regarding expenses, future revenues, and capital requirements; ● the success, cost, and timing of our clinical trials; ● our ability to obtain funding for our operations necessary to complete further development and commercialization of our diagnostic tests or therapeutic product candidates; ● our dependence on third parties in the conduct of our clinical trials; ● our ability to obtain the necessary regulatory approvals to market and commercialize our diagnostic tests or therapeutic product candidates; ● the potential that the results of our pre-clinical and clinical trials indicate our current diagnostic tests or any future diagnostic tests or therapeutic product candidates we may seek to develop are unsafe or ineffective; ● the results of market research conducted by us or others; ● our ability to obtain and maintain intellectual property protection for our diagnostic and therapeutic inventions or future diagnostic and therapeutic inventions to expand our product offerings; ● our ability to protect our intellectual property (“IP”) rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our IP rights; ● the possibility that a third party may claim we or our third-party licensors have infringed, misappropriated, or otherwise violated their IP rights and that we may incur substantial costs and be required to devote substantial time defending against such claims; ● our reliance on third parties; ● the success of competing therapies, diagnostic tests, and therapeutic products that are or will become available; ● our ability to expand our organization to accommodate potential growth and to retain and attract key personnel; ● our potential to incur substantial costs resulting from product liability lawsuits against us and the potential for such lawsuits to cause us to limit the commercialization of our diagnostic tests and therapeutic product candidates; ● market acceptance of our diagnostic tests and therapeutic product candidates, the size and growth of the potential markets for our current diagnostic tests and therapeutic product candidates, and any future diagnostic tests and therapeutic product candidates we may seek to develop, and our ability to serve those markets; ● the successful development of our commercialization capabilities, including sales and marketing capabilities; ● compliance with government regulations, including environmental, health, and safety regulations and liabilities thereunder; ● the impact of a health epidemic on our business, our clinical trials, our research programs, healthcare systems, or the global economy as a whole; ● general instability of economic and political conditions in the United States (“U.S.”), including inflationary pressures, increased interest rates, economic slowdown or recession, and escalating geopolitical tensions; ● our anticipated uses of net proceeds from our initial public offering (“the IPO”) and subsequent direct offering (“the Direct Offering”); ● the increased expenses associated with being a public company; and ● other factors discussed elsewhere in this Annual Report.
The factors that may affect our expectations regarding our operations include, among others, the following: ● our projected financial position and estimated cash burn rate; ● our estimates regarding expenses, future revenues, and capital requirements; ● the success, cost, and timing of our clinical trials; ● our ability to obtain funding for our operations necessary to complete further development and commercialization of our diagnostic tests or therapeutic product candidates; ● our dependence on third parties in the conduct of our clinical trials; ● our ability to obtain the necessary regulatory approvals to market and commercialize our diagnostic tests or therapeutic product candidates; ● the potential that the results of our pre-clinical and clinical trials indicate our current diagnostic tests or any future diagnostic tests or therapeutic product candidates we may seek to develop are unsafe or ineffective; ● the results of market research conducted by us or others; ● our ability to obtain and maintain intellectual property protection for our diagnostic and therapeutic inventions or future diagnostic and therapeutic inventions to expand our product offerings; ● our ability to protect our intellectual property (“IP”) rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our IP rights; ● the possibility that a third party may claim we or our third-party licensors have infringed, misappropriated, or otherwise violated their IP rights and that we may incur substantial costs and be required to devote substantial time defending against such claims; ● our reliance on third parties; ● the success of competing therapies, diagnostic tests, and therapeutic products that are or will become available; ● our ability to expand our organization to accommodate potential growth and to retain and attract key personnel; ● our potential to incur substantial costs resulting from product liability lawsuits against us and the potential for such lawsuits to cause us to limit the commercialization of our diagnostic tests and therapeutic product candidates; 3 ● market acceptance of our diagnostic tests and therapeutic product candidates, the size and growth of the potential markets for our current diagnostic tests and therapeutic product candidates, and any future diagnostic tests and therapeutic product candidates we may seek to develop, and our ability to serve those markets; ● the successful development of our commercialization capabilities, including sales and marketing capabilities; ● compliance with government regulations, including environmental, health, and safety regulations and liabilities thereunder; ● the impact of a health epidemic on our business, our clinical trials, our research programs, healthcare systems, or the global economy as a whole; ● general instability of economic and political conditions in the United States (“U.S.”), including inflationary pressures, increased interest rates, economic slowdown or recession, and escalating geopolitical tensions; ● our anticipated uses of net proceeds from our financings; ● the increased expenses associated with being a public company; and ● other factors discussed elsewhere in this Annual Report.
You should read this Annual Report and the documents that we reference within it with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect. Website and Social Media Disclosure We use our websites (www.bioaffinitytech.com and ir.bioaffinitytech.com) to share Company information.
You should read this Annual Report and the documents that we reference within it with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect. Website and Social Media Disclosure We use our websites (www.bioaffinitytech.com, ir.bioaffinitytech.com, www.cypathlung.com and www.Precisionpath.us/) to share Company information.
Exhibit and Financial Statement Schedules 56 Signatures 59 2 Throughout this Annual Report on Form 10-K (the “Annual Report”), the terms “bioAffinity,” “bioAffinity Technologies,” “we,” “us,” “our” or “Company” refer to bioAffinity Technologies, Inc., a Delaware corporation, and its wholly owned subsidiaries, OncoSelect ® Therapeutics, LLC, a Delaware limited liability company, and Precision Pathology Laboratory Services, LLC, a Texas limited liability company.
Exhibit and Financial Statement Schedules 64 Signatures 70 2 Throughout this Annual Report on Form 10-K (the “Annual Report”), the terms “bioAffinity,” “bioAffinity Technologies,” “we,” “us,” “our” or “Company” refer to bioAffinity Technologies, Inc., a Delaware corporation, and its wholly owned subsidiaries, OncoSelect ® Therapeutics, LLC, a Delaware limited liability company, and Precision Pathology Laboratory Services, LLC, a Texas limited liability company.
Other Information 54 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54 PART III Item 10. Directors, Executive Officers and Corporate Governance 55 Item 11. Executive Compensation 55 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 55 Item 13. Certain Relationships and Related Transactions, and Director Independence 55 Item 14.
Other Information 62 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 62 PART III Item 10. Directors, Executive Officers and Corporate Governance 63 Item 11. Executive Compensation 63 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 63 Item 13. Certain Relationships and Related Transactions, and Director Independence 63 Item 14.
Item 6. [Reserved] 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8. Financial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 53 Item 9A. Controls and Procedures 54 Item 9B.
Item 6. [Reserved] 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 54 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 61 Item 8. Financial Statements and Supplementary Data 61 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 61 Item 9A. Controls and Procedures 62 Item 9B.
Principal Accountant Fees and Services 55 PART IV Item 15.
Principal Accountant Fees and Services 63 PART IV Item 15.
Information contained on or that can be accessed through our websites is not, however, incorporated by reference in this Annual Report.
Information contained on or that can be accessed through our websites is not, however, incorporated by reference in this Annual Report. Investors should not consider any such information to be part of this Annual Report.
Risks Related to our Diagnostic Product ● The FDA could promulgate regulations that impose greater regulatory burdens on laboratory developed tests (“LDTs”) such as CyPath ® Lung. ● Clinical trials are expensive, time-consuming, and may not be successful. ● Delays or difficulties in the enrollment of patients could delay or prevent the regulatory approvals.
Food and Drug Administration (“FDA”) clearance for CyPath ® Lung as an in vitro diagnostic, the FDA could impose greater regulatory burdens on laboratory developed tests (“LDTs”). ● Delays or difficulties in the enrollment of patients could delay or prevent regulatory approvals. ● Clinical trials are expensive, time-consuming, and may not be successful.
Investors should not consider any such information to be part of this Annual Report. 3 Forward-Looking Statements This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties.
Forward-Looking Statements This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1.
Risks Related to Government Regulations ● Should the FDA disagree that CyPath ® Lung is an LDT our commercialization strategy may be adversely affected. ● FDA failure to grant our request for de novo classification would adversely affect our business. ● Noncompliance with laws pertaining to LDTs or in vitro devices (“IVDs”) could adversely affect our business. ● The third-party licensors of our future therapeutic products, may be unable to obtain regulatory approval. ● We may fail to obtain regulatory approval in foreign jurisdictions. ● We may never obtain approval or commercialize such products outside of the U.S. ● The impact of healthcare spending and recent healthcare reform legislation is currently unknown.
Risks Related to Government Regulations ● Should the FDA’s regulatory approach to LDTs change, our strategy may be adversely affected. ● Delay by or failure of the FDA to grant our request for de novo classification or our failure to comply with applicable requirements would adversely affect our business. ● Failure to comply with laws pertaining to LDTs or in vitro devices (“IVDs”) could adversely affect our business. ● Third-party licensors of our future therapeutic products may be unable to obtain regulatory approval. ● Failure to obtain regulatory approval in foreign jurisdictions would prevent our product candidates from being marketed in those jurisdictions that deny approval. ● We may never obtain approval or commercialize such products outside of the U.S., which would limit our ability to realize their full market potential. ● The impact of changes to healthcare policy and future healthcare reform legislation is unknown.
Risks Related to Intellectual Property Rights ● Intellectual property rights do not necessarily address all potential threats to our competitive advantage. ● Changes in patent law could impair our ability to protect our tests and product candidates. ● Our patent protection could be impacted by non-compliance with requirements of patent agencies. ● Patent terms may be inadequate to protect our diagnostic tests or therapeutic product candidates. ● Issued patents covering our product candidates could be found invalid or unenforceable if challenged. ● If we do not obtain patent term extension, our business may be harmed. ● We enjoy only limited geographical protection with respect to certain patents. ● If our trademarks and trade names are not adequately protected, we may not be able to build name recognition.
Risks Related to Intellectual Property Rights ● If we fail to comply with our obligations imposed by any intellectual property licenses with third parties that we may need in the future, we could lose rights that are important to our business. ● In the future, we may need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms. ● Our competitive position depends on protection of our intellectual property. ● Diagnostic tests and therapeutic products we develop could be subject to infringement claims. ● We may become involved in lawsuits to protect or enforce our intellectual property. ● If we are unable to protect our trade secrets, our business and competitive position could be harmed. ● Changes in patent law could impair our ability to protect our tests and product candidates. ● Our patent protection could be reduced or eliminated for non-compliance with requirements imposed by governmental patent agencies. ● Patent terms may be inadequate to protect our diagnostic tests or therapeutic product candidates. ● Issued patents could be found invalid or unenforceable. ● If we do not obtain patent term extension, our business may be harmed. ● We enjoy only limited geographical protection with respect to certain patents. ● If our trademarks and trade names are not adequately protected, we may not be able to build name recognition.
The forward-looking statements are contained principally in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report.
“Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions.
Risks Related to Ownership of Our Common Stock and Warrants ● We do not expect to pay dividends in the foreseeable future. ● The Tradeable Warrants may never have a market price that exceeds the exercise price and holders have no rights as stockholders until the warrants are exercised. ● The provisions of the Tradeable Warrants could limit a holder’s ability to choose a judicial forum for disputes. ● Our failure to file a registration statement to register the Common Stock issuable upon exercise of the Warrants that we issued in March 2024 or to timely hold a stockholders’ meeting to obtain stockholder approval will result in a breach of the Securities Purchase Agreement. ● We may be unable to meet the continued listing requirements of The Nasdaq Capital Market. ● Our stock price has been volatile and thinly traded, and may be volatile in the future. ● An investment in our Company may involve tax implications. ● Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. ● Our Certificate of Incorporation permits “blank check” Preferred Stock. ● Certain provisions in our Charter and Amended and Restated (“A&R”) Bylaws could make a merger, tender offer, acquisition or proxy contest difficult and have anti-takeover effects. ● Our Charter designates a state or federal court located within Delaware as the exclusive forum for disputes. ● Certain provisions in our Charter and A&R Bylaws may discourage stockholder lawsuit. 5 ● Our management collectively owns a substantial percentage of our Common Stock. ● Any inability to file our financial results accurately and timely could harm our reputation and stock price.
Any return on investment may be limited to the value of our Common Stock. ● Our Common Stock market price may never exceed the exercise price of our outstanding warrants. ● Holders of our warrants have no rights as stockholders until they exercise their warrants. ● The provisions of our outstanding warrants could limit a warrant holder’s ability to choose the judicial forum for disputes. ● Our failure to file timely registration statement pursuant to the terms of a warrant inducement agreement will result in a breach thereof. ● The financial and operational projections that we may make from time to time are subject to inherent risks. ● Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future. ● Our Common Stock has often been thinly traded. ● An investment in our Company may involve tax implications. ● Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. ● Our Certificate of Incorporation permits “blank check” Preferred Stock, which can be designated by our Board without stockholder approval. ● Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company more difficult. ● Certain provisions in our Charter and Amended and Restated (“A&R”) Bylaws could make a merger, tender offer, or proxy contest difficult. ● Certain provisions of Delaware’s General Corporation Law (“DGCL”) may have anti-takeover effects that could delay, defer, or discourage another party from acquiring control of us. ● Our Charter designates Delaware state or federal courts as the exclusive forum for disputes. ● Certain provisions in our Charter and A&R Bylaws may discourage stockholders from bringing a lawsuit against our directors and officers. ● Our management collectively owns a substantial percentage of our Common Stock. ● If analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. ● Any inability to report and file our financial results accurately and timely could harm our business. 6 PART I
Summary of Risk Factors Risks Related to Our Financial Position ● Our business plan relies upon our ability to obtain additional sources of capital and financing. ● We must raise additional capital to fund our operations in order to continue as a going concern. ● Our limited operating history makes it difficult to evaluate our current business and future prospects. ● We will require additional financing to implement our business plan.
Unless the context requires otherwise, references to “we,” “us,” “our,” and “bioAffinity,” refer to bioAffinity Technologies, Inc. and its subsidiaries. 4 Summary of Risk Factors Risks Related to Our Financial Position ● Our business plan relies upon our ability to obtain additional sources of capital and financing. ● We must raise additional capital to fund our operations in order to continue as a going concern. ● Our limited operating history makes it difficult to evaluate our business and future prospects. ● We are unable to precisely estimate when we will begin to generate significant profit from Precision Pathology Laboratory Services (PPLS). ● We have limited experience operating a laboratory.
We do not undertake any obligation to update any forward-looking statements. Unless the context requires otherwise, references to “we,” “us,” “our,” and “bioAffinity,” refer to bioAffinity Technologies, Inc. and its subsidiaries.
We do not undertake any obligation to update any forward-looking statements.
Removed
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions.
Added
Risks Related to our Diagnostic Product ● Until we secure U.S.
Removed
Risks Related to the Acquisition of Precision Pathology Laboratory Services (“PPLS”) ● The combined company may not experience the anticipated strategic benefits of the acquisition. ● We may not be able to enforce claims under the Asset Purchase Agreement. ● We are unable to estimate when we will begin to generate significant profit from revenue. ● Operating a clinical laboratory is a new business for us, and we have limited experience doing so.
Added
Risks Related to Ownership of Our Common Stock and Warrants ● Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our Common Stock. ● We do not expect to pay dividends in the foreseeable future.
Removed
Risks Related to the Operation of a CAP/CLIA Laboratory ● The operations of PPLS depend in part upon Roby Joyce, M.D., and his relationship with existing customers. ● PPLS may be unable to effectively maintain equipment. ● We will be adversely impacted if our sole laboratory facility becomes inoperable. ● PPLS relies on commercial courier delivery services to transport sputum samples for CyPath ® Lung. ● Security breaches, loss of data, and other disruptions could compromise sensitive information. ● If PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages. ● If PPLS is unable to scale its operations to support demand for CyPath ® Lung, its business could suffer. ● Delays of third-party billing and collection providers could have an adverse effect on PPLS.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+27 added−19 removed23 unchanged
Biggest changeWe also agreed to file a registration statement to register the resale of the Common Warrant Shares and the shares of Common Stock issuable upon exercise of the Placement Agent Warrant (the “Placement Agent Warrant Shares”) within 30 days of the date of the Purchase Agreement and to use commercially reasonable efforts to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares and until the Placement Agent does not own the Placement Agent Warrant or any Placement Agent Warrant Shares.
Biggest changeIn consideration of the immediate exercise of the October Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, we issued unregistered common warrants (the “February Warrants”) to purchase an aggregate of up to 2,926,166 shares of Common Stock (120% of the number of shares of Common Stock issuable upon exercise of the October Warrants and August Warrants) to such holders. 55 We agreed in the February Inducement Agreement to file a registration statement to register the resale of the shares of Common Stock (the “February Warrant Shares”) issuable upon exercise of the February Warrants (the “Resale Registration Statement”) as soon as practicable (and in any event within 45 calendar days following the date of the Inducement Agreement), and to use commercially reasonable efforts to have the Resale Registration Statement declared effective by the SEC and to keep such registration statement effective at all times until the Holders no longer own any February Warrants or February Warrant Shares.
Discount rate for finance leased equipment We follow ASC 842, Leases , In February 2016, the FASB issued Topic 842, under which a lessee is required to recognize most leases on its balance sheet.
Discount Rate for Finance Leased Equipment We follow Leases (“ASC 842”). In February 2016, the FASB issued Topic ASC 842, under which a lessee is required to recognize most leases on its balance sheet.
Accounting for Income Taxes We are governed by U.S. income tax laws, which are administered by the Internal Revenue Service (IRS). We follow ASC 740, Accounting for Income Taxes , which requires an asset and liability approach to financial accounting and reporting for income taxes.
Accounting for Income Taxes We are governed by U.S. income tax laws, which are administered by the Internal Revenue Service (“IRS”). We follow ASC 740, Accounting for Income Taxes , which requires an asset and liability approach to financial accounting and reporting for income taxes.
Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Annual Report and in the “Risk Factors” in this Annual Report. 48 Our MD&A is organized as follows: ● Company Overview – Discussion of our business plan and strategy to provide context for the remainder of the MD&A. ● Results of Operations – Analysis of our financial results comparing the year ended December 31, 2023, to the year ended December 31, 2022. ● Liquidity and Capital Resources – Analysis of changes in our cash flows and discussion of our financial condition and potential sources of liquidity. ● Critical Accounting Estimates – Accounting estimates are those estimates made in accordance with generally accepted accounting principles (“GAAP”) that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Annual Report and in the “Risk Factors” in this Annual Report. 54 Our MD&A is organized as follows: ● Company Overview – Discussion of our business plan and strategy to provide context for the remainder of the MD&A. ● Results of Operations – Analysis of our financial results comparing the year ended December 31, 2024, to the year ended December 31, 2023. ● Liquidity and Capital Resources – Analysis of changes in our cash flows and discussion of our financial condition and potential sources of liquidity. ● Critical Accounting Estimates – Accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles (“GAAP”) that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
Pre-acquisition, bioAffinity Technologies’ revenue was generated in three ways for pre-acquisition: (1) royalties from the Company’s diagnostic test, CyPath ® Lung, (2) clinical flow cytometry services provided to Village Oaks related to the Company’s CyPath ® Lung test, and (3) CyPath ® Lung tests purchased by the U.S.
Pre-acquisition, bioAffinity Technologies’ revenue was generated in three ways: (1) royalties from our diagnostic test, CyPath ® Lung, (2) clinical flow cytometry services provided to Village Oaks related to CyPath ® Lung test, and (3) CyPath ® Lung tests purchased by the U.S.
Results of Operations Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future.
Results of Operations Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP in the United States requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP in the U.S. requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Based on the Company’s current expected level of operating expenditures and the cash on hand of approximately $2.7 million at the time of this filing, management concludes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying consolidated financial statements.
Based on our current expected level of operating expenditures and the cash on hand of approximately $390 thousand at the time of this filing, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying consolidated financial statements.
The Company has elected to apply a third-party valuation increment borrowing rate (IBR) as the discount rate by class of underlying assets when the rate is not implicit in the lease.
The Company has elected to apply a third-party valuation incremental borrowing rate (“IBR”) as the discount rate by class of underlying assets when the rate is not implicit in the lease.
The increase in operating expenses is the result of the following factors. Direct costs and expenses Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment and allocated shared facilities. Direct costs and expenses totaled $1.7 million and $467 during 2023 and 2022, respectively.
The increase in operating expenses is the result of the following factors. Direct Costs and Expenses Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment and allocated shared facilities. Direct costs and expenses totaled approximately $6.0 million and $1.7 million during 2024 and 2023, respectively.
With the acquisition of PPLS and control of Village Oaks, the Company’s board-certified pathologists provide anatomic and clinical pathology services for patients and other customers. The Company’s other customer types include contract research organizations (“CRO’s), hospitals, and independent laboratories. the Company enters into contracts with its customers for these enters.
With the acquisition of PPLS and control of Village Oaks, the Company’s board-certified pathologists provide anatomic and clinical pathology services for patients and other customers. The Company’s other customer types include contract research organizations (“CRO’s), hospitals, and independent laboratories.
The Company has evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date the consolidated financial statements are issued.
We have evaluated whether there are conditions and events that raise substantial doubt about our ability to continue as a going concern for at least one year after the date the consolidated financial statements are issued.
Net loss for the year ended December 31, 2023, was approximately $7.9 million, compared to a net loss of approximately $8.2 million for the year ended December 31, 2022, resulting from the operational activities described below. Revenue Post-acquisition, additional revenue streams have been consolidated starting September 19, 2023.
Net loss for the year ended December 31, 2024 was approximately $9.0 million, compared to a net loss of approximately $7.9 million for the year ended December 31, 2023, resulting from the operational activities described below. Revenue Post-acquisition, additional revenue streams have been generated starting September 19, 2023.
We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue.
The direct offering resulted in gross proceeds of $2.5 million. We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue.
During 2023 and 2022, we had net losses of $7.9 million and $8.2 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $44.6 million as of December 31, 2023.
During 2024 and 2023, we had net losses of $9.0 million and $7.9 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $53.6 million as of December 31, 2024.
Interest income (expense) We had net interest income (expense) of approximately $85,000 and ($2.5) million for the years ended December 31, 2023 and 2022, respectively. The current year amount related to approximately $120,000 interest earned from money market account partially offset by interest paid in financing lease for laboratory equipment.
Interest income (expense) We had net interest (expense) income of approximately $(74,865) and $85,006 for the years ended December 31, 2024 and 2023, respectively. The prior year amount related to approximately $120,000 interest earned from money market account partially offset by interest paid in financing lease for laboratory equipment.
Through our wholly owned subsidiary PPLS, we acquired the assets of Village Oaks Pathology Services, P.A., a Texas professional association d/b/a Precision Pathology Services, including the CAP-accredited and CLIA-certified commercial laboratory it owned, and we now own and operate the clinical anatomic and clinical pathology laboratory.
Commercial laboratory services, including CyPath© Lung, are performed at our wholly owned subsidiary PPLS which we acquired by purchasing the assets of Village Oaks Pathology Services, P.A., a Texas professional association d/b/a Precision Pathology Services, that included the CAP-accredited and CLIA-certified commercial laboratory it owned. We now own and operate the clinical anatomic and clinical pathology laboratory.
The increase of approximately $111,000, or 76%, for 2023 compared to 2022 was primarily attributable to an increase in compensation costs and benefits as we added clinic development personnel. Selling, General and Administrative Our selling, general and administrative expenses consist primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general operating expenses.
The increase of $64,994, or 25% was primarily attributable to an increase in compensation costs and benefits as we added clinic development personnel. Selling, General and Administrative Our selling, general and administrative expenses consist primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general operating expenses.
Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
Our diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible. Assessment of Goodwill and Intangible Assets Our indefinite-lived assets include Goodwill and Intangible Assets resulting from the acquisition of PPLS.
Cash Flows The following information reflects cash flows for the years presented: Year Ended December 31, 2023 2022 Cash and cash equivalents at beginning of year $ 11,413,749 $ 1,360,638 Net cash used in operating activities (6,037,806 ) (4,070,845 ) Net cash used in investing activities (2,209,399 ) (219,987 ) Net cash provided (used) by financing activities (344,984 ) 14,343,953 Cash and cash equivalents at end of year $ 2,821,570 $ 11,413,759 Net Cash Used in Operating Activities Net cash used in operating activities was approximately $6.0 million and $4.1 million for the years ended December 31, 2023, and 2022, respectively.
Cash Flows The following information reflects cash flows for the years presented: Year Ended December 31, 2024 2023 Cash and cash equivalents at beginning of year $ 2,821,570 $ 11,413,749 Net cash used in operating activities (7,264,795 ) (6,037,806 ) Net cash used in investing activities (79,083 ) (2,209,399 ) Net cash provided by (used in) financing activities 5,627,599 (344,984 ) Cash and cash equivalents at end of year $ 1,105,291 $ 2,821,570 Net Cash Used in Operating Activities Net cash used in operating activities was approximately $7.3 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively.
We anticipate raising additional cash needed through the private or public sales of equity or debt securities, collaborative arrangements, or a combination thereof to continue to fund our operations and develop our products.
We intend to seek strategic partners for our therapeutic discoveries related to selective broad-spectrum cancer treatments through pre-clinical and clinical development. We anticipate raising additional cash needed through the private or public sales of equity or debt securities, collaborative arrangements, or a combination thereof to continue to fund our operations and develop our products.
We develop proprietary noninvasive diagnostic tests using flow cytometry and automated analysis developed by artificial intelligence (AI). One of our diagnostic tests analyzes cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state.
Company Overview Business We develop noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung using flow cytometry and automated analysis developed by machine learning, a form of artificial intelligence (“AI”). One of our diagnostic tests analyzes cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state.
The increase of approximately $1.7 million for 2023 compared to 2022 was primarily attributable to the laboratory operations of the newly acquired PPLS. Research and Development Our research and development expenses consist primarily of expenditures for lab operations, preclinical studies, compensation, and consulting costs. Research and development expenses totaled $1.5 million and $1.4 million during 2023 and 2022, respectively.
The increase of approximately $4.3 million, or 244%, was primarily attributable to the laboratory operations of PPLS being owned for the full fiscal year 2024, compared to approximately 3.5 months in fiscal year 2023. Research and Development Our research and development expenses consist primarily of expenditures for lab operations, preclinical studies, compensation, and consulting costs.
Net Cash Provided by Financing Activities During the year ended December 31, 2023, net cash used by financing activities was $345,000 as compared to net cash proceeds of $14.3 million during 2022.
Net Cash Provided by Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $5.5 million as compared to net cash used in financing activities of $0.3 million during 2023, representing an increase of approximately $5.9 million.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs. Through our wholly owned subsidiary, OncoSelect ® Therapeutics, LLC, our research has led to discoveries and advancement of novel cancer therapeutic approaches that specifically and selectively target cancer cells.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs.
Recent Developments On March 6, 2024, we received aggregate gross proceeds of $2.5 million from the sale to four institutional investors (the “Purchasers”) of (1) 1,600,000 shares of our Common Stock in a registered direct offering, and (2) Common Warrants to purchase an aggregate of 1,600,000 shares of Common Stock (the “Common Warrants”) with an exercise price of $1.64 in a concurrent private placement (the “Transactions”).
March 2024 Registered Direct Offering and Concurrent Private Placement On March 8, 2024, we issued to certain investors, pursuant to a Securities Purchase Agreement (1) 1,600,000 shares of Common Stock in a registered direct offering, and (2) warrants to purchase an aggregate of 1,600,000 shares of Common Stock with an exercise price of $1.64, in a concurrent private placement.
We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to the acquisition. We intend to license our therapeutic products for clinical development should animal and pre-clinical studies prove successful.
We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to accelerating sales of CyPath ® Lung and cost-saving measures we recently instituted at PPLS.
During the year ended December 31, 2022, net cash provided by financing activities was $14.3 million primarily due to net proceeds of approximately $6.0 million from issuance of Common Stock in our IPO, as well as proceeds of approximately $7.8 million from the exercise of warrants and options.
During the year ended December 31, 2024, net cash provided by financing activities was primarily due to net proceeds of approximately $5.8 million from issuance of Common Stock and, option and warrant exercises, partially offset by financing payments.
Liquidity and Capital Resources To date, we have funded our operations primarily through our IPO, exercise of warrants, and the sale of our equity and debt securities, resulting in gross proceeds of approximately $36.8 million.
The current year amount related to approximately $18,000 interest earned from money market account offset by interest paid in financing lease for laboratory equipment. 58 Liquidity and Capital Resources To date, we have funded our operations primarily through our IPO, exercise of warrants, and the sale of our equity and debt securities, resulting in gross proceeds of approximately $42.7 million.
Net Cash Used in Investing Activities The Company used approximately $2.2 million in investing activities in 2023, compared to $0.2 million used for the year ended December 31, 2022. The increase in cash used in investing activities in 2023, compared to 2022, is attributable to the acquisition of PPLS.
Additionally, the increase was due to the expansion of sales efforts for CyPath ® Lung. 59 Net Cash Used in Investing Activities We used approximately $79,000 in investing activities for the year ended December 31, 2024, compared to $2.2 million used for the year ended December 31, 2023.
For year ended December 31, 2023 2022 Patient service fees 1 $ 2,199,558 $ — Histology service fees 272,660 — Medical director fees 19,324 — Department of Defense observational studies 19,442 — Other revenues 2 21,515 4,803 Total net revenue $ 2,532,499 $ 4,803 1 Patient services fees includes direct billing for CyPath® Lung diagnostic test. 2 Other revenues include pre-acquisition CyPath® Lung royalty income and laboratory services. 50 Operating Expenses Year Ended Change in 2023 December 31, Versus 2022 2023 2022 $ % Operating expenses: Direct costs and expenses $ 1,740,884 $ 467 $ 1,740,417 372,680 % Research and development 1,467,936 1,378,624 89,312 6 % Clinical development 256,661 ‌145,546 111,115 76 % Selling, general and administrative 6,790,654 2,481,042 4,314,612 174 % Depreciation and amortization 249,592 ‌10,185 239,410 2,351 % Total operating expenses $ 10,505,727 $ 4,015,861 $ 6,494,866 162 % Operating expenses totaled $10.5 million and $4.0 million during 2023 and 2022, respectively.
Year Ended December 31, 2024 2023 Patient service fees 1 $ 8,175,670 $ 2,199,558 Histology service fees 1,103,751 272,660 Medical director fees 66,576 19,324 Department of Defense observational studies 8,654 19,442 Other revenues 7,371 21,515 Total net revenue $ 9,362,022 $ 2,532,499 1 Patient services fees includes direct billing for CyPath® Lung diagnostic test of approximately $516,000 and $35,000 for the years ended December 31, 2024 and 2023, respectively. 57 Operating Expenses Year Ended Change in 2024 December 31, Versus 2023 2024 2023 $ % Operating expenses: Direct costs and expenses $ 5,983,475 $ 1,740,884 $ 4,242,591 244 % Research and development 1,461,227 1,467,936 (6,709 ) 0 % Clinical development 321,655 256,661 64,994 25 % Selling, general and administrative 9,943,473 6,790,654 3,152,819 46 % Depreciation and amortization 605,637 249,592 356,045 143 % Total operating expenses $ 18,315,467 $ 10,505,727 $ 7,809,740 74 % Operating expenses totaled $18.3 million and $10.5 million for the years ended December 31, 2024 and 2023, respectively.
As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. Prior to the acquisition, Precision Pathology Services had licensed and developed CyPath ® Lung as an LDT for sale to physicians.
As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. We have never been profitable, and as of December 31, 2024, we had a working capital deficit of $0.4 million and an accumulated deficit of approximately $53.6 million.
Cash and cash equivalents were approximately $2.8 million as of December 31, 2023 which does not take into account the gross proceeds of $2.5 million that we received in March 2024. At the time of this filing, cash is expected to be sufficient through September 2024.
Without funding from the proceeds of a capital raise or strategic relationship or grant, management anticipates that our cash resources are sufficient to continue operations through April 2025. Cash and cash equivalents were approximately $1.1 million as of December 31, 2024, which does not take into account the gross proceeds of $1.4 million that we received in February 2025.
The increase of approximately $1.9 million in cash used by operations during the year ended December 31, 2023, compared to 2022, was primarily attributable to prior year recognizing approximately $1.9 million in fair value adjustments on convertible notes payable.
The increase of approximately $1.3 million in cash used by operations was primarily attributable to the laboratory operations of PPLS being owned for the full fiscal year 2024, compared to approximately 3.5 months in fiscal year 2023.
Historical data is used to determine estimates for those “in service” revenues that have not been billed or collected at the reporting period. 52 Patient Fee Receivables and considerations for credit losses We follow accounting considerations of CECL - Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. 60 Patient Fee Receivables and Considerations for Credit Losses We follow accounting considerations of CECL - Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
Research and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary, Precision Pathology Laboratory Services, LLC (“PPLS”) and The University of Texas at San Antonio. Commercial laboratory services are performed at PPLS. Our diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer.
We intend to seek strategic partners to develop our therapeutic discoveries which could result in broad-spectrum cancer treatments in the future. Research and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary, PPLS and leased laboratory space at The University of Texas at San Antonio.
We are also obligated to hold a stockholders’ meeting 90 days after the closing date and every three months thereafter seeking approval of the exercise of the Common Warrants. Financial To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath ® Lung.
The common warrants issued in the October Private Placement became exercisable on December 20, 2024, the date that our stockholders approved the issuance of the shares of Common Stock issuable upon exercise of such warrants, and expire on December 19, 2029. 56 Financial To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath ® Lung.
Other Income (Expense) Year Ended Change in 2023 December 31, Versus 2022 2023 2022 $ % Interest income (expense), net $ 85,006 $ (2,485,932 ) $ 2,570,938 62 % Other income (expense), net (27,796 ) — (27,796 ) 0 % Gain on extinguishment of debt — 212,258 (212,258 ) -100 % Loss on change in fair value of convertible notes — (1,866,992 ) 1,866,922 100 % Total other income (expense) $ 57,210 $ (4,140,596 ) $ 4,197,806 7,237 % Other income (expense) totaled approximately $57,210 and ($4.1) million for 2023 and 2022, respectively.
Other Income (Expense) Year Ended Change in 2024 December 31, Versus 2023 2024 2023 $ % Interest (expense) income, net $ (74,865 ) $ 85,006 $ 159,871 (188 )% Other income (expense), net 129 (27,796 ) (27,925 ) (100 )% Total other (expense) income $ (74,736 ) $ 57,210 $ 131,946 231 % Other net income (expense) totaled $129 and $(27,796) for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $28,000, or 100%.
Removed
Company Overview Business bioAffinity Technologies, Inc. (the “Company,” “bioAffinity,” “we,” or “our”) develops noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung. We are advancing research into our therapeutic discoveries which could result in broad-spectrum cancer treatments in the future.
Added
CyPath® Lung is offered for sale to physicians by PPLS. Through our wholly owned subsidiary, OncoSelect® Therapeutics, LLC, we have conducted research that has led to discoveries and advancement of novel cancer therapeutic approaches that specifically and selectively target cancer cells. We expect to present our findings at conferences and publish our research in the near future.
Removed
The Common Stock was offered pursuant to a shelf registration statement on Form S-3 (File No. 333-275608), which was declared effective on November 27, 2023, (as amended from time to time, the “Registration Statement”).
Added
Current Year Financial Highlights Key financial results for the year ended December 31, 2024 include: ● Consolidated revenue increased approximately 270% to $9.4 million as compared to $2.5 million for the year ended December 31, 2023, primarily as a result of the acquisition of PPLS in September 2023. ● CyPath ® Lung testing revenue increased approximately 1,400% to $0.5 million as compared to $35 thousand for the year ended December 31, 2023, due to an increase in total test results delivered of more than 600 for the current year. ● Raised approximately $6.9 million in gross proceeds from equity transactions to fund operating activities.
Removed
The Common Warrants and the shares of Common Stock issuable upon exercise of the Common Warrants (the “Common Warrant Shares”) were issued in a concurrent private placement and have not been registered.
Added
Recent Financial Developments Targeted Strategic Actions In March 2025, we announced targeted strategic actions to improve financial performance and accelerate the commercial growth of CyPath® Lung, taking steps to deliver approximately $4 million in annual cost savings at our subsidiary PPLS, while increasing resources to expand CyPath® Lung sales in high-potential national markets.
Removed
The Common Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of Common Stock issuable upon exercise of the Common Warrants (the “Stockholder Approval Date”) and will expire on the fifth anniversary of the Stockholder Approval Date.
Added
Specifically, cost savings are a result of labor cost reductions, operational efficiency enhancements, and discontinuing certain pathology services with suboptimal profit margins to focus on high-margin services such as CyPath ® Lung and by discontinuing certain pathology services with suboptimal profit margins.
Removed
Pursuant to the terms of the Purchase Agreement, until 60 days following the closing of the Transactions, we have agreed not to issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents, subject to certain exceptions.
Added
Public and Private Offerings On February 26, 2025, pursuant to the terms of the February Inducement Agreement certain holders of existing warrants exercised for cash (i) October Warrants to purchase an aggregate of up to 1,302,082 shares of Common Stock, at the reduced exercise price of $0.58 per share, and (ii) August Warrants to purchase an aggregate of up to 1,136,391 shares of Common Stock, at the reduced exercise price of $0.58 per share.
Removed
We have further agreed not to enter into an agreement involving a variable rate transaction until 12 months following the closing of the Transactions, provided however that the prohibition on “at-the-market offerings” and the issuance of common stock pursuant to an equity line of credit shall expire on the six-month anniversary of the closing date of this offering.
Added
We received aggregate gross proceeds of approximately $1.4 million, before deducting advisory fees and other expenses payable by us.
Removed
In addition, our Chief Executive Officer and each of our directors have entered into lock-up agreements with the Company pursuant to which each of them has agreed not to, for a period of 60 days from the closing of the Transactions, offer, sell, transfer or otherwise dispose of our securities, subject to certain exceptions.
Added
On October 21, 2024, we issued to certain institutional investors (i) in a registered direct offering, 2,048,294 shares of our Common Stock, and (ii) in a concurrent private placement (the “October Private Placement”), common warrants to purchase an aggregate of 2,662,782 shares of Common Stock, with an exercise price of $1.50, pursuant to a securities purchase agreement, dated October 18, 2024, that we entered into with such institutional investors, and received aggregate gross proceeds from the offerings of approximately $2.7 million, before deducting placement agent fees and other offering expenses.
Removed
In addition, from the date of the Purchase Agreement until the date that is nine (9) months after the date of the Purchase Agreement, upon any issuance by the Company or any of its subsidiaries of Common Stock, common stock equivalents for cash consideration, Indebtedness (as defined in the Purchase Agreement) or a combination of units thereof for capital raising purposes other than an at-the-market offering (a “Subsequent Financing”), the Purchasers shall have the right to participate in the Subsequent Financing in an amount up to the percentage of such Purchaser’s participation in the Transactions on the same terms, conditions and price provided for in the Subsequent Financing. 49 WallachBeth Capital LLC acted as the placement agent for the offering and received a cash fee of 9.0% of the aggregate gross proceeds paid to us for the securities sold in the transactions and reimbursement of certain out-of-pocket expenses.
Added
Research and development expenses remained consistent year-over-year, totaling $1.5 million for the years ended December 31, 2024 and 2023. Clinical Development Clinical development expenses totaled $321,655 and $256,661 for the years ended December 31, 2024 and 2023, respectively.
Removed
As additional compensation we issued to WallachBeth Capital LLC a warrant (the “Placement Agent Warrant”) to purchase an aggregate of 32,000 shares of Common Stock, such number of shares equal to two percent (2.0%) of the number of shares of Common Stock issued in the registered direct offering, at an exercise price per share equal to $1.64, which is equal to the exercise price of the Common Warrants.
Added
Selling, general and administrative expenses totaled approximately $9.9 million and $6.8 million for the years ended December 31, 2024 and 2023, respectively. The increase of approximately $3.1 million, or 46% was primarily attributable to the laboratory operations of PPLS being owned for the full fiscal year 2024, compared to approximately 3.5 months in fiscal year 2023.
Removed
The Placement Agent Warrant is exercisable via “cashless exercise” in certain circumstances.
Added
Additionally, the increase was due to the expansion of sales efforts for CyPath ® Lung, partially offset by a reduction in legal and professional fees.
Removed
The license agreement provided that revenues from the sale would be split evenly between the Company and Village Oaks. In the second quarter of 2022, prior to the acquisition, we started to recognize revenue as part of a limited beta market testing program of the CyPath ® Lung test.
Added
The net other expense for the year ended December 31, 2023 related to the loss on the disposal of an asset and other non-operating costs. The net other income for the year ended December 31, 2024 related to approximately a $9,000 gain on a sale of an asset and offset by property taxes.
Removed
We have never been profitable, and as of December 31, 2023, we had total working capital of $1.7 million and an accumulated deficit of approximately $44.6 million.
Added
Recent Financings February 2025 Warrant Inducement On February 26, 2025, pursuant to the terms of the February Inducement Agreement certain holders of existing warrants exercised for cash (i) October Warrants to purchase an aggregate of up to 1,302,082 shares of Common Stock, at the reduced exercise price of $0.58 per share, and (ii) August Warrants to purchase an aggregate of up to 1,136,391 shares of Common Stock, at the reduced exercise price of $0.58 per share.
Removed
The increase of approximately $89,000, or 6%, for 2023 compared to 2022 was primarily attributable to an increase in compensation costs and benefits as we added research personnel. Clinical Development Clinical development expenses totaled approximately $257,000 and $146,000 during 2023 and 2022, respectively.
Added
We received aggregate gross proceeds of approximately $1.4 million, before deducting advisory fees and other expenses payable by us.
Removed
Selling, general and administrative expenses totaled approximately $6.8 million and $2.5 million during 2023 and 2022, respectively.
Added
In consideration of the immediate exercise of the October Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, we issued unregistered common warrants to purchase an aggregate of up to 2,926,166 shares of Common Stock (120% of the number of shares of Common Stock issuable upon exercise of the October Warrants and August Warrants) to such holders.
Removed
The increase of approximately $4.3 million, or 174%, for 2023 compared to 2022, was primarily attributable to general and administration costs acquired from PPLS ($820,000), accounting, legal, and professional fee costs associated with the acquisition of PPLS ($811,000), the accounting, legal, and professional fee costs associated with the SEC filing of a registration statement on Form S-1 ($197,000), increase in stock-based compensation ($486,000), increase in employee compensation ($838,000) as we added sales and administrative personnel, increase in branding and marketing collateral ($391,000), increase in directors and officers (“D&O”) insurance ($290,000), increase in public company-related expenses ($294,000) as well as an increase related to board compensation ($147,000), and other operational expenses.
Added
October 2024 Registered Direct Offering and Concurrent Private Placement On October 21, 2024, we issued to certain institutional investors (i) in a registered direct offering, 2,048,294 shares of our Common Stock, and (ii) in a concurrent private placement, common warrants to purchase an aggregate of 2,662,782 shares of Common Stock, with an exercise price of $1.50, pursuant to a securities purchase agreement, dated October 18, 2024, that we entered into with such institutional investors, and received aggregate gross proceeds from the offerings of approximately $2.7 million, before deducting placement agent fees and other offering expenses.
Removed
Additionally, compensation increased due to additional personnel and support services to support the launch of sales of our diagnostic test, CyPath ® Lung.
Added
August 2024 Warrant Inducement, Registered Director Offering and Concurrent Private Placement On August 5, 2024, pursuant to the terms of the August Inducement Agreement, certain holders of existing warrants, exercised for cash March Warrants to purchase an aggregate of up to 1,041,667 shares of Common Stock, at the reduced exercise price of $1.25 per share.
Removed
The favorable improvement is based on convertible notes being converted to common stock in the prior year. 51 (Loss) gain on change in fair value of convertible notes The loss on the change in fair value of convertible notes was $0 during 2023 compared to a loss of $1.9 million during 2022, respectively.
Added
We received aggregate gross proceeds of approximately $1.3 million, before deducting advisory fees and other expenses payable by us.
Removed
The prior year recognized the change in the fair value of convertible notes converted to stock, the reduction in the expected term, and other assumptions during the reported periods.
Added
In consideration of the immediate exercise of the March Warrants by the holders thereof in accordance with the August Inducement Agreement, we issued unregistered common warrants to purchase an aggregate of up to 1,302,082 shares of Common Stock (120% of the number of shares of Common Stock issuable upon exercise of the March Warrants) to such holders.
Removed
These estimates relate to 3 rd party historical contractual discounts and adjustments (e.g. insurance providers) and patient historical uncollectible amounts. There can be a significant delay from the time a patient has been serviced to the invoicing of that service and then the net proceeds collected.
Added
On August 5, 2024, we also issued to an institutional investor (i) in a registered direct offering, 360,000 shares of Common Stock, and (ii) in a concurrent private placement, warrants to purchase an aggregate of 450,000 shares of Common Stock, with an exercise price of $1.50.
Added
We received aggregate gross proceeds from the offerings of approximately $450,000, before deducting fees payable to the placement agent and other estimated offering expenses.
Added
The significant decrease of $1.4 million in cash used in investing activities was primarily due to equipment purchases in the current year, and the investing activities in the prior year related to the acquisition of PPLS.
Added
The Company follows a standard process, which considers historical denial and collection experience and other factors (including the period of time that the receivables have been outstanding), to estimate contractual allowances and implicit price concessions, recording adjustments in the current period as changes in estimates.

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