bioAffinity Technologies, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Annual Report, is collected, recorded, processed, summarized, and reported within the time periods specified under the rules of the SEC. As of December 31, 2024, the end of the period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act\. The Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on their assessment, they have concluded that, as of December 31, 2024, our disclosure controls and procedures are effective. Internal Control over Financial Reporting Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of financial statements for external purposes in accordance with GAAP. All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the internal control system are met. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures and our internal control processes will prevent all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting, based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its 2013 Internal Control-Integrated Framework. Based on our evaluation, we concluded that our internal control over financial reporting was effective as of December 31, 2024. As of December 31, 2024, we are a non-accelerated filer, and our independent registered accounting firm is not required to issue an attestation report on our internal control over financial reporting . Item 9B. Other Information. During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 62 PART III Item 10. Directors, Executive Officers, and Corporate Governance. The information required by this item of this Annual Report will be included under the caption “Directors, Executive Officers, and Corporate Governance” in our 2025 Proxy Statement, and is incorporated by reference herein. Item 11. Executive Compensation. The information required by this item of this Annual Report will be included under the caption “Executive and Director Compensation” in our 2025 Proxy Statement, and is incorporated by reference herein. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item of this Annual Report will be included in our 2025 Proxy Statement and is incorporated by reference herein. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item of this Annual Report will be included under the captions “Certain Relationships and Related Party Transactions” and “Board of Directors and Corporate Governance – Director Independence” in our 2025 Proxy Statement and is incorporated by reference herein. Item 14. Principal Accountant Fees and Services. The information required by this item of this Annual Report will be included in our 2025 Proxy Statement and is incorporated by reference herein. 63 PART IV Item 15. Exhibit and Financial Statement Schedules. (a) Financial Statements and Schedules. See “Index to Consolidated Financial Statements” beginning on page F-1 following the signature page as required by Part II, Item 8 of this Annual Report. (b) Exhibits. Exhibit Number Description 3.1 Certificate of Incorporation of the Registrant as filed with the Delaware Secretary of State on March 26, 2014 (incorporated by reference as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2024) 3.2 Amended and Restated Bylaws of Registrant (Incorporated by reference as Exhibit 3.6 to the Registrant’s Form S-1/A (File No. 333-264463) filed with the SEC on June 16, 2022) 3.3 Certificate of Amendment to the Certificate of Incorporation of Registrant, as filed with the Delaware Secretary of State on May 31, 2016 (incorporated by reference as Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2024) 3.4 Certificate of Designation of Series A Convertible Preferred Stock of the Registrant filed with the Delaware Secretary of State on July 13, 2017 (Incorporated by reference as Exhibit 3.4 to the Registrant’s Form S-1/A (File No. 333-264463) filed with the SEC on May 25, 2022) 3.5 Certificate of Amendment to the Certificate of Incorporation of Registrant, as filed with the Delaware Secretary of State on November 29, 2021 (incorporated by reference as Exhibit 3.5 to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2024) 3.6 Certificate of Amendment to the Certificate of Incorporation of Registrant, as filed with the Delaware Secretary of State on June 23, 2022 (Incorporated by reference as Exhibit 3.2 to the Registrant’s Form S-1/A (File No. 333-264463) filed with the SEC on May 25, 2022) 3.7 Certificate of Amendment to the Certificate of Incorporation of Registrant, as filed with the Delaware Secretary of State on June 6, 2023 (Incorporated by reference as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on June 7, 2023) 3.8 Certificate of Amendment to the Certificate of Incorporation of Registrant, as filed with the Delaware Secretary of State on June 5, 2024 (Incorporated by reference as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on June 5, 2024) 3.9 Amendment to Amended and Restated By-Laws of bioAffinity Technologies Inc., dated October 17, 2024 (Incorporated by reference as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 21, 2024) 4.1 Form of Registrant’s Common Stock Certificate (Incorporated by reference as Exhibit 4.1 to the Registrant’s Form S-1/A filed with the SEC on June 16, 2022) 4.2 Common Stock Purchase Warrant issued to San Antonio Economic Development Corporation dated March 17, 2017 (Incorporated by reference as Exhibit 4.2 to the Registrant’s Form S-1/A filed with the SEC on May 25, 2022). 4.3 Form of Common Stock Purchase Warrant issued to Holders of the Registrant’s Convertible Promissory Notes (Incorporated by reference as Exhibit 4.3 to the Registrant’s Form S-1/A filed with the SEC on May 25, 2022) 4.4 Form of Placement Agent’s Warrant issued to WallachBeth Capital, LLC (Incorporated by reference as Exhibit 4.4 to the Registrant’s Form S-1/A filed with the SEC on August 5, 2022) 4.5 Form of Representative’s Warrant issued to WallachBeth Capital, LLC, in connection with the Registrant’s Initial Public Offering (Incorporated by reference as Exhibit 4.5 to the Registrant’s Form S-1/A filed with the SEC on July 28, 2022). 64 4.6 Form of (Tradeable) Common Stock Purchase Warrant issued as part of the Units sold in the Registrant’s Initial Public Offering (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 6, 2022) 4.7 Form of Warrant Agent Agreement for the Warrants issued as part of the Units sold in the Registrant’s Initial Public Offering (Incorporated by reference as Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 6, 2022) 4.8 Form of (Non-tradeable) Common Stock Purchase Warrant issued as part of the Units sold in the Registrant’s Initial Public Offering (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 6, 2022) 4.9 Form of Amendment to Common Share Purchase Warrants with schedule of warrant holders and warrants (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 4.10 Form of Amendment to Initial Public Offering Warrants with schedule of warrant holders and warrants (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 4.11 Form of Warrant to Purchase Common Stock (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2024) 4.12 Form of Placement Agent Warrant (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2024) 4.13* Description of Securities 4.14 Form of Purchase Warrant (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 5, 2024) 4.15 Form of Placement Agent Warrant (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 5, 2024) 4.16 Form of Common Warrant (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 21, 2024) 4.17 Form of Placement Agent Warrant (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 21, 2024) 4.18 Form of New Warrant (Incorporated by reference as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on February 27, 2025) 4.19 Form of Advisor Warrant (Incorporated by reference as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on February 27, 2025) 10.1+ 2014 Equity Incentive Plan of Registrant, as amended. (Incorporated by reference as Exhibit 10.1 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 10.2+ Executive Chairman Employment Agreement dated January 1, 2020, by and between Registrant and Steven Girgenti, as amended. (Incorporated by reference as Exhibit 10.2 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 65 10.3+ Employment Agreement dated February 1, 2015, by and between Registrant and Maria Zannes. (Incorporated by reference as Exhibit 10.3 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 10.4+ Employment Agreement dated April 4, 2016, by and between Registrant and Vivienne Rebel, as amended. (Incorporated by reference as Exhibit 10.4 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 10.5+ Employment Agreement dated February 1, 2015, by and between Registrant and Timothy Zannes. (Incorporated by reference as Exhibit 10.5 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 10.6+ Consulting Agreement dated May 25, 2017, by and between Registrant and Michael Edwards, as amended. (Incorporated by reference as Exhibit 10.6 to the Registrant’s Form S-1 filed with the SEC on May 25, 2022) 10.7 License Agreement to Participate in the UTSA New Venture Incubator Program dated June 15, 2015, by and between Registrant and the University of Texas at San Antonio. (Incorporated by reference as Exhibit 10.9 to the Registrant’s Form S-1 filed with the SEC on April 25, 2022) 10.8 Joint Development Agreement dated October 1, 2018, by and between the Registrant and Village Oaks Pathology Services, P.A. d/b/a Precision Pathology Services (Incorporated by reference as Exhibit 3.2 to the Registrant’s Form S-1/A filed with the SEC on July 27, 2022) 10.9 Agreement dated October 17, 2020, by and between Registrant and GO2 Partners (Incorporated by reference as Exhibit 10.9 to the Registrant’s Form S-1/A filed with the SEC on July 27, 2022) 10.10 Form of Note Purchase Agreement used by the Registrant in its private offering of Convertible Promissory Notes issued between October 2021 and January 2022 (Incorporated by reference as Exhibit 10.10 to the Registrant’s Form S-1 filed with the SEC on May 25, 2022) 10.11+ Offer Letter between bioAffinity Technologies, Inc. and Michael Dougherty dated April 11, 2023 (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on May 1, 2023) 10.12+ bioAffinity Technologies, Inc. Amended and Restated 2014 Equity Incentive Plan Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on June 7, 2023) 10.13+ Amendment, effective as of August 1, 2023, to Employment Agreement, dated February 1, 2015, by and between bioAffinity Technologies, Inc. and Maria Zannes (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on July 28, 2023) 10.14 Asset Purchase Agreement, effective September 18, 2023, by and among, Precision Pathology Laboratory Services, LLC, Dr. Roby P. Joyce and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.15 Subscription Agreement, dated September 18, 2023, by and between The Joyce Living Trust, dated March 19, 2013, and bioAffinity Technologies, Inc. (Incorporated by reference as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.16 Management Services Agreement, effective as of September 18, 2023, by and between Precision Pathology Laboratory Services, LLC and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 66 10.17 Succession Agreement, effective September 18, 2023, by and among, Precision Pathology Laboratory Services, LLC, Dr. Roby P. Joyce and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.18 Professional Services Agreement, effective as of September 18, 2023, by and between Precision Pathology Laboratory Services, LLC and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.19+ Executive Employment Agreement, dated September 18, 2023, by and between the Registrant and Roby Joyce, M.D. (Incorporated by reference as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.20 Assignment and Assumption of Lease Agreement, effective September 18, 2023, by and between Precision Pathology Laboratory Services, LLC and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.7 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.21 Office Lease, dated July 31, 2019, by and between Village Oaks Pathology Services, P.A. and 343 West Sunset, LLC (Incorporated by reference as Exhibit 10.8 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.22 Assignment and Assumption Agreement, effective September 18, 2023, by and between Precision Pathology Laboratory Services, LLC and Village Oaks Pathology Services, P.A. (Incorporated by reference as Exhibit 10.9 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.23 Equipment Usage Attachment, dated effective as of August 9, 2019, by and between Gen-Probe Sales & Service, Inc., together with its subsidiaries and affiliates and Village Oaks Pathology Services, P.A. d/b/a Precision Pathology, as amended by that certain Amendment No. 1 to Equipment Usage Attachment dated November 2, 2020, as further amended by that certain Amendment No. 2 to Equipment Usage Attachment dated November 2, 2020, and as further amended by that certain Amendment No. 3 to Equipment Usage Attachment dated December 21, 2022 (Incorporated by reference as Exhibit 10.10 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.24 Master Agreement, dated as of January 29, 2015, by and between Leica Microsystems, Inc. and Precision Pathology, as amended by Amendment No. 1 to the Master Agreement, dated on or about April 4, 2018, as further amended by that certain Amendment No. 2 to Master Agreement, dated March 23, 2021 (Incorporated by reference as Exhibit 10.11 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.25 Strategic Relationship License Agreement, dated December 1, 2022, by and between Pathology Watch, Inc. and Precision Pathology Services (Incorporated by reference as Exhibit 10.12 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 10.26 Bill of Sale signed by Village Oaks Pathology Services, P.A., effective as of September 18, 2023 (Incorporated by reference as Exhibit 10.13 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on September 20, 2023) 67 10.27 Jamie Platt Offer Letter (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on December 5, 2023) 10.28+ bioAffinity Technologies, Inc. Management Incentive Bonus Plan (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on January 31, 2024) 10.29+ Amendment to Michael Dougherty Offer Letter (Incorporated by reference as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on January 31, 2024) 10.30 Form of Securities Purchase Agreement, dated as of March 6, 2024, by and among the Company and the investors parties thereto (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2024) 10.31 Form of Support Agreement with schedule of signatories (Incorporated by reference as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2024) 10.32+ bioAffinity Technologies, Inc. 2024 Incentive Compensation Plan (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on June 5, 2024) 10.33 Form of Securities Purchase Agreement, dated as of August 2, 2024, by and among the Company and the investor listed on the signature page thereto (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 5, 2024) 10.34 Form of Warrant Inducement Agreement (Incorporated by reference as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 5, 2024) 10.35 Form of Support Agreement with schedule of signatories (Incorporated by reference as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 5, 2024) 10.36+ Consulting Agreement, dated August 21, 2024, by and between bioAffinity Technologies, Inc. and Michael Edwards (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on August 23, 2024) 10.37+ Employment Agreement between bioAffinity Technologies, Inc. and Michael Edwards, dated as of October 9, 2024 (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 10, 2024) 10.38 Form of Securities Purchase Agreement, dated as of October 18, 2024, by and between the Company and the purchasers listed on the signature pages thereto (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 21, 2024) 10.39 Form of Support Agreement (Incorporated by reference as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on October 21, 2024) 10.40+ Amendment No. 2 to Employment Agreement with Maria Zannes (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on January 14, 2025) 10.41 Form of Warrant Inducement Agreement (Incorporated by reference as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41463) filed with the SEC on February 27, 2025) 68 14.1 Code of Business Conduct of the Registrant (Incorporated by reference as Exhibit 14.1 to the Registrant’s Form S-1 filed with the SEC on May 25, 2022) 19.1* Amended and Restated Insider Trading Policy of the Registrant 21.1 List of Subsidiaries of the Registrant (incorporated by reference as Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2024) 23.1* Consent of WithumSmith+Brown, PC, independent registered public accounting firm 31.1* Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 97.1 Clawback Policy (incorporated by reference as Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2024) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. + Indicates management contract or compensatory plan. 69 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 31 st day of March, 2025. bioAffinity Technologies, Inc. By: /s/ Maria Zannes Maria Zannes Chief Executive Officer, President, and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Maria Zannes President, Chief Executive Officer, and Director (Principal Executive Officer) March 31, 2025 Maria Zannes /s/ J. Michael Edwards Chief Financial Officer March 31, 2025 J. Michael Edwards (Principal Financial and Accounting Officer) /s/ Steven Girgenti Executive Chairman and Director March 31, 2025 Steven Girgenti /s/ Robert Anderson Director March 31, 2025 Robert Anderson /s/ Stuart Diamond Director March 31, 2025 Stuart Diamond /s/ Peter S. Knight Director March 31, 2025 Peter S. Knight /s/ Gary Rubin Director March 31, 2025 Gary Rubin /s/ Roby Joyce, M.D. Director March 31, 2025 Roby Joyce /s/ Jamie Platt Director March 31, 2025 Jamie Platt 70 bioAffinity Technologies, Inc. Index to the Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID NO. 100) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-4 Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the years ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-6 Notes to Consolidated Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of bioAffinity Technologies, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of bioAffinity Technologies, Inc. (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with principles generally accepted in the United States of America. Substantial Doubt Regarding the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant losses and negative cash flows from operations since inception, has an accumulated deficit, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ WithumSmith+Brown, PC We have served as the Company’s auditor since 2021. New York, New York March 31, 2025 PCAOB ID Number 100 F- 2 bioAffinity Technologies, Inc. Consolidated Balance Sheets as of December 31, 2024 and 2023 December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 1,105,291 $ 2,821,570 Accounts and other receivables, net 1,139,204 811,674 Inventory 27,608 18,484 Prepaid expenses and other current assets 422,995 321,017 Total current assets 2,695,098 3,972,745 Non-current assets: Property and equipment, net 375,385 458,633 Operating lease right-of-use asset, net 463,011 370,312 Finance lease right-of-use asset, net 780,872 1,165,844 Goodwill 1,404,486 1,404,486 Intangible assets, net 775,139 833,472 Other assets 19,676 16,060 Total assets $ 6,513,667 $ 8,221,552 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 987,311 $ 604,789 Accrued expenses 1,398,722 1,149,811 Unearned revenue 24,404 33,058 Operating lease liability, current portion 127,498 94,708 Finance lease liability, current portion 395,301 365,463 Notes payable, current portion 171,669 — Total current liabilities 3,104,905 2,247,829 Non-current liabilities Operating lease liability, net of current portion 342,098 283,001 Finance lease liability, net of current portion 444,448 835,467 Notes payable, net of current portion 20,180 — Total liabilities 3,911,631 3,366,297 Commitments and contingencies (See Note 11) - - Stockholders’ equity: Preferred stock, no shares issued or outstanding at December 31, 2024 and 2023, respectively — — Common stock, par value $ 0.007 per share; 100,000,000 shares authorized; 15,576,674 and 9,394,610 shares issued and outstanding as of December 31, 2024 and 2023, respectively 106,593 65,762 Additional paid-in capital 56,139,753 49,393,972 Accumulated deficit ( 53,644,310 ) ( 44,604,479 ) Total stockholders’ equity 2,602,036 4,855,255 Total liabilities, and stockholders’ equity $ 6,513,667 $ 8,221,552 The accompanying notes are an integral part of these consolidated financial statements. F- 3 bioAffinity Technologies, Inc. Consolidated Statements of Operations For the Years Ended December 31, 2024 and 2023 2024 2023 Net Revenue $ 9,362,022 $ 2,532,499 Operating expenses: Direct costs and expenses 5,983,475 1,740,884 Research and development 1,461,227 1,467,936 Clinical development 321,655 256,661 Selling, general and administrative 9,943,473 6,790,654 Depreciation and amortization 605,637 249,592 Total operating expenses 18,315,467 10,505,727 Loss from operations ( 8,953,445 ) ( 7,973,228 ) Other income (expense): Interest income 17,610 122,131 Interest expense ( 92,475 ) ( 37,125 ) Other income 10,323 3,325 Other expense ( 10,194 ) ( 31,121 ) Loss before income taxes ( 9,028,181 ) ( 7,916,018 ) Income tax expense ( 11,650 ) ( 20,993 ) Net loss $ ( 9,039,831 ) $ ( 7,937,011 ) Net loss per common share, basic and diluted $ ( 0.75 ) $ ( 0.91 ) Weighted average common shares outstanding 12,125,029 8,747,509 The accompanying notes are an integral part of these consolidated financial statements. F- 4 bioAffinity Technologies, Inc. Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2024 and 2023 Convertible Additional Stockholders’ Preferred Stock Common Stock Paid-in Accumulated Equity Shares Amount Shares Amount Capital Deficit (Deficit) Balance at December 31, 2022 — — 8,381,324 $ 58,669 $ 47,652,242 $ ( 36,667,468 ) $ 11,043,443 Stock-based compensation — — 448,314 3,138 745,685 — 748,823 Stock issued in connection with the acquisition — — 564,972 3,955 996,045 — 1,000,000 Net loss — — — — — ( 7,937,011 ) ( 7,937,011 ) Balance at December 31, 2023 — — 9,394,610 $ 65,762 $ 49,393,972 $ ( 44,604,479 ) $ 4,855,255 Balance — — 9,394,610 $ 65,762 $ 49,393,972 $ ( 44,604,479 ) $ 4,855,255 Stock-based compensation — — 549,917 3,849 985,832 — 989,681 Exercise of stock options — — 208,031 1,456 73,443 — 74,899 Exercise of stock warrants — — 1,066,767 7,467 1,363,680 — 1,371,147 Sale of common stock — — 4,008,294 28,059 5,584,724 — 5,612,782 Offering costs — — ( 1,261,898 ) — ( 1,261,898 ) Net loss — — — — — ( 9,039,831 ) ( 9,039,831 ) Balance at December 31, 2024 — — 15,227,619 $ 106,593 $ 56,139,753 $ ( 53,644,310 ) $ 2,602,036 Balance — — 15,227,619 $ 106,593 $ 56,139,753 $ ( 53,644,310 ) $ 2,602,036 The accompanying notes are an integral part of these consolidated financial statements. F- 5 bioAffinity Technologies, Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 2024 2023 Cash flows from operating activities Net loss $ ( 9,039,831 ) $ ( 7,937,011 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 605,637 249,592 Stock-based compensation expense 989,681 748,823 Changes in operating assets and liabilities: Accounts and other receivables ( 327,530 ) 311,366 Inventory ( 9,124 ) ( 12,944 ) Prepaid expenses and other assets ( 105,594 ) 214,402 Accounts payable 382,521 ( 14,501 ) Accrued expenses 248,911 362,012 Unearned revenue ( 8,654 ) 33,058 Accrued interest — — Operating lease right-of-use asset ( 812 ) 7,397 Net cash used in operating activities ( 7,264,795 ) ( 6,037,806 ) Cash flows from investing activities Purchase of property and equipment ( 79,083 ) ( 22,902 ) Acquisition, net of cash acquired — ( 2,186,497 ) Net cash used in investing activities ( 79,083 ) ( 2,209,399 ) Cash flows from financing activities Proceeds from issuance of common stock from direct offering, net of underwriting discounts, commissions, and offering expenses of $ 1,334,811 4,350,885 — Proceeds from exercised stock options 74,899 — Proceeds from exercise of warrants 1,371,147 — Payment on loans payable — ( 251,746 ) Proceeds from loans payable 191,849 — Principal repayments on finance leases ( 361,181 ) ( 93,238 ) Net cash provided by (used in) by financing activities 5,627,599 ( 344,984 ) Net decrease in cash and cash equivalents ( 1,716,279 ) ( 8,592,189 ) Cash and cash equivalents at beginning of year 2,821,570 11,413,759 Cash and cash equivalents at end of year $ 1,105,291 $ 2,821,570 Supplemental disclosures of cash flow information: Income taxes paid in cash $ 11,650 $ 20,993 Interest paid 17,610 37,125 Noncash investing activities: Stock issuance in connection with the acquisition $ — $ 1,000,000 Noncash financing activities: Fair value of warrants issued to placement agents $ 74,281 — The accompanying notes are an integral part of these consolidated financial statements. F- 6 bioAffinity Technologies, Inc. Notes to Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023 Note 1. BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS Description of Business bioAffinity Technologies, Inc., a Delaware corporation (the “Company,” or “bioAffinity Technologies”), addresses the need for noninvasive diagnosis of lung cancer at early stage and other diseases of the lung. bioAffinity Technologies’ proprietary platform uses flow cytometry and automated data analysis built by machine learning, a form of artificial intelligence, to preferentially target cancer cell populations and other cell populations indicative of a diseased state. The Company’s first diagnostic test, CyPath ® Lung, is a noninvasive test for early detection of lung cancer, the leading cause of cancer-related deaths. CyPath ® Lung is offered for sale to physicians by the Company’s subsidiary, Precision Pathology Laboratory Services, LLC (“PPLS”). The Company also conducted and intends to seek strategic partners to advance therapeutic discoveries that could in the future result in broad-spectrum cancer treatments. Research and optimization of the Company’s proprietary platform technologies are conducted in laboratories at PPLS and laboratory space leased at The University of Texas at San Antonio. Organization The Company was formed on March 26, 2014, as a Delaware corporation with its corporate offices located in San Antonio, Texas. On June 15, 2016, the Company formed a wholly owned subsidiary, OncoSelect ® Therapeutics, LLC, as a Delaware limited liability company. On August 14, 2023, the Company formed a wholly owned subsidiary, PPLS, as a Texas limited liability company, to acquire the assets of Village Oaks Pathology Services, P.A. (“Village Oaks”), a Texas professional association d/b/a Precision Pathology Services, including the clinical pathology laboratory it owned. Basis of Presentation The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Liquidity and Capital Resources In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), 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. The Company has incurred significant losses and negative cash flows from operations since inception and expects to continue to incur losses and negative cash flows for the foreseeable future. As a result, the Company had an accumulated deficit of $ 53.6 million at December 31, 2024. The Company’s cash and cash equivalents at December 31, 2024, were approximately $ 1.1 million. Based on the Company’s current expected level of operating expenditures and the cash and cash equivalents on hand at December 31, 2024, 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. Without funding from the proceeds of a capital raise or strategic relationship or grant, management anticipates that the Company’s cash resources are sufficient to continue operations through April 2025. The Company 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 its future operations, if revenue from operations does not significantly increase. If such funding is not available or not available on terms acceptable to the Company, the Company’s current development plan may be curtailed. Furthermore, an alternative source of funding to the sale of additional equity or debt securities is the exercise of outstanding warrants for which there can be no guarantee. No adjustments have been made to the presented consolidated financial statements as a result of this uncertainty. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of 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. Management bases these significant judgments and estimates on historical experience and other assumptions it believes to be reasonable based upon information presently available. Actual results could differ from those estimates under different assumptions, judgments, or conditions. Principles of Consolidation The Company’s consolidated financial statements reflect its financial statements, those of its wholly owned subsidiaries, and certain variable interest entities where the Company is the primary beneficiary. The accompanying consolidated financial statements include all the accounts of the Company, its wholly owned subsidiaries, OncoSelect ® Therapeutics, LLC and PPLS, and the variable interest entity, Village Oaks. All significant intercompany balances and transactions have been eliminated. F- 7 In determining whether the Company is the primary beneficiary of a variable interest entity, it applies a qualitative approach that determines whether it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in the Company consolidating or deconsolidating one or more of its collaborators or partners. Business Combination On September 18, 2023, the Company, in connection with the Asset Purchase Agreement it entered into with Village Oaks and Roby P. Joyce, M.D., dated September 18, 2023, acquired substantially all the assets and assumed certain liabilities of Village Oaks in exchange for total consideration of $ 3,500,000 , which consists of: (1) $ 2.5 million in cash paid at closing and (2) 564,972 shares of the Company’s Common Stock valued at $ 1 million. The assets purchased included a clinical pathology laboratory regulated by the Centers for Medicare and Medicaid Services (“CMS”) and accredited by the College of American Pathologists (“CAP”) and certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). The primary reason for the acquisition was control of the laboratory in which CyPath ® Lung is ordered and processed. The Company recognized goodwill of $ 1,404,000 arising from the acquisition. The acquisition is being accounted for as a business combination in accordance with ASC 805. The Company has determined the fair values of the accounts receivable, accounts payable, and accrued expenses that make up the majority of the net working capital assumed in the acquisition. The following table summarizes the purchase price and finalized purchase price allocations relating to the acquisition: SCHEDULE OF PURCHASE PRICE AND FINALIZED PURCHASE PRICE ALLOCATIONS Cash $ 2,500,000 Common Stock 1,000,000 Total purchase consideration $ 3,500,000 Assets Net working capital (including cash) $ 912,000 Property and equipment 326,000 Other assets 8,000 Customer relationships 700,000 Trade names and trademarks 150,000 Goodwill 1,404,000 Total net assets $ 3,500,000 Goodwill represents the excess fair value after the allocation to the identifiable net assets. The calculated goodwill is not deductible for tax purposes. The Company incurred and expensed approximately $ 811,000 in acquisition costs. Cash and Cash Equivalents For the purpose of the consolidated statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates market value because of the short maturity of these instruments. Concentration of Risk The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $ 250,000 . Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. Advertising Expense The Company expenses all advertising costs as incurred. Advertising expenses were approximately $ 267,201 and $ 88,832 for the years ended December 31, 2024 and 2023, respectively. F- 8 Loss Per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of the Company’s Common Stock, par value $ 0.007 per share outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of shares of Common Stock outstanding during the period and the weighted-average number of dilutive Common Stock equivalents outstanding during the period, using the treasury stock method. Dilutive Common Stock equivalents are comprised of in-the-money stock options, convertible notes payable, and warrants based on the average stock price for each period using the treasury stock method. The following potentially dilutive securities have been excluded from the computations of weighted average shares of Common Stock outstanding as of December 31, 2024 and 2023, as they would be anti-dilutive: SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES As of December 31, 2024 2023 Shares underlying options outstanding 304,125 683,695 Shares underlying warrants outstanding 12,298,124 — Shares underlying unvested restricted stock outstanding 349,057 4,649,952 Anti-dilutive securities 12,951,306 5,333,647 Revenue Recognition To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers , the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Post-acquisition of PPLS, additional revenue streams have been consolidated starting September 19, 2023. PPLS generates three sources of revenue: (1) patient service fees, (2) histology service fees, and (3) medical director fees. The Company recognizes as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods sold or services rendered primarily upon completion of the testing process (when results are reported) or when services have been rendered. 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. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. Pre-acquisition, bioAffinity’s revenue was generated in three ways: (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. Department of Defense (“DOD”) for an observational study, “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay (NCT05870592),” and 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. The royalty income from CyPath ® Lung and clinical flow cytometry services income, beginning September 19, 2023, are related party income and, therefore, eliminated from consolidated net revenues. SCHEDULE OF REVENUE RECOGNITION 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 include direct billing for CyPath® Lung diagnostic test of approximately $ 516,000 and $ 35,000 for the years ended December 31, 2024 and 2023. Reclassifications Certain prior year balances have been reclassified to conform to current year presentation. Any reclassifications had an immaterial effect on the Company’s consolidated financial statements and had no effect on prior periods net income or stockholders’ equity. Property and Equipment, Net In accordance with ASC 360-10, Accounting for the Impairment of Long-Lived Assets ( “ASC 360” ) , the Company periodically reviews the carrying value of its long-lived assets, such as property, equipment, and definite lived intangible assets, to test whether current events or circumstances indicate that such carrying value may not be recoverable. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows. If an asset’s carrying value exceeds such estimated cash flows (undiscounted and with interest charges), the Company records an impairment charge for the difference. The Company did not record any impairment for the years ended December 31, 2024 or 2023. Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. Amortization of leasehold improvements is computed using the shorter of the lease term or estimated useful life of the asset. Additions and improvements are capitalized, while repairs and maintenance are expensed as incurred. Useful lives of each asset class are as follows: SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIFE Asset Category Useful Life Computer equipment 3 - 5 years Computer software 3 years Equipment 3 - 5 years Furniture and fixtures 5 - 7 years Vehicles 5 years Leasehold improvements Lesser of lease term or useful life F- 9 Intangible Assets The Company’s acquisition of PPLS on September 18, 2023 identified Goodwill and intangible assets. Goodwill represents the purchase price in excess of fair values assigned to the underlying identifiable net assets of the acquired business. The intangible assets and their respective useful lives are as follows: trade names and trademarks ( 18 years) and customer relationships ( 14 years). Intangible assets, net of accumulated amortization, are summarized as follows as of December 31, 2024 and 2023: SCHEDULE OF INTANGIBLE ASSETS 2024 2023 December 31, 2024 2023 Cost Goodwill $ 1,404,486 $ 1,404,486 Trade names and trademarks 150,000 150,000 Customer relationships 700,000 700,000 Cost 2,254,486 2,254,486 Accumulated amortization Goodwill — — Trade names and trademarks ( 10,694 ) ( 2,361 ) Customer relationships ( 64,167 ) ( 14,167 ) Accumulated amortization ( 74,861 ) ( 16,528 ) Intangible assets, net $ 2,179,625 $ 2,237,958 For the year ended December 31, 2024, amortization of intangible assets totaled $ 58,333 compared to $ 16,528 in the prior year comparative period. Goodwill is reviewed annually for impairment in accordance with ASC 350 - Intangibles – Goodwill and Other , and intangible assets are reviewed annually for impairment in accordance with ASC 360 unless circumstances dictate the need for more frequent assessment. The Company elected to perform a quantitative impairment analysis as of December 31, 2024. The annual quantitative assessment of the intangible assets was performed utilizing a discounted cash flow analysis (“income approach”) . The income approach measures the fair value of an interest in a business by discounting expected future cash flows to present value. The results of the annual quantitative impairment analysis indicated that the fair value exceeded the carrying value of the reporting unit and therefore resulted in no impairment needed. Recent Accounting Pronouncements The Company continues to monitor new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) and does not believe any accounting pronouncements issued through the date of this Annual report will have a material impact on the Company’s consolidated financial statements. The Company adopted FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures on December 31, 2024, on a retrospective basis. The Company used the five steps to ASC 280 to evaluate what, if any, segment reporting would be beneficial for shareholders. These five steps included: 1) evaluate operating segments for aggregation, 2) perform quantitative threshold tests, 3) evaluate remaining operating segments for aggregation, 4) ensure that 75% of revenue is reported, and 5) consider practical limit. Based on the analysis above against those five steps, management concludes that segment reporting is required for two segment operations: 1) diagnostic R&D and 2) laboratory services (See Note 2). The FASB issued Accounting Standards Update (“ASU”) No. ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures which requires public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% of the product of multiplying income from continuing operations by the applicable statutory income tax rate. The ASU is effective for all public business entities for annual periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. 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 Company includes interest and penalties related to uncertain tax positions as part of income tax expense, if any. No such interest or penalties were recognized during the years ended December 31, 2024 and 2023, and the Company had no accruals for interest and penalties at December 31, 2024 or 2023. F- 10 Segment Information The Company is organized in two operating segments, Diagnostic Research and Development (“R&D”) and Laboratory Services, whereby its chief operating decision maker (“CODM”) uses operating income as the primary measure of segment profit or loss to assess performance and make resource allocation decisions, in addition to monitoring revenue growth and research and development progress. The CODM is the Chief Executive Officer. Diagnostic R&D includes research and development and clinical development of diagnostic tests. Any revenues assigned to Diagnostic R&D are proceeds received from observational studies. Laboratory services include all the operations from Village Oaks and PPLS in addition to sales and marketing costs of CyPath® Lung from bioAffinity. SCHEDULE OF SEGMENT INFORMATION As of December 31, 2024 2023 Net revenues: Diagnostic R&D $ 8,654 $ 19,442 Laboratory services 9,353,368 2,513,057 Total net revenues 9,362,022 2,532,499 Operating expenses: Diagnostic R&D ( 1,782,882 ) ( 1,724,597 ) Laboratory services ( 9,946,452 ) ( 3,769,783 ) General corporate activities ( 6,586,133 ) ( 5,011,347 ) Total operating loss ( 8,953,445 ) ( 7,973,228 ) Non-operating income (expense), net ( 74,736 ) 57,210 Net loss before income taxes ( 9,028,181 ) ( 7,916,018 ) Income tax expense ( 11,650 ) ( 20,993 ) Net loss $ ( 9,039,831 ) $ ( 7,937,011 ) Research and Development Research and development costs are charged to expense as incurred. The Company’s research and development expenses consist primarily of expenditures for laboratory operations, preclinical studies, compensation, and consulting costs. Accrued Research and Development Costs The Company records accrued liabilities for estimated costs of research and development activities conducted by service providers, which include preclinical studies. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued expenses in the accompanying consolidated balance sheets and within research and development expense in the accompanying consolidated statements of operations. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with service providers. The Company makes significant judgments and estimates in determining the accrued expenses balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. The Company has not experienced any material differences between accrued costs and actual costs incurred since its inception. Regulatory Matters Regulations imposed by federal, state, and local authorities in the U.S. are a significant factor in providing medical care. In the U.S., drugs, biological products, and medical devices are regulated by the federal Food, Drug and Cosmetic Act, which is administered by the FDA and CMS. The Company has not yet obtained marketing authorization from the FDA but is able to market its CyPath ® Lung test as a laboratory developed test sold by Precision Pathology Laboratory Services, a CAP-accredited, CLIA-certified clinical pathology laboratory and wholly owned subsidiary. F- 11 Note 3. ACCOUNTS AND OTHER RECEIVABLES, NET Accounts and other receivables at December 31, 2024 and 2023, are summarized below: SCHEDULE OF ACCOUNTS AND OTHER RECEIVABLES December 31, 2024 2023 Patient service fees $ 915,488 $ 657,717 Histology service fees 190,648 121,301 Medical director fees 5,194 3,103 Other receivables 27,874 29,553 Total accounts and other receivables, net $ 1,139,204 $ 811,674 Note 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets at December 31, 2024 and 2023, are summarized below: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2024 2023 Prepaid insurance $ 248,364 $ 171,855 Legal and professional 27,448 24,476 Other 147,183 124,686 Total prepaid expenses and other current assets $ 422,995 $ 321,017 Note 5. PROPERTY AND EQUIPMENT, NET Property and equipment at December 31, 2024 and 2023, are summarized below: SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2024 2023 Lab equipment $ 662,747 $ 647,214 Computers and software 81,433 68,682 Leasehold improvements 19,353 9,941 Vehicles 148,103 105,919 Property and equipment, gross 911,636 831,756 Less: accumulated depreciation and amortization ( 536,251 ) ( 373,123 ) Total property and equipment, net $ 375,385 $ 458,633 Total property and equipment depreciation and amortization expense was $ 162,332 and $ 233,064 for the years ended December 31, 2024 and 2023, respectively. Note 6. ACCRUED EXPENSES Accrued expenses at December 31, 2024 and 2023, are summarized below: SCHEDULE OF ACCRUED EXPENSES December 31, 2024 2023 Compensation $ 1,079,839 $ 857,037 Legal and professional 98,477 257,926 Clinical 160,371 15,350 Other 60,035 19,498 Total accrued expenses $ 1,398,722 $ 1,149,811 Note 7. UNEARNED REVENUE The Company engaged in an observational study of CyPath ® Lung with the DOD. A total of 70 CyPath ® Lung units were ordered and shipped. However, in compliance with FASB ASC 606, the performance obligation was complete for only 40 units as of December 31, 2024. The performance obligation is deemed complete after samples have been collected and processed and results analyzed. The unearned revenue balance amounted to $ 24,404 and $ 33,058 as of December 31, 2024 and 2023, respectively. F- 12 Note 8. FAIR VALUE MEASUREMENTS The Company analyzes all financial instruments with features of both liabilities and equity under the FASB accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three levels of the hierarchy and the related inputs are as follows: Level Inputs 1 Unadjusted quoted prices in active markets for identical assets and liabilities. Unadjusted quoted prices in active markets for similar assets and liabilities; 2 Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or Inputs other than quoted prices that are observable for the asset or liability. 3 Unobservable inputs for the asset or liability. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts and other receivables, prepaid and other current assets, accounts payable, accrued expenses, and loan payable, are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Note 9. LEASES The Company has one operating lease for its real estate and office space for the CAP/CLIA laboratory, as well as multiple finance leases for lab equipment in Texas that were acquired through the September 18, 2023 acquisition. Additionally, the Company entered into another operating lease on September 1, 2024 with regard to office space. The Company has operating leases consisting of office space with remaining lease terms ranging from 3.1 to 5.9 years as of December 31, 2024. The Company has finance leases consisting of office and lab equipment with remaining lease terms ranging from approximately 1.25 to 3.0 years as of December 31, 2024, for which the Company has determined that it will use the equipment for a major part of its remaining economic life. The lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach as of the date of inception of the leases to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed interest rates ranging from 7.41 % to 8.03 % for the lease term lengths. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space. The Company has not entered into any lease arrangements with related parties, and the Company is not the sublessor in any arrangement. The Company’s existing leases contain escalation clauses and renewal options. The Company has evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise a contractual renewal option. For leases with renewal options that are reasonably certain to be exercised, the Company included the renewal term in the total lease term used in calculating the right-of-use asset and lease liability. The components of lease expense, which are included in selling, general and administrative expense and depreciation and amortization for the year ended December 31, 2024, and 2023 are as follows: SCHEDULE OF COMPONENTS OF LEASE EXPENSE Components of lease expense: 2024 2023 Amortization of right-of-use assets - finance lease $ 384,971 $ 128,324 Interest on lease liabilities - finance lease 83,041 33,838 Operating lease cost 93,029 39,887 Total lease cost $ 561,041 $ 202,049 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 361,181 $ 93,238 Operating cash flows from operating leases 133,605 32,489 SCHEDULE OF BALANCE SHEET INFORMATION RELATING TO LEASES Operating leases: 2024 2023 Operating lease right-of-use, assets $ 463,011 $ 370,312 Operating lease liability, current 127,498 94,708 Operating lease liability, non-current 342,098 283,001 Total operating lease liabilities $ 469,596 $ 377,709 Financing leases: 2024 2023 Financing lease right-of-use assets, gross $ 1,294,168 $ 1,294,168 Accumulated amortization ( 513,296 ) ( 128,324 ) Finance lease right-of-use assets, net $ 780,872 $ 1,165,844 Financing lease liability, current 395,301 365,463 Financing lease liability, non-current 444,448 835,467 Total finance lease liabilities $ 839,749 $ 1,200,930 Weighted-average remaining lease term: 2024 2023 Operating leases (in years) 4.21 3.58 Finance leases (in years) 2.39 3.25 Weighted-average discount rate: 2024 2023 Operating leases 7.41 % 8.07 % Finance leases 8.03 % 8.01 % SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT UNDER NON-CANCELLABLE Operating Leases Finance Leases 2025 $ 157,837 $ 448,505 2026 159,282 270,395 2027 110,063 202,970 2028 40,616 — 2029 42,252 — 2030 and thereafter 28,919 — Total undiscounted cash flows 538,969 921,870 Less discounting ( 69,373 ) ( 82,121 ) Present value of lease liabilities $ 469,596 $ 839,749 F- 13 Note 10. NOTES PAYABLE Toyota Corolla - 2024 On March 18, 2024, the Company entered into a finance agreement to purchase a 2024 Toyota Corolla for $ 33,620 with a maturity date of February 18, 2030 . The loan bears fixed interest at a rate of 5.99 % per annum, with monthly payments of $ 467 , which is comprised of principal and interest. This loan is collateralized by the underlying vehicle. The balance of this loan as of December 31, 2024, and 2023 was $ 24,849 and $ 0 , respectively. The current portion of the balance of this loan as of December 31, 2024, and 2023 was $ 5,603 and $ 0 , respectively. Directors and Officers Insurance Policy – 2024 In September 2024, the Company obtained short-term financing of approximately $ 0.26 million with 11 monthly payments of approximately $ 24,000 and interest at a 6.7 % fixed annual rate for director and officer insurance policies. The current portion of the balance of this loan as of December 31, 2024, and December 31, 2023, was $ 167,000 and $ 0 , respectively. Note 11. COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. To date, the Company has no material pending legal proceedings. Note 12. COMMON STOCK The Company has authorized a total of 100,000,000 shares of Common Stock, $ 0.007 par value per share. On June 4, 2024, the Company received stockholder approval to increase the number of authorized shares of Common Stock from 25,000,000 shares to 100,000,000 shares, and on June 5, 2024, the Company filed an amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the increase. The Company has issued 15,576,674 shares of Common Stock, of which 349,057 are unvested restricted stock awards as of December 31, 2024, and 9,505,255 shares of Common Stock, of which 110,645 are unvested restricted stock awards as of December 31, 2023. Note 13. STOCK-BASED COMPENSATION The Company granted options and restricted stock awards under its 2014 Equity Incentive Plan (the “2014 Plan”). Under the 2014 Plan, the Company was authorized to grant options or restricted stock for up to 2,000,000 shares of Common Stock. On June 6, 2023, the Company received stockholder approval to increase the number of authorized shares from 1,142,857 to 2,000,000 . Options or restricted stock awards may be granted to employees, the Company’s board of directors, and external consultants who provide services to the Company. Options and restricted stock awards granted under the 2014 Plan have vesting schedules with terms of one to three years and become fully exercisable based on specific terms imposed at the date of grant. The 2014 Plan expired according to the respective 10-year term of the 2014 Plan in March 2024. A new 2024 Incentive Compensation Plan (the “2024 Plan”) was approved at the Annual Meeting of Shareholders on June 4, 2024. The Company has recorded stock-based compensation expense related to the issuance of restricted stock awards in the following line items in the accompanying condensed consolidated statements of operations: SUMMARY OF STOCK-BASED COMPENSATION EXPENSE RECOGNIZED FOR STOCK OPTION AWARDS 2024 2023 Research and development $ 99,174 $ 37,131 Selling, general and administrative 890,507 711,692 Total stock-based compensation expense $ 989,681 $ 748,823 The following table summarizes stock option activity under the 2014 and 2024 Plans: SUMMARY OF OPTION ACTIVITY Number of options Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value Outstanding at December 31, 2023 683,695 $ 3.99 2.9 $ 158,332 Granted — — — — Exercised ( 208,031 ) 1.16 — — Forfeited ( 171,539 ) 2.16 — — Outstanding at December 31, 2024 304,125 $ 6.95 4.20 $ — Vested and exercisable at December 31, 2024 304,125 $ 6.95 4.20 $ — As of December 31, 2024, there was no unrecognized compensation cost related to non-vested stock options. During the year ended December 31, 2024, 208,031 options were exercised at an exercise price of $ 1.155 , of which 143,183 options were from a cashless exercise, and 137,854 options were forfeited due to a cashless exercise. F- 14 Restricted Stock Awards The following table summarizes restricted stock award activity under the 2014 and 2024 Plan: SUMMARY OF RESTRICTED STOCK AWARD As of December 31, 2024 Number of restricted stock awards (RSA) Weighted- average grant price FMV on grant date Vested number of RSA Unvested number of RSA Balance at December 31, 2023 540,969 $ 2.24 $ 1,209,400 462,298 78,671 Granted 865,423 1.81 1,570,834 517,941 347,482 Forfeited ( 77,096 ) 1.80 ( 139,173 ) — ( 77,096 ) Balance at December 31, 2024 1,329,296 $ 2.24 $ 2,641,061 980,239 349,057 During the year ended December 31, 2024, the Company issued restricted stock awards (“RSAs”) for 865,423 shares of Common Stock to employees, non-employees, and the Board of Directors. The shares vest in equal monthly installments over terms of between immediately up to three years , subject to the employees and non-employees providing continuous service through the vesting date. During the year ended December 31, 2024, 31,973 shares vested from RSAs granted prior to January 1, 2024, and 517,943 shares vested from RSAs granted during the year ended December 31, 2024. During the year ended December 31, 2023, the Company issued RSAs for 431,028 shares of Common Stock to employees and non-employees. The shares vest in equal monthly installments over terms of between immediately up to one year , subject to the employees and non-employees providing continuous service through the vesting date. During the year ended December 31, 2023, 59,051 shares vested from RSAs previously issued. Note 14. WARRANTS The Company’s outstanding Common Stock warrants are equity classified. As of December 31, 2024 and 2023, the Company had 12,298,124 and 4,649,952 warrants outstanding, respectively, to purchase one share of the Company’s Common Stock for each warrant at a weighted average exercise price of $ 2.95 and expire at various dates through October 2029. During the year ended December 31, 2024, a total number of 1,066,767 warrants were exercised into an equivalent number of shares of Common Stock as compared to no warrants being exercised during the year ended December 31, 2023. The proceeds of the exercised warrants for the year ended December 31, 2024, was $ 1,343,390 , compared to no proceeds during the year ended December 31, 2023. On March 8, 2024, the Company issued to certain investors (1) in a registered direct offering, 1,600,000 shares of the Company’s Common Stock and (2) in a concurrent private placement, warrants to purchase an aggregate of 1,600,000 shares of Common Stock, with an exercise price of $ 1.64 (collectively, the “Transaction”), which Transaction constitutes a Dilutive Issuance under the terms of the warrants. In addition, the placement agent was granted warrants to purchase 32,000 shares of Common Stock, with an exercise price of $ 1.64 . On August 5, 2024, the Company entered into warrant exercise agreements with three existing accredited investors to exercise certain outstanding warrants to purchase an aggregate of 1,041,667 of the Company’s shares of Common Stock (the “Existing Warrants”). The exercising holders received in a private placement new unregistered warrants (the “New Warrants”) to purchase up to an aggregate of 1,302,082 shares of Common Stock with an exercise price of $ 1.50 per share, which are initially exercisable on the date that stockholder approval of the exercise of the New Warrants is obtained and will expire five years from the date of such approval. In connection with the exercise of the Existing Warrants, the Company agreed to reduce the exercise price of the Existing Warrants from $ 1.64 to $ 1.25 per share. The exercise of the Existing Warrants and the issuance of the New Warrants occurred on August 5, 2024. The change in the exercise price of the Existing Warrants resulted in a fair value adjustment of $ 27,757 which was recorded to Additional paid-in capital for the exercised warrants. On August 5, 2024, the Company also entered into a securities purchase agreement with an institutional investor (the “Purchaser”), pursuant to which the Company issued to the Purchaser, (1) in a registered direct offering, 360,000 shares of Common Stock, and (2) in a concurrent private placement, warrants (the “Private Warrants”) to purchase an aggregate of 450,000 shares of Common Stock (the “Private Warrant Shares”), with an exercise price of $ 1.50 (collectively, the “Offering”). In addition, designees of the placement agent for the Offering were granted warrants to purchase an aggregate of up to 49,862 shares of Common Stock, with an exercise price of $ 1.50 . On October 21, 2024, the Company issued (1) in a registered direct offering, 2,048,294 shares (the “Shares”) of the Company’s Common Stock, par value $ 0.007 per share, and (2) in a concurrent private placement, common warrants (the “Common Warrants”) to purchase an aggregate of 2,662,782 shares of Common Stock (the “Common Warrant Shares”), with an exercise price of $ 1.50 , pursuant to a securities purchase agreement, dated October 18, 2024 with institutional investors (the “Purchasers”). Such registered direct offering and concurrent private placement are collectively referred to as the “Offerings.” In addition, designees of the placement agent for the Offering were granted warrants to purchase an aggregate of up to 61,448 shares of Common Stock, with an exercise price of $ 1.50 . As of December 31, 2024, and prior to the Offering, there were tradeable warrants to purchase up to an aggregate of 1,601,255 shares of Common Stock outstanding and non-tradeable warrants to purchase an aggregate of up to 2,704,458 shares of Common Stock outstanding. SCHEDULE OF CLASS OF WARRANT Number of warrants issued Weighted-average exercise price Number of warrants exercised Number of warrants outstanding Pre-IPO convertible notes 2,900,904 $ 5.31 — 2,900,904 IPO tradeable 2,326,835 3.06 ( 725,580 ) 1,601,255 IPO non-tradeable 3,015,464 3.06 ( 311,006 ) 2,704,458 Direct offering March 8, 2024 1,600,000 1.64 ( 1,066,667 ) 533,333 Placement agent direct offering March 8, 2024 32,000 1.64 — 32,000 Inducement/direct offering August 5, 2024 1,752,082 1.50 — 1,752,082 Placement agent direct offering August 5, 2024 49,862 1.50 — 49,862 Direct offering October 21, 2024 2,662,782 1.50 — 2,662,782 Placement agent direct offering October 21, 2024 61,448 1.50 — 61,448 Balance at December 31, 2024 14,401,377 $ 2.95 ( 2,103,253 ) 12,298,124 F- 15 Note 15. INCOME TAXES Deferred tax assets and valuation allowance The Company had, subject to limitation, approximately $ 31 million of net operating loss carryforwards at December 31, 2024, of which approximately $ 0.67 million will begin expiring in 2034. The remaining balance of approximately $ 30 million will carry forward indefinitely. A 100 % valuation allowance has been provided for the deferred tax benefits resulting from the net operating loss carryover due to a lack of earnings history. In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance increased by approximately $ 2.0 million and $ 3.0 million for the years ended December 31, 2024 and 2023, respectively. Significant components of deferred tax assets are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2024 2023 Deferred tax assets: Net operating loss carryover $ 8,185,845 $ 6,479,696 Stock compensation 247,574 325,320 Capitalized R&E costs 662,855 525,463 Bad debt expense 203,323 145,777 Other 107,538 58,236 Operating lease liabilities 274,962 79,319 Tax credits 480,724 332,690 Total deferred tax assets 10,162,821 7,946,501 Deferred tax liability: Right-of-use asset tax liability $ ( 261,215 ) $ ( 77,766 ) Depreciation and amortization ( 50,463 ) ( 59,248 ) Total deferred tax liability ( 311,678 ) ( 137,014 ) Less: valuation allowance ( 9,851,143 ) ( 7,809,487 ) Deferred tax assets (liabilities), net $ — $ — The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023, was as follows: SCHEDULE OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE December 31, 2024 2023 Tax at federal statutory rate - 21.00 % - 21.00 % Permanent differences 0.1 % 0.03 % Research and development credits - 0.8 % - 0.83 % Deferred balance true-up 0.00 % - 16.07 % Change in valuation allowance 21.7 % 37.87 % Effective income tax rate 0.00 % 0.00 % Unrecognized tax benefits As of December 31, 2024, and 2023, the Company has unrecognized tax benefits related to tax credits of $ 281,207 and $ 249,516 , respectively. None of the unrecognized tax benefits as of December 31, 2024, if recognized, would impact the effective tax rate due to the valuation allowance, and no interest or penalties have been recognized. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows: SCHEDULE OF UNRECOGNIZED TAX BENEFITS December 31, 2024 2023 Beginning balance $ 249,516 $ 190,228 Deductions based on tax positions related to the prior year — 30,897 Additions based on tax positions related to the current year 31,691 28,391 Ending balance $ 281,207 $ 249,516 Note 16. SUBSEQUENT EVENTS On March 7, 2025, the Company 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 its subsidiary Precision Pathology Laboratory Services (PPLS), while increasing resources to expand CyPath ® Lung sales in high-potential national markets. 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. On February 26, 2025, pursuant to the terms of a warrant inducement agreement (the “February Inducement Agreement”), dated February 25, 2025 that the Company entered into with certain holders of existing warrants, such holders exercised for cash (i) warrants to purchase an aggregate of up to 1,302,082 shares of Common Stock issued on October 21, 2024 (the “October Warrants”), at the reduced exercise price of $ 0.58 per share, and (ii) warrants to purchase an aggregate of up to 1,136,391 shares of Common Stock issued on August 5, 2024 (the “August Warrants”), at the reduced exercise price of $ 0.58 per share. The Company received aggregate gross proceeds of approximately $ 1.4 million, before deducting advisory fees and other expenses payable by it. In consideration of the immediate exercise of the October Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, the Company 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. F- 16