What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-03-31 · 1891 added, 9 removed, 2 unchanged (100% of the section changed)

Risk Factors.

a smaller reporting company, we are not required to provide disclosure pursuant to this Item 1A.

However, in addition to other information

set forth in this Annual Report, you should carefully consider the “Risk Factors” discussed in our Final Prospectus filed

with the SEC on September 2, 2022, pursuant to Rule 424(b)(4) under the Securities Act (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm )

and elsewhere in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the

results described in or implied by the forward-looking statements contained in this Annual Report.

Additional risks and uncertainties

not currently known to us or that we currently deem to be immaterial might materially adversely affect our actual business, financial

Related to Our Financial Position

business plan relies upon our ability to obtain additional sources of capital and financing.

If the amount of capital we are able to

raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may be

required to cease operations.

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.

During the year ended December 31, 2023, we generated $2.2 million from laboratory patient services

(of which approximately $37,000 related to our first diagnostic test, CyPath ® Lung), and approximately $273,000 from histology

laboratory test, approximately $19,000 from medical director fees, and in connection with CyPath ® Lung tests purchased

by the DOD in the approximate amount of $19,000 for an observational study.

become and remain profitable, we must succeed in generating additional laboratory revenue in excess of our operating expenses and developing

and commercializing our diagnostic tests and therapeutic products that we expect will generate significant income in the planned timeframe.

This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials

of our diagnostic and therapeutic technologies, obtaining regulatory approval for our diagnostic and therapeutic technologies, manufacturing,

marketing, and selling any diagnostic tests and therapeutic products for which we may obtain regulatory approval, and establishing and

managing our collaborations at various phases of each diagnostic test and therapeutic product candidate’s development.

the preliminary phases of these activities.

We may never succeed in these activities and, even if we do, may never generate sufficient

income to achieve profitability.

become profitable, we must develop our diagnostic tests and therapeutic products, which will depend in large part on our ability to:

enhance, and protect our diagnostic tests and therapeutic products;

sufficient funding to support our diagnostic tests and therapeutic product development program(s);

pre-clinical testing;

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;

de novo classification from FDA for our CyPath ® Lung as a Class II in vitro diagnostic

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;

test, and attract licensing partners for drug conjugates, siRNAs, and other therapeutics (and methods for their use) developed by

and conduct human clinical studies to support the regulatory approval and marketing of our diagnostic test(s) and therapeutic product(s);

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);

the necessary regulatory approvals to market our diagnostic test(s) and therapeutic product(s);

the necessary personnel and infrastructure to support the development, commercialization, and marketing of our diagnostic test(s)

and therapeutic product(s);

strategic relationships to support development, manufacturing, and marketing of our diagnostic test(s) and therapeutic product(s).

if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Our failure to

become and remain profitable would depress the value of our Company and could impair our ability to raise capital, expand our business,

maintain the research and development efforts, diversify our diagnostic tests and therapeutic product offerings, or even continue our

A decline in the value of our Company could also cause you to lose all or part of your investment.

must raise additional capital to fund our operations in order to continue as a going concern.

of December 31, 2023, we had an accumulated deficit of $44.6 million and $2.8 million cash on hand.

For the year 2023, cash used in

operations was $6.0 million and net loss was $7.9 million.

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.

business plan includes expansion for our commercialization efforts which will require additional funding.

If we are unable to

improve our liquidity position, we may not be able to continue as a going concern.

Our ability to continue as a going concern is

dependent upon our ability to generate revenue and raise capital from financing transactions.

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.

There can be no assurance that we will be successful in accomplishing

these objectives.

Without such additional capital, we may be required to curtail or cease operations and be required to realize our

assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of

all or a substantial portion of their investment.

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.

have a limited operating history, which makes it difficult to evaluate our current business and future prospects.

are a company with limited operating history, and our operations are subject to all of the risks inherent in establishing a new business

The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays

frequently encountered in connection with the formation of a new business, the development of new technologies or those subject to clinical

testing, and the competitive and regulatory environment in which we will operate.

To date, we have generated revenue from a limited market

launch of CyPath ® Lung in Texas.

There can be no assurance that we will be able to successfully expand our commercialization

efforts or that we will obtain the necessary regulatory approvals that will allow us to expand our marketing efforts.

We may not be able

to maintain certification of CyPath ® Lung as an LDT in accordance with CAP/CLIA guidance and regulations, or obtain approval

of our diagnostic tests in development by the CMS, the FDA, European Medicines Agency, or Chinese National Medical Products Administration.

Even if we do so and are also able to commercialize our diagnostic tests, we may never generate revenue sufficient to become profitable.

Our failure to generate revenue and profit would likely cause our securities to decrease in value or become worthless.

addition, while we anticipate generating continued revenue from PPLS, our CAP-accredited, CLIA-certified clinical pathology laboratory,

we do not expect to immediately derive profit from revenue from PPLS’ services.

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 and that revenue generated will

cover necessary operating expenses.

In addition, since we have limited experience operating a clinical laboratory, we may not accurately

estimate the expenses we will incur.

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.

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.

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.

believe that we must raise additional funds to be able to continue our business operations.

We may not be able to obtain equity or debt

financing on acceptable terms or at all to implement our growth strategy.

As a result, adequate capital may not be available to finance

our current development plan, take advantage of business opportunities, or respond to competitive pressures.

If we are unable to raise

additional funds, we may be forced to curtail or even abandon our business plan and focus on fewer commercial opportunities that may

result in more limited growth than forecast.

such time, if ever, as we can generate substantial income from sale of our diagnostic test(s) and therapeutic product candidates, we

expect to finance our cash needs through a combination of equity offerings, debt financings, and license and collaboration agreements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing

stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the

rights of the holders of our Common Stock (the “Common Stockholders”).

In addition, the terms of any future financing may

impose restrictions on our right to declare dividends or on the manner in which we conduct our business.

Debt financing and preferred

equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions,

such as incurring additional debt, making capital expenditures, declaring dividends, or making acquisitions or significant asset sales.

we raise additional funds through collaborations, strategic alliances or marketing, or distribution or licensing arrangements with third

parties, we may have to relinquish valuable rights to our technologies, future revenue streams, and research programs, or grant licenses

on terms that may not be favorable to us and/or that may reduce the value of our Common Stock.

Related to the Acquisition

combined company may not experience the anticipated strategic benefits of the PPLS acquisition.

we anticipate benefits from the acquisition of PPLS, we may not be able to realize the expected benefits.

Despite due diligence we could

assume previously unidentified or contingent liabilities.

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 the acquisition to meet our expectations could

have a material negative effect on our results of operations.

There can be no assurance that the anticipated benefits of the acquisition

will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company.

may not be able to enforce claims with respect to the representations, warranties, and indemnities that Village Oaks has provided to

us under the Asset Purchase Agreement.

connection with the acquisition, Village Oaks has given certain representations, warranties, and indemnities.

There can be no assurance

we will be able to enforce any claims against Village Oaks’ breaches of such representations, warranties, or indemnities.

Oaks’ liability with respect to breaches of such representations, warranties, and indemnities under the Asset Purchase Agreement

may be limited or the amount and coverage of any insurance obtained with respect to representations and warranties may be limited.

if we ultimately succeed in recovering any amounts, we may temporarily be required to bear these losses ourselves.

are unable to precisely estimate when we will begin to generate significant profit from revenue, if ever, from PPLS’ services,

nor to estimate the amount of profit or revenue that will be generated or the expenses that will be incurred.

do not expect to immediately derive profit from revenue from PPLS’ services.

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.

In addition, since we have limited experience operating a clinical laboratory, we

may not accurately estimate the expenses we will incur.

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.

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

Our management team may not successfully or efficiently manage our transition to operating a CAP-accredited and CLIA-certified

laboratory subject to significant regulatory oversight and reporting obligations.

However, to ease the transition, Roby Joyce, M.D.,

the Medical Director and Laboratory Director of Village Oaks prior to the acquisition, continues to serve as the Medical Director and

Laboratory Director of PPLS.

These new obligations and constituents will require significant attention from our senior management and

could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial

condition, and operating results.

Unresolved Staff Comments.

Related to our Diagnostic Product

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.

order to market our CyPath ® Lung as an IVD medical device, we must receive de novo classification from the FDA

as a Class II in vitro diagnostic.

We intend to launch a pivotal trial later this year in an effort to attain such classification;

there can be no assurance that the trial will have favorable results or that it will generate the results necessary to obtain such classification.

Until such time as we receive de novo classification, which we may never receive, our marketing efforts are limited to the marketing

and sale of CyPath ® Lung as an LDT.

Without clearance of CyPath ® Lung by the FDA, some physicians may not

order the test.

we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals

could be delayed or prevented.

may not be able to initiate or continue clinical trials if we are unable to locate and enroll a sufficient number of eligible patients

to participate in these trials as required by the FDA or similar regulatory authorities outside the U.S., such as the European Medicines

enrollment is affected by many other factors, including:

severity of the disease under investigation;

patient eligibility criteria for the study in question;

efforts to facilitate timely enrollment in clinical trials;

payments for conducting clinical trials;

patient referral practices of physicians;

ability to monitor patients adequately during the trial period;

proximity and availability of clinical trial sites for prospective patients.

are unable to forecast with precision our ability to enroll patients.

Our inability to enroll a sufficient number of patients for our

clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.

delays in our clinical trials may result in increased development costs, which would cause the value of our Company to decline and limit

our ability to obtain additional financing.

trials are expensive, time consuming, and may not be successful.

They involve the evaluation of diagnostic tests and testing of potential

therapeutic agents and effective treatments in humans to determine the safety and efficacy of the diagnostic tests and therapeutic products

necessary for an approved diagnostic and therapeutic technology.

Many tests and products in human clinical trials fail to demonstrate

the desired safety and efficacy characteristics.

Even if our tests and products progress successfully through initial or subsequent human

testing, they may fail in later phases of development.

We may engage others to conduct our clinical trials, including clinical research

organizations and government-sponsored agencies.

These trials may not start or be completed as we forecast or may not achieve desired

may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive

marketing authorization or commercialize our diagnostic and therapeutic technologies, including:

or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial

at a prospective trial site;

may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols

with prospective trial sites;

trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical

trials or abandon product and test development programs;

number of patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower

than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;

third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner,

may have to suspend or terminate clinical trials for various reasons, including a finding that the participants are being exposed

to unacceptable health risks;

or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons,

including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health

cost of clinical trials may be greater than we anticipate;

may revise the requirements for approving our diagnostic or therapeutic technologies, or such requirements may not be as we anticipate.

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:

delayed in obtaining marketing approval;

obtain marketing approval at all, which would seriously impair our viability;

marketing approval in some countries and not in others;

approval for indications or patient populations that are not as broad as we intend or desire;

approval with labeling that includes significant use or distribution restrictions or safety warnings;

subject to additional post-marketing testing requirements;

the diagnostic test or therapeutic product removed from the market after obtaining marketing approval.

product and test development costs will increase if we experience delays in clinical testing or marketing approvals.

We do not know whether

any of our preclinical studies or clinical trials will begin as planned, will need to be restructured, or will be completed on schedule

Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right

to commercialize our diagnostic technology or allow our competitors to bring diagnostic tests and therapeutic products to market before

we do, potentially impairing our ability to successfully commercialize our diagnostic and therapeutic technologies and harming our business

and results of operations.

Related to Our Diagnostic Tests

our tests do not perform as expected, our operating results, reputation and business will suffer.

success depends on the market’s confidence that PPLS can provide reliable, high-quality clinical testing services.

guarantee that the accuracy and reproducibility that our CAP/CLIA clinical pathology laboratory has demonstrated to date will continue

as its test volume increases.

We believe that PPLS’ customers are likely to be particularly sensitive to test limitations and errors,

including inaccurate test results.

As a result, if PPLS does not perform its diagnostic services as expected, our operating results,

reputation and business will suffer.

We may be subject to legal claims arising from such limitations, errors, or inaccuracies.

may experience difficulties that delay or prevent our development, introduction, or marketing of enhanced or new tests.

success may also depend on our ability to effectively introduce enhanced or new tests.

The development of enhanced or new tests is complex,

costly, and uncertain.

Furthermore, enhancing or developing new tests requires us to anticipate patients’, clinicians’, and

payors’ needs and emerging technology trends accurately.

We may experience research and development, regulatory, marketing, and

other difficulties that could delay or prevent our introduction of enhanced or new tests.

The research and development process in diagnostics

generally takes a significant amount of time from the research and design stage to commercialization.

This process is conducted in various

stages, and each stage presents the risk that we will not achieve our goals.

We may have to abandon a test in which we have invested

substantial resources.

In order to successfully commercialize tests that we may develop in the future, we may need to conduct lengthy,

expensive clinical trials and develop dedicated sales and marketing operations or enter into collaborative agreements to achieve market

awareness and demand.

Any delay in the research and development, approval, production, marketing, or distribution of enhanced or new

tests could adversely affect our competitive position, branding, and results of operations.

cannot be certain that:

tests that we may enhance or develop will prove to be effective in clinical trials;

will be able to obtain, in a timely manner or at all, regulatory approvals, if needed;

tests that we may enhance or develop will be ordered and used by healthcare providers;

tests that we may enhance or develop can be provided at acceptable cost and with appropriate quality;

of our tests can be successfully marketed.

factors and other factors beyond our control could delay the launch of enhanced or new tests.

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.

must demonstrate the product safety and efficacy of our candidates for diagnostic tests and therapeutic products in humans through extensive

clinical testing.

Our research and development programs are at an early stage of development.

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:

results of pre-clinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical

and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical

reviewing test results, we may abandon projects that we might previously have believed to be promising;

or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable

health risks;

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.

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.

if our products receive marketing approval, if needed, they may nonetheless fail to gain sufficient market acceptance by physicians,

patients, third-party payors, and others in the medical community.

If we do not generate significant product revenues, we may not become

The degree of market acceptance of our products and tests, if approved for commercial sale, will depend on a number of factors,

efficacy, safety, and other potential advantages compared to alternative tests or products;

ability to offer them for sale at competitive prices;

convenience and ease of administration compared to alternative diagnostics or treatments;

willingness of the target patient population to try new diagnostic tests and of physicians to order these tests;

willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

strength of marketing and distribution support;

availability of governmental agencies and third-party medical insurance and adequate reimbursement for our diagnostic tests or therapeutic

restrictions on the use of our diagnostic tests or therapeutic products together with other diagnostic methods or therapeutic treatments;

restrictions on the use of our diagnostic tests or therapeutic products together with other medications;

of certain types of patients to produce adequate samples for analysis in the use of our diagnostic tests;

of certain types of patients to use our diagnostic tests or take our therapeutic products;

prevalence and severity of side effects from our therapeutic products.

we are unable to address and overcome these and similar concerns, our business and results of operations could be substantially harmed.

we are unable to establish effective sales, marketing, and distribution capabilities or enter into agreements with third parties with

such capabilities, we may not be successful in commercializing our diagnostic tests or therapeutic products if and when they are approved.

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.

To achieve commercial success for any diagnostic test or therapeutic product for which we obtain marketing

approval, we will need to successfully establish and maintain relationships directly and with third parties to perform sales and marketing

that may inhibit our efforts to commercialize our diagnostic tests or therapeutic products on our own include:

inability to recruit, train, and retain adequate numbers of effective sales, technical support, and marketing personnel;

inability of sales personnel to obtain access to or educate physicians on the benefits of our diagnostic tests or therapeutic products;

lack of complementary diagnostic tests or therapeutic products to be offered by sales personnel, which may put us at a competitive

disadvantage relative to companies with more extensive diagnostic tests or therapeutic product lines;

costs and expenses associated with creating an independent sales, technical support, and marketing organization;

inability to obtain sufficient coverage and reimbursement from third-party payors and governmental agencies.

we do not establish sales, marketing, and distribution capabilities successfully, either on our own or in collaboration with third parties,

we will not be successful in commercializing our diagnostic tests or therapeutic products.

are currently dependent upon our pathology laboratory PPLS to offer and perform CyPath ® Lung.

is currently the only commercial laboratory offering CyPath ® Lung and, therefore, we are dependent upon our subsidiary

PPLS for the generation of our revenue.

PPLS performs testing when ordered by physicians for their patients.

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.

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.

use of our proposed diagnostic tests and products may require pathology laboratories and physicians to be informed regarding our proposed

diagnostic tests and products and their intended benefits.

Inability to carry out this physician education process may adversely affect

market acceptance of our proposed diagnostic tests or therapeutic products.

We may be unable to timely educate physicians regarding our

proposed diagnostic tests or therapeutic products in sufficient numbers to achieve our marketing plans or to achieve acceptance of our

diagnostic tests or therapeutic products.

Any delay in physician education may materially delay or reduce demand for our diagnostic tests

or therapeutic products.

In addition, we may expend significant funds toward physician education before any acceptance or demand for

our proposed diagnostic tests or therapeutic products is created, if at all.

face substantial competition, which may result in others discovering, developing, or commercializing competing diagnostic tests or therapeutic

products before or more successfully than we do.

development and commercialization of new diagnostic and therapeutic technologies is highly competitive.

We will always face competition

with respect to any diagnostic and therapeutic technology that we may seek to develop or commercialize in the future from major diagnostic

and pharmaceutical companies, LDT laboratories, smaller diagnostic and pharmaceutical companies, and biotechnology companies worldwide.

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.

and acquisitions in the diagnostic, pharmaceutical, and biotechnology industries may result in even more resources being concentrated

among a smaller number of our competitors.

and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large

and established companies.

These third parties compete with us in recruiting and retaining qualified scientific, sales, marketing, and

management personnel, establishing clinical trial sites and patient registration for clinical trials, and acquiring technologies complementary

to or necessary for our programs.

commercial opportunity could be reduced or eliminated if our competitors develop and commercialize diagnostic tests or therapeutic products

that are more accurate, more convenient, or less expensive than any diagnostic tests or therapeutic products that we may develop.

competitors also may obtain FDA or other regulatory approval for their diagnostic tests or therapeutic products more rapidly than we

may obtain approval for ours, which could result in our competitors establishing a stronger market position.

In addition, our ability

to compete may be affected in many cases by insurers or other third-party payors.

may be unable to compete in our target marketplaces, which could impair our ability to generate revenues, thus causing a material adverse

impact on our results of operations.

success depends upon our ability to retain key executives and to attract, retain, and motivate qualified personnel, and the loss of these

persons could adversely affect our operations and results.

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.

loss of the services of any of our executive officers or other members of our management team could impede the achievement of our research,

development, and commercialization objectives and seriously harm our ability to successfully implement our business strategy.

replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number

of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of,

and commercialize diagnostic tests or therapeutic products.

Competition to hire from this limited pool is intense, and we may be unable

to hire, train, retain, or motivate key personnel on acceptable terms given the competition among numerous biotechnology companies for

similar expertise.

We also face competition from universities and research institutions for qualified scientific and clinical personnel.

In addition, we rely and expect to continue to rely to a significant degree on consultants and advisors, including scientific and clinical

advisors, to assist us in formulating our research and development and commercialization strategies.

Our consultants and advisors may

be engaged by other entities and may have commitments under consulting or advisory contracts that may limit their availability to us.

If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited.

lack of operating experience may make it difficult to manage our growth which could lead to our inability to implement our business plan.

have limited experience in marketing and selling diagnostic tests and pharmaceutical products.

Any growth will require us to expand our

management and our operational and financial systems and controls.

If we are unable to do so, our business and financial condition would

be materially harmed.

If rapid growth occurs, it may strain our operational, managerial, and financial resources.

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.

may in the future require licenses to third-party technology and materials.

We had previously been granted a license from Village Oaks

to use its intellectual property, pursuant to a joint development and project agreement, to develop CyPath ® Lung for commercialization.

In connection with the acquisition of PPLS, Village Oaks assigned its rights pursuant to such joint development and project agreement

to PPLS, as well as the intellectual property that is the subject of our license under such agreement.

Such licenses may not be available

in the future or may not be available on commercially reasonable terms, or at all, which could have a material adverse effect on our

business and financial condition.

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.

For example, we cannot

be certain that such activities by these licensors will be conducted in compliance with applicable laws and regulations or will result

in valid and enforceable patents and other intellectual property rights.

We may have limited control over the manner in which our licensors

initiate an infringement proceeding against a third-party infringer of the intellectual property rights or defend certain of the intellectual

property that may be licensed to us.

It is possible that the licensors’ infringement proceeding or defense activities may be less

vigorous than if we conduct them ourselves.

Even if we acquire the right to control the prosecution, maintenance, and enforcement of

the licensed and sublicensed intellectual property relating to our diagnostic tests or therapeutic product candidates, we may require

the cooperation of our licensors and any upstream licensor, which may not be forthcoming.

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.

our licensor fail to maintain such patents, or if we or our licensor lose rights to those patents or patent applications, the rights

we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our diagnostic tests or therapeutic

product candidates that are the subject of such licensed rights could be adversely affected.

In addition to the foregoing, the risks

associated with patent rights that we license from third parties will also apply to patent rights we may own in the future.

if we fail to comply with our diligence, development and commercialization timelines, milestone payments, royalties, insurance, and other

obligations under our license agreements, we may lose our patent rights with respect to such agreement, which would affect our patent

rights worldwide.

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.

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.

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.

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.

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.

currently own intellectual property directed to our diagnostic tests, therapeutic product candidates and other proprietary technologies.

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.

required to obtain licenses to any third-party technology, including any such patents required to manufacture, use, or sell our product

candidates, such licenses may not be available to us on commercially reasonable terms or at all.

The inability to obtain any third-party

license required to develop or commercialize any of our product candidates could cause us to abandon any related efforts, which could

seriously harm our business and operations.

The licensing or acquisition of third-party intellectual property rights is a competitive

area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights we

may consider attractive or necessary.

These established companies may have a competitive advantage over us due to their size, capital

resources, and greater clinical development and commercialization capabilities.

In addition, companies that perceive us to be a competitor

may be unwilling to assign or license rights to us.

Even if we are able to obtain a license under such intellectual property rights,

any such license may be non-exclusive, which may allow our competitors access to the same technologies licensed to us.

some of our owned and in-licensed patents or patent applications or future patents may be co-owned with third parties.

If we are unable

to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners

may be able to license their rights to other third parties, including our competitors, and our competitors could market competing diagnostic

tests or therapeutic products and technology.

In addition, we may need the cooperation of any such co-owners of our patents in order

to enforce such patents against third parties, and such cooperation may not be provided to us.

Furthermore, our owned and in-licensed

patents may be subject to a reservation of rights by one or more third parties.

Any of the foregoing could have a material adverse effect

on our competitive position, business, financial conditions, results of operations, and prospects.

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.

do not have, and do not now intend to develop, facilities for the manufacture of the contents of our collection kits needed for clinical

or commercial production.

In addition, we are not a party to any long-term agreement with any of our suppliers such as the reagents used

in processing sputum samples, and accordingly, we have the products used in our diagnostic tests manufactured on a purchase-order basis

from primary suppliers.

We have entered into relationships with manufacturers on a contract basis but will need to expand those relationships.

We expect to depend on such collaborators to supply us with reagents and other materials manufactured in compliance with standards imposed

by the CMS, FDA, and foreign regulators.

as we develop our diagnostic tests or therapeutic products eligible for clinical trials, we intend to contract with independent parties

to design the trial protocols, arrange for and monitor the clinical trials, and collect and analyze the data.

In addition, certain clinical

trials for our products may be conducted by government-sponsored agencies and will be dependent on governmental participation and funding.

Our dependence on independent parties and clinical sites involves risks, including reduced control over the timing and other aspects

of our clinical trials.

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.

business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing, and marketing

of diagnostic tests and therapeutic products.

Such claims may be asserted against us.

In addition, using diagnostic tests and therapeutic

products that may be developed with potential collaborators in our clinical trials and the subsequent sale of these tests and products

by bioAffinity or our potential collaborators may cause us to bear a portion of or all product liability risks.

A successful liability

claim, or series of claims, brought against us could have a material adverse effect on our business, financial condition, and results

of operations.

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.

Furthermore, potential partners with whom we intend to have collaborative or strategic agreements

or our future licensees may not be willing to indemnify us against these types of liabilities and may not themselves be sufficiently

insured or have sufficient liquidity to satisfy any product liability claims.

Claims or losses in excess of any product liability insurance

coverage that we may obtain could have a material adverse effect on our business, financial condition, and results of operations.

addition, we may be unable to obtain or to maintain clinical trial liability insurance on acceptable terms, if at all.

Any inability

to obtain and/or maintain insurance coverage on acceptable terms could prevent or limit the commercialization of any tests or products

collection, use, and disclosure of personal information, including health and employee information, is subject to U.S.

state and federal

privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could

result in significant liability or reputational harm.

privacy and security of personal information stored, maintained, received, or transmitted, including electronically, is a major issue

Numerous federal and state laws and regulations, including state privacy, data security and breach notification

laws, federal and state consumer protection and employment laws, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”),

as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and the Genetic Information Nondiscrimination

Act of 2008, govern the collection, dissemination, use, and confidentiality of personal information, including genetic, biometric, and

health information.

These laws and regulations are increasing in complexity and number, may change frequently, and sometimes conflict.

Penalties for violations of these laws vary but can be severe.

we strive to comply with all applicable privacy and security laws and regulations, including our own posted privacy policies, these laws

and regulations continue to evolve, and any failure or perceived failure to comply may result in proceedings or actions against us by

government entities or others or could cause us to lose customers, which could have a material adverse effect on our business.

there has been an increase in public awareness of privacy issues in the wake of revelations about the data collection activities of various

government agencies and in the number of private privacy-related lawsuits filed against companies.

Concerns about our practices with

regard to the collection, use, retention, disclosure, or security of personal information or other privacy-related matters, even if unfounded

and even if we are in compliance with applicable laws, could damage our reputation and harm our business.

we are unable to obtain adequate reimbursement from third-party payors or governmental agencies for CyPath ® Lung or other

diagnostic tests or therapeutic products under development or if new restrictive legislation is adopted, market acceptance of our tests

or products may be limited, and we may not achieve expected revenues.

continuing efforts of government and insurance companies, health maintenance organizations (“HMOs”), and other payors of

healthcare costs to contain or reduce costs may affect our future revenues and profitability, as well as the future revenues and profitability

of our potential customers, suppliers, and collaborative partners and the availability of capital.

For example, in certain international

markets, pricing or profitability of diagnostic tests and therapeutic products is subject to government control.

In the U.S., given recent

federal and state government initiatives directed at lowering the total cost of healthcare, the U.S.

Congress and state legislatures

will likely continue to focus on healthcare reform, the cost of medical devices, tests, and prescription pharmaceuticals, and Medicare

and Medicaid reforms.

While we cannot predict whether any such legislative or regulatory proposals will be adopted, the announcement

or adoption of such proposals could materially harm our business, financial condition, and results of operations.

ability to commercialize our tests or products will depend in part on the extent to which appropriate reimbursement levels for the cost

of our tests or products are obtained by governmental authorities, private health insurers, and other organizations such as HMOs.

agencies and third-party payors are increasingly challenging the prices charged for medical tests, drugs, and services.

Also, the trend

toward managed healthcare in the U.S.

and the concurrent growth of organizations such as HMOs, which could control or significantly influence

the purchase of healthcare services, diagnostics, and drugs, as well as legislative proposals to reform healthcare or reduce government

insurance programs, may all result in lower prices for or rejection of our tests or products.

employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities,

including noncompliance with regulatory standards and requirements.

business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors,

and customers will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health

information privacy and security laws, and other healthcare laws and regulations.

If we are unable to comply, or have not fully complied,

with such laws, we could face substantial penalties.

We are exposed to the risk of employee fraud or other illegal activity by our employees,

independent contractors, consultants, commercial partners, vendors, and agents acting on behalf of us or our affiliates.

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;

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.

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.

If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

providers and others play a primary role in the recommendation, ordering, and prescription of any diagnostic tests or therapeutic products

for which we obtain marketing approval.

Our operations and current and future arrangements with investigators, healthcare professionals,

customers, and third-party payors are subject to various U.S.

federal and state healthcare laws and regulations, including, without limitation,

federal Anti-Kickback Statute, the U.S.

federal civil and criminal false claims laws, and the Physician Payments Sunshine Act and

These laws may impact, among other things, our current business operations, including our clinical research activities,

and proposed sales, marketing, and education programs and constrain the business of financial arrangements and relationships with healthcare

providers and other parties through which we may market, sell, and distribute our diagnostic tests or therapeutic products for which

we obtain marketing approval.

In addition, we may be subject to additional healthcare, statutory, and regulatory requirements and enforcement

by foreign regulatory authorities in jurisdictions in which we conduct our business.

that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations

will involve substantial costs.

It is possible that governmental authorities will conclude that our business practices, including certain

arrangements with physicians who receive stock, warrants, or stock options as compensation for services provided to us, do not comply

with current or future statutes, regulations, agency guidance, or case law involving applicable fraud and abuse or other healthcare laws

and regulations.

If our operations are found to be in violation of any of the laws described above or any other governmental laws and

regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties,

damages, fines, exclusion from U.S.

government-funded healthcare programs, such as Medicare and Medicaid, or similar programs in other

countries or jurisdictions, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits, additional reporting

requirements, and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance

with these laws, and the delay, reduction, termination, or restructuring of our operations.

Further, defending against any such actions

can be costly and time consuming and may require significant financial and personnel resources.

Therefore, even if we are successful

in defending against any such actions that may be brought against us, our business may be impaired.

If any of the physicians or other

providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject

to significant criminal, civil, or administrative sanctions, including exclusions from government-funded healthcare programs and imprisonment.

If any of the above occur, it could adversely affect our ability to operate our business and our results of operations.

face intense competition in the biotechnology and pharmaceutical industries.

biotechnology and pharmaceutical industries are intensely competitive.

We face direct competition from U.S.

and foreign companies focusing

on diagnostic tests and pharmaceutical products, which are rapidly evolving.

Our competitors include major multinational diagnostic and

pharmaceutical companies, specialized biotechnology firms, and universities and other research institutions.

Many of these competitors

have greater financial and other resources, larger research and development staffs, and more effective marketing and manufacturing organizations

In addition, academic and government institutions are increasingly likely to enter into exclusive licensing agreements with

commercial enterprises, including our competitors, to market commercial tests or products based on technology developed at such institutions.

Our competitors may succeed in developing or licensing technologies, tests, and products that are more effective or less costly than

ours or succeed in obtaining CAP/CLIA validation or FDA or other regulatory approvals for diagnostic test and therapeutic product candidates

before we do.

Acquisitions of, or investments in, competing diagnostic, pharmaceutical, or biotechnology companies by large corporations

could increase such competitors’ financial, marketing, manufacturing, and other resources.

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.

diagnostic, pharmaceutical, and biotechnology industries are subject to rapid and substantial technological change.

Developments by others

may render our proposed tests or products noncompetitive or obsolete, or we may be unable to keep pace with technological developments

or other market factors.

Technological competition from diagnostic, pharmaceutical and biotechnology companies, universities, governmental

entities, and others diversifying into the field is intense and is expected to increase.

a company engaged in the development of diagnostic technology with limited revenue generated to date, our resources are limited, and

we may experience technical challenges inherent in such technologies.

Competitors have developed or are in the process of developing

technologies that are, or in the future may be, the basis for competition.

Some of these technologies may have an entirely different

approach or means of accomplishing similar diagnostic efficacy compared to our proposed tests or products.

Our competitors may develop

diagnostic technologies that are more effective or less costly than our proposed tests or products and therefore present a serious competitive

potential widespread acceptance of diagnostic tests or therapies that are alternatives to ours may limit market acceptance of our proposed

tests or products, even if commercialized.

Many of our targeted diseases and conditions can also be detected by other tests or treated

by other medications.

These tests and treatments may be widely accepted in medical communities and have a longer history of use.

established use of these competitive technologies may limit the potential for our technologies, formulations, tests, and products to

receive widespread acceptance if commercialized.

cost containment initiatives and the growth of managed care may limit our returns.

ability to commercialize our diagnostic tests and therapeutic products successfully may be affected by the ongoing efforts of governmental

and third-party payors to contain the cost of healthcare.

These entities are challenging prices of healthcare products and services,

denying or limiting coverage and reimbursement amounts for new diagnostic tests and therapeutic products, CAP/CLIA-validated LDTs and

FDA-approved diagnostic tests and therapeutic products considered experimental or investigational or which are used for disease indications

without FDA marketing authorization.

Even if we succeed in bringing any tests or products to the market, they may not be considered cost

effective, and governmental or third-party reimbursement might not be available or sufficient.

If adequate governmental or third-party

coverage is not available, we may not be able to maintain price levels sufficient to realize an appropriate return on our investment

in research and development for new tests and products.

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.

competitive position depends on protection of our intellectual property.

and protection of our intellectual property are critical to our business.

If we do not adequately protect our intellectual property,

or if competitors develop technologies incorporating the same or similar technologies that already are in the public domain, those competitors

may be able to develop similar technologies to our own.

Our success depends in part on our ability to obtain patent protection for our

diagnostic tests, therapeutic products, or processes in the U.S.

and other countries, protect trade secrets, and prevent others from

infringing on our proprietary rights.

patent applications in the U.S.

are maintained in secrecy for at least portions of their pendency periods (published on U.S.

patent issuance

or, if earlier, 18 months from earliest filing date for most applications) and since other publication of discoveries in the scientific

or patent literature often lags behind actual discoveries, we cannot be certain that we are or will be the first to make the inventions

to be covered by our patent applications.

The patent position of biopharmaceutical and biotechnology firms generally is highly uncertain

and involves complex legal and factual questions.

Patent and Trademark Office has not established a consistent policy regarding

the breadth of claims that it will allow in biotechnology patents.

patent applications we file, including applications that will follow the filing of provisional patents, may not issue as patents or the

claims of any issued patents may not afford meaningful protection for our technologies, tests, or products.

In addition, patents issued

to us or to any future licensors may be challenged and subsequently narrowed, invalidated, or circumvented.

Patent litigation is widespread

in the biotechnology industry and could harm our business.

Litigation might be necessary to protect our patent position or to determine

the scope and validity of third-party proprietary rights, and we may not have the required resources to pursue such litigation or to

protect our patent rights.

we have executed assignment of invention agreements with current scientific and technical employees and in the future will require our

scientific and technical employees and consultants to enter into broad assignment of invention agreements, and require all of our employees,

consultants, and corporate partners with access to proprietary information to enter into confidentiality agreements, these agreements

may not be honored.

tests and therapeutic products we develop could be subject to infringement claims asserted by others.

cannot assure that diagnostic tests and therapeutic products based on our patents or intellectual property that we license from others

will not be challenged by a third-party claiming infringement of its proprietary rights.

If we are not able to successfully defend patents

that may be issued to us, that we may acquire, or that we may license in the future, we may have to pay substantial damages or licensing

fees, possibly including treble damages, for past infringement.

may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming,

and ultimately unsuccessful.

may infringe our issued patents or other intellectual property.

To counter infringement or unauthorized use, we intend to file infringement

claims, which can be expensive and time consuming.

Any claims we assert against perceived infringers could provoke these parties to assert

counterclaims against us alleging that we infringe their intellectual property.

In addition, in a patent infringement proceeding, a court

may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly, or refuse

to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

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.

we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

addition to seeking patents for some of our technology, we also intend to rely on trade secrets, including unpatented know-how, technology,

and other proprietary information, to maintain our competitive position.

We have executed and will continue to seek to protect these

trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as

our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors, and other third

We also have executed and will continue to seek to enter into confidentiality and invention or patent assignment agreements

with our employees and consultants.

Despite these efforts, any of these parties may breach the agreements and disclose our proprietary

information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.

Our trade secrets may

also be obtained by third parties by other means, such as breaches of our physical or computer security systems.

a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome

is unpredictable.

In addition, some courts inside and outside the U.S.

are less willing or unwilling to protect trade secrets.

of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them,

or those to whom they communicate it, from using that technology or information to compete with us.

If any of our trade secrets were

to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

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.

are increasingly dependent upon information technology systems, infrastructure, and data to operate our business.

In the ordinary course

of business, we collect, store, and transmit confidential information (including but not limited to intellectual property, proprietary

business information, and personal information).

It is critical that we do so in a secure manner to maintain the confidentiality and

integrity of such confidential information.

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.

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 technology security initiatives and disaster recovery plans in place to mitigate our risk to these vulnerabilities, but these

measures may not be adequately designed or implemented to ensure that our operations are not disrupted or that data security breaches

do not occur.

To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications,

or inappropriate disclosure of confidential or proprietary information, we could incur liability and reputational damage.

and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks which may remain undetected until

after they occur.

We cannot assure you that our data protection efforts and our investment in information technology will prevent significant

breakdowns, data leakages, breaches in our systems, or other cyber incidents that could have a material adverse effect upon our reputation,

business, operations, or financial condition.

For example, if such an event were to occur and cause interruptions in our operations,

it could result in a material disruption of our programs and the development of our diagnostic tests and therapeutic product candidates

could be delayed.

In addition, the loss of clinical trial data for our diagnostic tests and therapeutic product candidates could result

in delays in our marketing approval efforts and significantly increase our costs to recover or reproduce the data.

Furthermore, significant

disruptions of our internal information technology systems or security breaches could result in the loss, misappropriation, and/or unauthorized

access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual

property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational

Like all businesses we may be increasingly subject to ransomware or other malware that could significantly disrupt our business

operations or disable or interfere with necessary access to essential data or processes.

Numerous recent attacks of this nature have

also involved exfiltration and disclosure of sensitive or confidential personal or proprietary information, or intellectual property,

when victim companies have not paid the cyber criminals substantial ransom payments.

For example, any such event that leads to unauthorized

access, use, disclosure, unavailability, or compromised integrity of personal or other sensitive or essential information, including

personal information regarding our clinical trial subjects or employees, could harm our reputation directly, compel us to comply with

federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, increase the costs

we incur to protect against such information security breaches, such as increased investment in technology, render key personnel unable

to perform duties or communicate throughout the organization, and otherwise subject us to fines and other liability under laws and regulations

that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational

damages that could potentially have an adverse effect on our business.

costs of mitigating cybersecurity risks are significant and are likely to increase in the future.

These costs include, but are not limited

to, retaining the services of cybersecurity providers;

compliance costs arising out of existing and future cybersecurity, data protection

and privacy laws and regulations;

and costs related to maintaining redundant networks, data backups and other damage-mitigation measures.

We also cannot be certain that our existing insurance coverage will continue to be available on acceptable terms or in amounts sufficient

to cover the potentially significant losses that may result from a security incident or breach or that the insurer will not deny coverage

of any future claim.

general economic or business conditions may have a negative impact on our business.

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

These factors, combined with low business and consumer confidence, could precipitate an economic slowdown and recession.

Additionally,

political changes in the U.S.

and elsewhere in the world have created a level of uncertainty in the markets.

If the economic climate

deteriorates, our business, as well as the financial condition of our suppliers and our third-party payors, could be adversely affected,

resulting in a negative impact on our business, financial condition, and results of operations.

due to increasing inflation, operating costs for many businesses have increased and in the future could impact demand or pricing manufacturing

of our drug candidates or services providers.

Inflation rates, particularly in the U.S., have increased recently to levels not seen in

years, and increased inflation may result in increases in our operating costs (including employee wages), reduced liquidity, and limits

on our ability to access credit or otherwise raise capital.

In addition, the Federal Reserve has raised, and may again raise, interest

rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may

have the effect of further increasing economic uncertainty and heightening these risks.

events involving reduced or limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions

or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events

of these kinds, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon

Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance

Corporation as receiver.

Although we did not have any cash or cash equivalent balances on deposit with Silicon Valley Bank, uncertainty

and liquidity concerns in the broader financial services industry remain, and the failure of Silicon Valley Bank and its potential near-

and long-term effects on the biotechnology industry and its participants, such as our vendors, suppliers, and investors, may also adversely

affect our operations and stock price.

addition, the global macroeconomic environment could be negatively affected by, among other things, a resurgence of COVID-19 or other

pandemics or epidemics, instability in global economic markets, increased U.S.

trade tariffs and trade disputes with other countries,

instability in the global credit markets, supply chain weaknesses, instability in the geopolitical environment as a result of the withdrawal

of the United Kingdom from the European Union, the Russian invasion of Ukraine, the war in the Middle East and other political tensions,

and foreign governmental debt concerns.

Such challenges have caused, and may continue to cause, uncertainty and instability in local

economies and in global financial markets.

are actively monitoring the effects these disruptions and increasing inflation could have on our operations.

These conditions make it

extremely difficult for us to accurately forecast and plan future business activities.

climate change and related regulations could negatively affect our business.

effects of climate change, such as extreme weather conditions, create financial risks to our business.

For example, the demand for our

products may be affected by unseasonable weather conditions.

The effects of climate change could also disrupt our operations by impacting

the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs.

We could also

face indirect financial risks passed through the supply chain and disruptions that could result in increased prices for our products

and the resources needed to produce them.

Related to the Operation of a CAP/CLIA Laboratory

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.

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.

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.

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.

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.

The loss of the technical knowledge and management and industry expertise of Dr.

Joyce or any of our key

personnel could result in delays in services, loss of customers and sales, and diversion of management resources, which could adversely

affect our operating results.

may be unable to effectively maintain equipment or generate revenue when its equipment is not operational.

effective service is essential to maintaining the reputation and high use rates of our CAP/CLIA laboratory, PPLS.

Although it has agreements

with a third-party equipment service providers pursuant to which such service providers maintain and repair its equipment, the agreement

does not compensate it for loss of revenue when its systems are not fully operational, and its business interruption insurance may not

provide sufficient coverage for the loss of revenue.

Also, third-party equipment service providers may not be able to perform repairs

or supply needed parts in a timely manner, which could result in a loss of revenue.

Therefore, if PPLS experiences more equipment malfunctions

than anticipated or if it is unable to promptly obtain the service necessary to keep its equipment functioning effectively, or where

its business or data is compromised on account of equipment malfunctions or a cybersecurity-related attack, PPLS’s ability to provide

services and to fulfill its contractual arrangements would be adversely affected and our revenue could decline.

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.

facilities and equipment could be harmed or rendered inoperable by natural or man-made disasters, including fire, earthquake, flooding,

and power outages, which may render it difficult or impossible for it to provide pathology services or perform our diagnostic assays

for some period of time.

The inability to of PPLS to perform its services for customers if PPLS’ facility is inoperable for even

a short period of time may result in the loss of customers or harm to its reputation or relationships with its customers, and it may

be unable to regain those customers or repair its reputation in the future.

Furthermore, PPLS’ facilities and the equipment it

uses to perform its services could be costly and time-consuming to repair or replace.

if PPLS’ current or future CLIA-certified, CAP-accredited, and state-licensed laboratory becomes inoperable or unqualified in any

way, it may not be able to license or transfer its technology to another facility with the necessary qualifications, including state

licensure and CLIA certification, under the scope of which its current assays and its planned future assays could be performed.

if PPLS finds a facility with such qualifications to perform its assays, it may not be available to PPLS on commercially reasonable terms.

date, substantially all of our revenue has been derived from the operations of the laboratory.

The inability of PPLS to perform its services

for its customers if PPLS’ facility is inoperable would significantly impact our ability to generate revenue.

relies on commercial courier delivery services to transport sputum samples for processing the CyPath ® Lung test in a timely

and cost-efficient manner, and if these delivery services are disrupted, its business will be harmed.

business depends on its ability to quickly and reliably deliver test results to its customers.

Sputum samples are received overnight

within the U.S.

for analysis at the laboratory facility located in San Antonio, Texas.

Disruptions in delivery service, whether due to

bad weather, natural disaster, terrorist acts or threats, or for other reasons could adversely affect specimen integrity and its ability

to process samples in a timely manner and to service its customers, and ultimately its reputation and its business.

In addition, if PPLS

is unable to continue to obtain expedited delivery services on commercially reasonable terms, its operating results may be adversely

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.

the ordinary course of its business, PPLS collects and stores sensitive data, including legally protected health information, credit

card information, and personally identifiable information, such as data collected in connection with the CyPath ® Lung

laboratory test results.

PPLS also stores sensitive intellectual property and other proprietary business information, including that

of its customers, payors, and collaboration partners.

PPLS manages and maintains its applications and data utilizing a combination of

on-site systems, managed data center systems, and cloud-based data center systems.

These applications and data encompass a wide variety

of business-critical information, including research and development information, commercial information, and business and financial

PPLS is highly dependent on information technology networks and systems, including the internet, to securely process, transmit,

and store this critical information.

Although its policies and practices adhere to the requirements of HIPAA and PPLS employs measures

to protect sensitive information from unauthorized access or disclosure, its information technology and infrastructure, and that of its

third-party billing and collections provider, may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance,

or other disruptions.

security breach or privacy violation that leads to disclosure or modification of or prevents access to patient information, including

personally identifiable information or protected health information, could harm PPLS’ reputation, compel PPLS to comply with state

breach notification laws, subject PPLS to mandatory corrective action, require PPLS to verify the correctness of database contents and

otherwise subject PPLS to liability under laws that protect personal data, resulting in increased costs or loss of revenue.

unable to prevent such security breaches or privacy violations or implement satisfactory remedial measures, its operations could be disrupted,

and it may suffer loss of reputation, financial loss, and other regulatory penalties because of lost or misappropriated information,

including sensitive patient data.

In addition, these breaches and other inappropriate access can be difficult to detect, and any delay

in identifying them may lead to increased harm of the type described above.

such breach or interruption could compromise PPLS’ networks, and the information stored there could be inaccessible or could be

accessed by unauthorized parties, publicly disclosed, lost, or stolen.

Any such interruption in access, improper access, disclosure,

modification of, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy

of personal information, such as HIPAA, and regulatory penalties.

Unauthorized access, loss, or dissemination could also disrupt PPLS’

operations, including its ability to perform tests, provide test results, bill payors or patients, process claims and appeals, provide

customer assistance services, conduct research and development activities, develop and commercialize tests, collect, process and prepare

company financial information, provide information about tests, educate patients and clinicians about services, and manage the administrative

aspects of its business, any of which could damage its reputation and adversely affect our business.

Any such breach could also result

in the compromise of PPLS’ trade secrets and other proprietary information, which could adversely affect our competitive position.

addition, the interpretation and application of health-related, privacy, and data protection laws in the U.S., Europe, and elsewhere

are often uncertain, contradictory, and in flux.

It is possible that these laws may be interpreted and applied in a manner that is inconsistent

with PPLS’ practices.

If so, this could result in government-imposed fines or orders requiring that it change its practices, which

could adversely affect our business and its reputation.

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.

PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages.

activities currently require the controlled use of potentially harmful chemicals.

PPLS cannot eliminate the risk of accidental contamination

or injury to employees or third parties from the use, storage, handling, or disposal of these materials.

In the event of contamination

or injury, PPLS could be held liable for any resulting damages, and any liability could exceed its resources or any applicable insurance

coverage it may have.

Additionally, PPLS is subject to, on an ongoing basis, federal, state and local laws and regulations governing

the use, storage, handling, and disposal of these materials and specified waste products.

The cost of compliance with these laws and

regulations may become significant and could have a material adverse effect on its, and therefore our, financial condition, results of

operations and cash flows.

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.

PPLS are unable to successfully scale its operations to support demand for CyPath ® Lung, its business could suffer.

test volume of CyPath ® Lung grows, PPLS will need to continue to ramp up its testing capacity, implement increases in

scale and related processing, customer service, billing and systems process improvements, and expand its internal quality assurance program

and technology platform to support testing on a larger scale.

PPLS will also need additional equipment and certified laboratory personnel

to process higher volumes of our tests.

We cannot assure you that any increases in scale, related improvements, and quality assurance

will be successfully implemented by PPLS or that equipment and appropriate personnel will be available.

As additional tests are developed,

PPLS may need to bring new equipment on-line, implement new systems, technology, controls and procedures, and hire personnel with different

qualifications.

value of CyPath ® Lung depends, in large part, on PPLS’ ability to perform the tests accurately and on a timely basis

and on its reputation for such timeliness and accuracy.

Failure to implement necessary procedures or to hire the necessary personnel

could impact its ability to meet market demand.

There can be no assurance that it will be able to perform tests on a timely basis at

a level consistent with demand, that its efforts to scale its commercial operations will not negatively affect the quality of test results,

or that it will be successful in responding to the growing complexity of testing operations.

addition, PPLS’ growth may place a significant strain on its management, operating and financial systems and its sales, marketing,

and administrative resources.

As a result of its growth, PPLS’ operating costs may escalate even faster than planned, and some

of its internal systems may need to be enhanced or replaced.

If we cannot effectively manage PPLS’ expanding operations and its

costs, we may not be able to grow effectively or we may grow at a slower pace, and our business could be adversely affected.

for PPLS’ services is complex, and PPLS must dedicate substantial time and resources to the billing process to be paid.

for clinical laboratory services is complex, time consuming and expensive.

Depending on the billing arrangement and applicable law, PPLS

bills various payors, including Medicare, insurance companies, and patients, all of which have different billing requirements.

bills third-party payors for its diagnostic assays and pursues reimbursement on a case-by-case basis where pricing contracts or Medicare

reimbursement is not in place.

To the extent laws or contracts require it to bill patient co-payments or co-insurance, PPLS must also

comply with these requirements.

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.

factors make the billing process complex, including:

reimbursement rates of payors;

with complex federal and state regulations related to billing Medicare;

of government audits related to billing Medicare;

among payors as to which party is responsible for payment;

in coverage and in information and billing requirements among payors, including the need for prior authorization and/or advanced

notification;

effect of patient co-payments or co-insurance;

to billing codes and/or coverage policies that apply to PPLS’ assays;

or missing billing information;

resources required to manage the billing and claims appeals process.

uses standard industry billing codes, known as Current Procedural Terminology (“CPT”) codes, to bill for its diagnostic assays.

These codes can change over time.

When codes change, there is a risk of an error being made in the claim adjudication process.

errors can occur with claims submission, third-party transmission, or in the processing of the claim by the payor.

Claim adjudication

errors may result in a delay in payment processing or a reduction in the amount of the payment received.

Coding changes, therefore, may

have an adverse effect on PPLS’ revenues.

There can be no assurance that payors will recognize these codes in a timely manner or

that the process of transitioning to such a code and updating their billing systems will not result in errors, delays in payments, and

a related increase in accounts receivable balances.

PPLS introduces new assays, PPLS will need to add new codes to its billing process as well as its financial reporting systems.

or delays in effecting these changes in external billing and internal systems and processes could negatively affect its collection rates,

revenue, and cost of collecting.

Additionally,

PPLS’ billing activities require its third-party billing provider to implement compliance procedures and oversight, train and monitor

its employees, challenge coverage and payment denials, assist patients in appealing claims, and require PPLS to undertake audits to evaluate

compliance with applicable laws and regulations as well as internal compliance policies and procedures.

Payors also conduct external

audits to evaluate payments, which add further complexity to the billing process.

If the payor makes an overpayment determination, there

is a risk that PPLS may be required to return some portion of prior payments it has received.

These billing complexities and the related

uncertainty in obtaining payment for its assays could negatively affect its revenue and cash flow, its ability to achieve profitability,

and the consistency and comparability of its, and therefore our, results of operations.

relies on a third-party billing provider and an in-house billing function to transmit claims to payors, and any delay in transmitting

claims could have an adverse effect on its revenue.

PPLS manages the overall processing of claims, it relies on a third-party billing provider to transmit the actual claims to payors based

on the specific payor billing format.

Claims processing could be delayed if its third-party provider makes changes to its invoicing system.

Additionally, coding for diagnostic assays may change, and such changes may cause short-term billing errors that may take significant

time to resolve.

If claims are not submitted to payors on a timely basis or are erroneously submitted, or if PPLS is required to switch

to a different provider to handle claim submissions, it may experience delays in its ability to process these claims and receipt of payments

from payors, or possibly denial of claims for lack of timely submission, which would have an adverse effect on its, and therefore our,

revenue and business.

Related to Intellectual Property Rights

property rights do not necessarily address all potential threats to our competitive advantage.

degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations

and may not adequately protect our business or permit us to maintain our competitive advantage.

may be able to make diagnostic tests and therapeutic product candidates that are the same as or similar to ours but that are not

covered by the claims of the patents that we own or have exclusively licensed;

or our licensors or future collaborators might not have been the first to make the inventions covered by the issued patent or pending

patent application that we own or have exclusively licensed;

or our licensors or future collaborators might not have been the first to file patent applications covering certain of our inventions;

may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual

property rights;

is possible that noncompliance with the U.S.

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;

is possible that our pending patent applications will not lead to issued patents;

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;

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;

may not develop additional proprietary technologies that are patentable;

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;

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

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;

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;

enforced, a court may not hold that our patents are valid, enforceable, and infringed.

in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability

to protect our diagnostic tests and therapeutic product candidates.

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.

Changes in either the patent laws or interpretation of the patent laws in the U.S.

could increase

the uncertainties and costs, and may diminish our ability to protect our inventions, obtain, maintain, and enforce our intellectual property

rights and, more generally, could affect the value of our intellectual property or narrow the scope of our owned and licensed patents.

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.

These include provisions that affect the way patent applications are prosecuted, redefine prior art, and provide more efficient and cost-effective

avenues for competitors to challenge the validity of patents.

These include allowing third-party submission of prior art to the USPTO

during patent prosecution and additional procedures to attack the validity of a patent by USPTO-administered post-grant proceedings,

including post-grant review, inter partes review, and derivation proceedings.

Further, because of a lower evidentiary standard

in these USPTO post-grant proceedings compared to the evidentiary standard in U.S.

federal courts necessary to invalidate a patent claim,

a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the

same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party

may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the

third party as a defendant in a district court action.

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.

March 2013, under the Leahy-Smith Act, the U.S.

transitioned to a “first inventor to file” system in which, assuming that

the other statutory requirements are met, the first inventor to file a patent application will be titled to the patent on an invention

regardless of whether a third party was the first to invent the claimed invention.

A third party that files a patent application in the

USPTO after March 2013, but before we file an application covering the same invention, could therefore be awarded a patent covering an

invention of ours even if we had made the invention before it was made by such third party.

This will require us to be cognizant going

forward of the time from invention to filing of a patent application, but circumstances could prevent us from promptly filing patent

applications on our inventions.

Since patent applications in the U.S.

and most other countries are confidential for a period of time

after filing or until issuance, we cannot be certain that we or our licensors were the first to either (1) file any patent application

related to our diagnostic tests and therapeutic product candidates and other proprietary technologies we may develop or (2) invent any

of the inventions claimed in our or our licensor’s patents or patent applications.

Even where we have a valid and enforceable patent,

we may not be able to exclude others from practicing the claimed invention where the other party can show that they used the invention

in commerce before our filing date.

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.

addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly

Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection

available in certain circumstances or weakening the rights of patent owners in certain situations.

Depending on future actions by the

Congress, the U.S.

courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents

could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents

that we might obtain in the future.

For example, in the 2013 case Assoc.

for Molecular Pathology v.

Myriad Genetics, Inc.

Supreme Court held that certain claims to DNA molecules are not patentable.

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.

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.

maintenance fees, renewal fees, annuities fees, and various other governmental fees on patents and/or patent applications are due to

be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent and/or patent application.

and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment, and other

similar provisions during the patent application process.

While an inadvertent lapse can in many cases be cured by payment of a late

fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment

or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Non-compliance

events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond

to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents.

If we fail to maintain the patents and patent applications covering our diagnostic tests or therapeutic product candidates, our competitive

position would be adversely affected.

terms may be inadequate to protect our competitive position on our diagnostic tests or therapeutic product candidates for an adequate

amount of time.

term of any individual patent depends on applicable law in the country where the patent is granted.

In the U.S., provided all maintenance

fees are timely paid, a patent generally has a term of 20 years from its application filing date or earliest claimed non-provisional

Extensions may be available under certain circumstances, but the life of a patent and, correspondingly, the protection it

affords is limited.

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.

Given the amount of time required for the development, testing, and regulatory

review and approval of new diagnostic test or therapeutic product candidates, patents protecting such candidates may expire before or

shortly after such candidates are commercialized.

As a result, our owned and licensed patent portfolio may not provide us with sufficient

rights to exclude others from commercializing diagnostic tests and therapeutic products similar or identical to ours.

patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO.

we or a licensee initiate legal proceedings against a third party to enforce a patent covering one of our diagnostic tests or therapeutic

product candidates, the defendant could counterclaim that the patent covering our diagnostic tests or therapeutic product candidate,

as applicable, is invalid and/or unenforceable.

In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or

unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of

Third parties may also raise similar claims before administrative bodies in the U.S.

or abroad, even outside the context of

Such mechanisms include re-examination, inter partes review, post grant review, and equivalent proceedings in foreign

jurisdictions (i.e., opposition proceedings).

Such proceedings could result in revocation or amendment to our patents in such a way that

they no longer cover our diagnostic tests or therapeutic product candidates.

The outcome following legal assertions of invalidity and

unenforceability is unpredictable.

With respect to the validity question, for example, we cannot be certain that there is no invalidating

prior art, of which we, our patent counsel, and the patent examiner were unaware during prosecution.

If a defendant were to prevail on

a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our

diagnostic tests or therapeutic product candidates.

Such a loss of patent protection could have a material adverse impact on our business.

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.

the U.S., a patent that covers an FDA-approved drug or biologic may be eligible for a term extension designed to restore the period of

the patent term that is lost during the premarket regulatory review process conducted by the FDA.

Depending upon the timing, duration,

and conditions of FDA marketing authorization of our diagnostic tests or therapeutic product candidates, one or more of our U.S.

may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman

Act”), which permits a patent term extension of up to five years for a patent covering an approved diagnostic test or therapeutic

product as compensation for effective patent term lost during diagnostic test or therapeutic product development and the FDA regulatory

review process.

A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of diagnostic

test or therapeutic product approval, and only claims covering such approved diagnostic test or drug product, a method for using it,

or a method for manufacturing it may be extended.

In Europe, our diagnostic test or therapeutic product candidates may be eligible for

term extensions based on similar legislation.

In either jurisdiction, however, we may not receive an extension if we fail to apply within

applicable deadlines, fail to apply prior to expiration of relevant patents, or otherwise fail to satisfy applicable requirements.

if we are granted such an extension, the duration of such extension may be less than our request.

If we are unable to obtain a patent

term extension, or if the term of any such extension is less than our request, the period during which we can enforce our patent rights

for that product will be in effect shortened, and our competitors may obtain approval to market competing diagnostic tests or products

The resulting reduction of years of revenue from applicable diagnostic tests or products could be substantial.

enjoy only limited geographical protection with respect to certain patents, and we may not be able to protect our intellectual property

rights throughout the world.

prosecuting, and defending patents covering our diagnostic tests and therapeutic product candidates in all countries throughout the world

would be prohibitively expensive, and even in countries where we have sought protection for our intellectual property, such protection

can be less extensive than it is in the U.S.

The requirements for patentability may differ in certain countries, particularly developing

countries, and the breadth of patent claims allowed can be inconsistent.

In addition, the laws of some foreign countries do not protect

intellectual property rights to the same extent as federal and state laws in the U.S.

In-licensing patents covering our diagnostic tests

and therapeutic product candidates in all countries throughout the world may similarly be prohibitively expensive, if such opportunities

are available at all.

And in-licensing or filing, prosecuting, and defending patents even in only those jurisdictions in which we develop

or commercialize our diagnostic tests and therapeutic product candidates may be prohibitively expensive or impractical.

Competitors may

use our and our licensors’ technologies in jurisdictions where we have not obtained patent protection or licensed patents to develop

their own diagnostic tests and therapeutic products and further may export otherwise infringing products to territories where we and

our licensors have patent protection, but where enforcement is not as strong as that in the U.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.

laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or regulations in the U.S.

Europe, and many companies have encountered significant difficulties in protecting and defending proprietary rights in such jurisdictions.

Moreover, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents,

trade secrets, or other forms of intellectual property, particularly those relating to biotechnology tests and products, which could

make it difficult for us to prevent competitors in some jurisdictions from marketing competing tests and products in violation of our

proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, are likely

to result in substantial costs and divert our efforts and attention from other aspects of our business, and additionally could put at

risk our or our licensors’ patents of being invalidated or interpreted narrowly, could increase the risk of our or our licensors’

patent applications not issuing, or could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that

we initiate, while damages or other remedies may be awarded to the adverse party, which may be commercially significant.

If we prevail,

damages or other remedies awarded to us, if any, may not be commercially meaningful.

Accordingly, our efforts to enforce our intellectual

property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we

develop or license.

Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we

cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our diagnostic

tests and product candidates.

Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate,

which may have an adverse effect on our ability to successfully commercialize our diagnostic tests and product candidates in all of our

expected significant foreign markets.

If we or our licensors encounter difficulties in protecting, or are otherwise precluded from effectively

protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights may be diminished,

and we may face additional competition in those jurisdictions.

some jurisdictions, including European countries, compulsory licensing laws compel patent owners to grant licenses to third parties.

In addition, some countries limit the enforceability of patents against government agencies or government contractors.

In these countries,

the patent owner may have limited remedies, which could materially diminish the value of such patent.

If we or any of our licensors are

forced to grant a license to third parties under patents relevant to our business, or if we or our licensors are prevented from enforcing

patent rights against third parties, our competitive position may be substantially impaired in such jurisdictions.

our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest,

and our business may be adversely affected.

current or future trademarks or trade names may be challenged, infringed, circumvented, declared generic or descriptive or determined

to be infringing on other marks.

We may not be able to protect our rights to these trademarks and trade names or may be forced to stop

using these names, which we need for name recognition by potential partners or customers in our markets of interest.

During trademark

registration proceedings, we may receive rejections of our applications by the USPTO or in other foreign jurisdictions.

we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections.

In addition, in the USPTO

and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications

and to seek to cancel registered trademarks.

Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks

may not survive such proceedings.

If we are unable to establish name recognition based on our trademarks and trade names, we may not

be able to compete effectively and our business may be adversely affected.

We may license our trademarks and tradenames to third parties,

such as distributors.

Although these license agreements may provide guidelines for how our trademarks and tradenames may be used, a breach

of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill

associated with our trademarks and trade names.

any name we have proposed to use with our therapeutic product candidate in the U.S.

must be approved by the FDA, regardless of whether

we have registered it, or applied to register it, as a trademark.

The FDA typically conducts a review of proposed product names, including

an evaluation of potential for confusion with other product names.

If the FDA, or an equivalent administrative body in a foreign jurisdiction,

objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort

to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third

parties and be acceptable to the FDA.

Furthermore, in many countries, owning and maintaining a trademark registration may not provide

an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark.

At times, competitors or other

third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly

leading to market confusion.

In addition, there could be potential trade name or trademark infringement claims brought by owners of other

registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.

trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party

against whom we have asserted trademark infringement has superior rights to the marks in question.

In this case, we could ultimately

be forced to cease use of such trademarks.

Related to Government Regulations

Lung is currently being offered as an LDT by PPLS.

Should the FDA disagree that CyPath ® Lung is an LDT, or if the

FDA’s regulatory approach to LDTs should change in the future, our commercialization strategy may be adversely affected, which

would negatively affect our results of operations and financial condition.

FDA considers an LDT to be a test that is developed, validated, and performed within a single laboratory.

The FDA has historically asserted

its authority to regulate LDTs as medical devices under the FDCA, but it has generally exercised enforcement discretion with regard to

This means that even though the FDA believes it can impose regulatory requirements on LDTs, such as requirements to obtain premarket

approval, de novo classification, or clearance of LDTs, it has generally chosen not to enforce those requirements.

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.

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.

policy makes it clear that the FDA intends to provide greater oversight of LDTs.

The FDA plans to finalize its ruling in April 2024 and

initiate a phased implementation process in which it will require laboratories to register their LDTs and begin the premarket review

process over the next four years.

Any future rulemaking, guidance, or other oversight of LDTs and clinical laboratories that develop

and perform them, if and when finalized, may affect the sales of our products and how customers use our products, and may require us

to change our business model in order to maintain compliance with these laws.

have been numerous legislative proposals to clarify the FDA’s regulatory authority over medical devices.

In 2021, two bills were

reintroduced in the U.S.

the Verifying Accurate, Leading-edge IVCT Development Act of 2020 (the “VALID Act”), which

would have expressly granted the FDA authority to regulate LDTs under a risk-based framework;

and the Verified Innovative Testing in

American Laboratories Act of 2020 (the “VITAL Act”), which would have assigned LDTs to regulation solely under CLIA and would

have directed CMS to update its CLIA regulations.

Neither of these bills were enacted.

The VALID Act was reintroduced in March 2023.

We cannot predict if either of these bills will be enacted in their current (or any other) form and cannot quantify the effect of these

bills on our business.

of legislation directing FDA to regulate LDTs or promulgation of new regulations for LDT oversight by FDA could materially and adversely

affect our business, financial condition, and results of operations.

If FDA premarket review, classification, or approval is required

for CyPath ® Lung before we obtain de novo classification, our phased strategy for market entry would be adversely

Our laboratory licensee, PPLS, could be forced to stop offering CyPath ® Lung as an LDT while we work to obtain

de novo classification.

Our business, results of operations, and financial condition would be negatively affected unless and until

such review were completed and our request for de novo classification were granted.

we do intend to conduct clinical trials in order to receive de novo classification from the FDA as a Class II in vitro diagnostic,

there can be no assurance that the trial will have favorable results or that it will generate the results necessary to obtain such clearance.

by or failure of the FDA to grant our request for de novo classification, or failure on our part to comply with applicable requirements,

would adversely affect our business, results of operations, and financial condition.

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 the second quarter

The FDA may not agree that CyPath ® Lung meets the criteria for de novo classification, in which case we

would be required to submit a PMA to obtain marketing authorization, which would require manufacturing information and a pre-approval

inspection of the manufacturing facilities and could require review by an FDA advisory panel comprised of experts outside the FDA.

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.

Additionally,

obtaining FDA marketing authorization, approval, or de novo classification for diagnostics can be expensive, time consuming and

uncertain, and for higher-risk devices can take several years and require detailed and comprehensive scientific and clinical data.

addition, medical devices are subject to ongoing FDA obligations and continued regulatory oversight and review.

Ongoing compliance with

FDA regulations increases the cost of conducting our business and subjects us to heightened regulation by the FDA and penalties for failure

to comply with these requirements.

by our laboratory to comply with applicable laws pertaining to LDTs or IVDs could adversely affect our business, results of operations,

and financial condition.

clinical laboratory testing sector is highly regulated in the U.S.

PPLS, our laboratory, is accredited by CAP and holds a CLIA certificate

of accreditation.

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.

Additionally,

certain states, including California, Maryland, Nevada, Pennsylvania, and Rhode Island, require laboratories testing specimens from their

jurisdictions to hold an out-of-state laboratory license or permit.

New York is exempt from, and imposes requirements in addition to,

CLIA, including a requirement for test-specific permits of LDTs before they can be used to test specimens from patients in New York.

The failure of our laboratory to obtain state licenses or permits, where required, could interfere with our strategy for a national rollout

of CyPath ® Lung.

Medical is providing the Acapella ® Choice Blue device to assist patients in expelling sputum out of the lungs into a collection

cup noninvasively.

This device is 510(k) cleared as a positive expiratory pressure device to help mobilize lung secretions in people

with certain lung conditions.

The device does not have a cleared indication for use as a specimen collection device.

Promotion of the

device by us or our partners for use of the device for specimen collection could cause the FDA to consider the device to be adulterated

or misbranded in violation of the FDCA and to require a 510(k) clearance for a specimen collection indication as a condition of distributing

Any disruption to our ability to distribute the Acapella ® Choice Blue could interfere with our ability to

collect adequate patient samples necessary for CyPath ® Lung.

Lung also relies on a proprietary algorithm to develop and validate software integrated into the test procedure that generates

the quantitative and qualitative diagnostic results that are included in the laboratory report.

Certain types of standalone diagnostics

software are subject to FDA regulation as a medical device (specifically, software as a medical device or “SaMD”) .

types of SaMD are subject to premarket authorization requirements.

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.

third-party licensors of our future therapeutic products, when ready, may be unable to obtain regulatory approval.

The denial or delay

of any such approval would delay commercialization of our future therapeutic products and have a material adverse effect on our potential

to generate revenue, our business, and our results of operations.

plan to license our therapeutic candidates to third parties for development including clinical testing, manufacturing, labeling, packaging,

approval, promotion, advertising, storage, recordkeeping, marketing, distribution, post-approval monitoring and reporting, and export

These activities that are to be undertaken by third-party licensees of our future therapeutic products are subject to extensive

regulation by the FDA and by foreign health authorities in other countries.

These regulations differ from country to country.

U.S., we are not permitted to market our therapeutic product candidates until we receive regulatory approval from the FDA.

of obtaining regulatory approval is expensive, often takes many years following research and development and thereafter the commencement

of clinical trials, and can vary substantially based upon the type, complexity, and novelty of the product candidates involved, as well

as the target indications and patient population.

Despite the time and expense invested in clinical development of product candidates,

regulatory approval is never guaranteed.

For our licensors to gain approval to market our product candidates, they must provide clinical

data that adequately demonstrate the safety and efficacy of the product for the intended indication.

We or any third party has not yet

obtained regulatory approval to market any of our product candidates in the U.S.

or any other country.

Our business depends upon licensing

our therapeutic products to third-party pharmaceutical companies that would obtain these regulatory approvals.

The FDA can delay, limit,

or deny approval of these product candidates for many reasons, including:

inability of our licensors to satisfactorily demonstrate that the product candidates have acceptable safety and efficacy profiles

for the requested indication;

FDA’s disagreement with the trial designs of our licensors or the interpretation of data from preclinical studies or clinical

population studied in the clinical trial may not be sufficiently broad or representative to assess safety in the full population

for which we seek approval;

licensors’ inability to demonstrate that clinical or other benefits of our product candidates outweigh any safety or other

perceived risks;

FDA’s determination that additional preclinical or clinical trials are required;

FDA’s non-approval of the formulation, labeling, or specifications of our product candidates;

FDA’s failure to accept the manufacturing processes, drug product characteristics, or facilities of third-party manufacturers

with which we or the third-party licensors contract;

potential for approval policies or regulations of the FDA to significantly change in a manner rendering clinical data related to

any therapeutic product candidate insufficient for approval.

if clinical testing approval of any regulatory filing for our product candidates eventually is completed, the FDA may grant approval

contingent on the performance of costly additional post-approval clinical trials.

The FDA may also approve our product candidates for

a more limited indication or a narrower patient population than the third party originally requested, and the FDA may not approve the

labeling that we believe is necessary or desirable for the successful commercialization of our product candidates.

If the FDA requires

the licensors to narrow the indications to smaller patient subsets, the market opportunities for our product candidates, if approved,

and the ability to generate revenues and royalties may be materially limited.

To the extent the licensors seeks regulatory approval in

foreign countries, they may face challenges similar to those described above with regulatory authorities in applicable jurisdictions.

and maintaining regulatory approval of our diagnostic tests or therapeutic product candidates in one jurisdiction does not mean that

we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

Failure to obtain regulatory

approval in foreign jurisdictions would prevent our product candidates from being marketed abroad.

addition to regulations in the U.S., to market and sell our diagnostic tests and therapeutic products in the EU, many Asian countries,

and other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements, both

from a clinical and manufacturing perspective.

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.

However, a failure or delay in obtaining regulatory approval in one jurisdiction

may have a negative effect on the regulatory approval process in others.

For example, even if the FDA grants marketing authorization

of a diagnostic test or therapeutic product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the

manufacturing, marketing, and promotion of the diagnostic test or therapeutic product candidate in those countries.

Approval procedures

vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the

U.S., including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted

by regulatory authorities in other jurisdictions.

In many jurisdictions outside the U.S., a diagnostic test or therapeutic product candidate

must be approved for reimbursement before it can be approved for sale in that jurisdiction.

In some cases, the price that we intend to

charge for our diagnostic tests or therapeutic products is also subject to approval.

A diagnostic test or therapeutic product candidate

that has been approved for sale in a particular country may not receive reimbursement approval in that country.

We may not be able to

obtain approvals from regulatory authorities or payor authorities outside the U.S.

on a timely basis, if at all.

may also submit marketing applications in other countries, such as countries in Europe or Asia.

We may not be able to file for regulatory

approvals and may not receive necessary approvals to commercialize our diagnostic tests or therapeutic products in any jurisdiction.

Regulatory authorities in jurisdictions outside of the U.S, have requirements for approval of diagnostic tests or therapeutic product

candidates with which we must comply prior to marketing in those jurisdictions.

Obtaining foreign regulatory approvals and compliance

with foreign regulatory requirements could result in significant delays, difficulties, and costs for us and could delay or prevent the

introduction of our diagnostic tests or therapeutic products in certain countries.

We do not have any diagnostic tests or therapeutic

product candidates approved for sale in any foreign jurisdiction, including international markets, and we do not have experience in obtaining

regulatory approval in international markets.

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.

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.

order to market any diagnostic test or therapeutic product outside of the U.S., we must establish and comply with numerous and varying

regulatory requirements of other countries regarding safety and efficacy.

Clinical trials conducted in one country may not be accepted

by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained

in any other country.

Approval procedures vary among countries and can involve additional diagnostic and therapeutic product testing

and validation and additional administrative review periods.

Seeking foreign regulatory approvals could result in significant delays,

difficulties, and costs for us and may require additional preclinical studies or clinical trials, which would be costly and time-consuming.

Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our diagnostic tests or

therapeutic products in those countries.

Satisfying these and other regulatory requirements is costly, time consuming, uncertain, and

subject to unanticipated delays.

In addition, our failure to obtain regulatory approval in any country may delay or have negative effects

on the process for regulatory approval in other countries.

We do not have any diagnostic test or therapeutic product candidate approved

for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international

If we fail to comply with regulatory requirements in international markets or fail to obtain and maintain required approvals,

our ability to realize the full market potential of our diagnostic tests or therapeutic products will be harmed.

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.

revenue prospects could be affected by changes in healthcare spending and policy in the U.S.

We operate in a highly regulated

industry, and new laws, regulations, judicial decisions, or new interpretations of existing laws, regulations, or decisions related to

healthcare availability, the method of delivery, or payment for healthcare tests, products, and services could negatively impact our

business, operations, and financial condition.

have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal, and state levels directed at

broadening the availability of healthcare and containing or lowering the cost of healthcare, including proposals aimed at lowering prescription

drug prices and increasing competition for prescription drugs, as well as additional regulation on pharmaceutical transparency and reporting

requirements, any of which could negatively impact our future profitability and increase our compliance burden.

We cannot predict the

initiatives that may be adopted in the future, including future challenges or significant revisions to the Affordable Care Act.

The continuing

efforts of the government, insurance companies, managed care organizations, and other payors to contain or reduce costs of healthcare

and/or impose price controls may adversely affect:

demand for our diagnostic tests or therapeutic product candidates, if we or our licensors obtain regulatory approval;

ability to set a price that we believe is fair for our diagnostic tests and therapeutic products;

ability to obtain coverage and reimbursement approval for a diagnostic test and therapeutic product;

ability to generate revenue and achieve or maintain profitability;

level of taxes that we are required to pay;

availability of capital.

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.

Related to Ownership of Our Common Stock and Warrants

do not expect to pay dividends in the foreseeable future.

Any return on investment may be limited to the value of our Common Stock.

do not anticipate paying cash dividends on our Common Stock in the foreseeable future.

The payment of dividends on our Common Stock will

depend on earnings, financial condition, and other business and economic factors affecting it at such time as our Board of Directors

(our “Board”) may consider relevant.

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.

Warrants may never have a market price that exceeds the exercise price.

Tradeable Warrant and Non-Tradeable Warrant that we issued in our initial public offering has an exercise price of $3.0625.

Warrant that we issued in March 2024 has an exercise price equal to $1.64.

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.

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.

holders of our Warrants acquire shares of Common Stock upon exercise thereof, such holders will have no rights with respect to the shares

of Common Stock underlying the Warrants other than as set forth in the Warrants.

Upon exercise of the Warrants, the holders will be titled

to exercise the rights of a stockholder only as to matters for which the record date occurs after the date they were entered in the register

of members of the Company as a stockholder.

warrant certificates governing our Warrants designate the state and federal courts of the State of New York sitting in the City of New

York, Borough of Manhattan, as the exclusive forum for actions and proceedings with respect to all matters arising out of the Warrants,

which could limit a Warrant holder’s ability to choose the judicial forum for disputes arising out of the Warrants.

warrant certificates governing our Warrants provide that all legal proceedings concerning the interpretations, enforcement, and defense

of the transactions contemplated by the warrant certificate (whether brought against a party to the warrant certificate or their respective

affiliates, directors, officers, shareholders, partners, members, employees, or agents) shall be commenced exclusively in the state and

federal courts sitting in the City of New York.

The warrant certificates further provide that we and the Warrant holders irrevocably

submit to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication

of any dispute under the warrant certificate or in connection with it or with any transaction contemplated by it or discussed in it.

Furthermore, we and the Warrant holders irrevocably waive, and agree not to assert in any suit, action, or proceeding, any claim that

we or they are not personally subject to the jurisdiction of any such court, that such suit, action, or proceeding is improper or is

an inconvenient venue for such proceeding.

With respect to any complaint asserting a cause of action arising under the Securities Act

or the rules and regulations promulgated thereunder, we note, however, that there is uncertainty as to whether a court would enforce

this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty

or liability created by the Securities Act or the rules and regulations thereunder.

Section 27 of the Exchange Act creates exclusive

federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations

As a result, the exclusive forum provision in the warrant certificates expressly does not apply to suits brought to enforce

any duty or liability created by the Exchange Act.

person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our Warrants

shall be deemed to have notice of and consented to the foregoing provisions.

Although we believe this exclusive forum provision benefits

us by providing increased consistency in the application of the governing law in the types of lawsuits to which it applies, the exclusive

forum provision may limit a Warrant holder’s ability to bring a claim in a judicial forum of its choosing for disputes with us

or any of our directors, officers, other employees, stockholders, or others which may discourage lawsuits with respect to such claims.

Our Warrant holders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder

as a result of this exclusive forum provision.

Further, in the event a court finds the exclusive forum provision contained in our Warrant

certificates to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in

other jurisdictions, which could harm our results of operations.

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.

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.

We are also obligated to hold a stockholders’

meeting 90 days after the closing date and, if approval is not obtained at the shareholders meeting, every three months thereafter seeking

approval of the exercise of the Warrants issued to the Purchasers .

The failure to take any of these actions will constitute a

default under the Securities Purchase Agreement.

financial and operational projections that we may make from time to time are subject to inherent risks.

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.

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.

failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our common stock.

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.

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.

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.

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.

Although the states are preempted from regulating the sale of covered securities, the federal

statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity,

then the states can regulate or bar the sale of covered securities in a particular case.

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.

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.

should consider an investment in our Common Stock risky and invest only if they can withstand a significant loss and wide fluctuations

in the market value of their investment.

Investors who purchase our Common Stock may not be able to sell their shares at or above the

purchase price.

Our stock price has been volatile and may be volatile in the future.

The stock market in general has been, and the market

price of our Common Stock or Tradeable Warrants in particular, will likely be subject to fluctuation, whether due to, or irrespective

of, our operating results and financial condition.

The market price of our Common Stock or Tradeable Warrants may fluctuate as a result

of a number of factors, some of which are beyond our control, including, but not limited to:

or anticipated variations in our and our competitors’ results of operations and financial condition;

acceptance of our diagnostic tests and therapeutic products;

mix of products that we sell and related services that we provide;

in earnings estimates or recommendations by securities analysts, if our Common Stock is covered by analysts;

of technological innovations or new competitive diagnostic tests or therapeutic products by others;

announcements

of technological innovations or new diagnostic tests or therapeutic products by us;

failure to achieve a publicly announced milestone;

between our expenditures to develop and market new or enhanced diagnostic tests or therapeutic products and the generation of sales

from those diagnostic tests and therapeutic products;

concerning intellectual property rights, including our involvement in litigation;

developments and the decisions of regulatory authorities as to the approval or rejection of new or modified diagnostic tests or therapeutic

in the amounts that we spend to develop, acquire, or license new diagnostic tests or therapeutic products, technologies, or businesses;

in our expenditures to promote our diagnostic tests or therapeutic products;

sale or proposed sale, or the sale by our significant shareholders, of our Common Stock or other securities in the future;

in key personnel;

or failure of our research and development projects or those of our competitors;

trading volume of our Common Stock;

economic and market conditions and other factors, including factors unrelated to our operating performance.

factors and any corresponding price fluctuations may materially and adversely affect the market price of our Common Stock or Tradeable

Warrants and result in substantial losses being incurred by our investors.

In the past, following periods of market volatility, public

company shareholders have often instituted securities class action litigation.

If we were involved in securities litigation, it could

impose a substantial cost upon us and divert the resources and attention of our management from our business.

Common Stock has often been thinly traded, so investors may be unable to sell at or near ask prices or at all if investors need to sell

shares to raise money or otherwise desire to liquidate their shares.

date, there have been many days on which limited trading of our Common Stock took place.

We cannot predict the extent to which investors’

interests will lead to an active trading market for our Common Stock or whether the market price of our Common Stock will be volatile.

If an active trading market does not develop, investors may have difficulty selling our Common Stock.

We are likely to be too small to

attract the interest of many brokerage firms and analysts.

We cannot give investors any assurance that an active public trading market

for our Common Stock will develop or be sustained.

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.

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.

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.

You are strongly urged to consult your own tax and other advisors prior

to investing, as neither we nor any of our officers, directors, or related parties can offer tax or similar advice, nor are any such

persons making any representations and warranties regarding such matters.

ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally

defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to

use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its

post-change income may be limited.

We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership,

including the completion of any offering taken together with other transactions we may consummate in the succeeding three-year period.

As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S.

taxable income may be subject to limitations, which potentially could result in increased future tax liability.

Certificate of Incorporation permits “blank check” Preferred Stock, which can be designated by our Board without stockholder

are authorized to issue 20,000,000 shares of Preferred Stock.

The shares of our Preferred Stock may be issued from time to time in one

or more series, each of which shall have a distinctive designation or title as is determined by our Board prior to the issuance of any

shares thereof.

The Preferred Stock may have such voting powers, full, enhanced or limited, or no voting powers, and such preferences

and relative, participating, optional, or other special rights and such qualifications, limitations, or restrictions thereof as adopted

by the Board, which may include enhanced dividend rights, rights of redemption, sinking funds to pay dividends, liquidation, and other

rights that would be different than, and preferential to, the rights of the Common Stockholders.

Because our Board is able to designate

the powers and preferences of the Preferred Stock without the vote of a majority of our stockholders, Common Stockholders will have no

control over what designations and preferences our Preferred Stock will have.

If Preferred Stock is designated and issued, then depending

upon the designation and preferences, the holders of the Preferred Stock may exercise voting control.

As a result, our stockholders would

have no control over the operations of our Company.

in our corporate charter documents and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders,

more difficult and may prevent attempts by our stockholders to replace or remove our current management.

in our certificate of incorporation, as amended (our “Charter”) and amended and restated bylaws (“A&R Bylaws”)

may discourage, delay or prevent a merger, acquisition, or other change in control, that stockholders may consider favorable, including

transactions in which you might otherwise receive a premium for your shares.

These provisions also could limit the price that investors

might be willing to pay in the future for shares of our Common Stock, thereby depressing the market price of our Common Stock.

because our Board is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts

by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our

Among other things, these provisions:

the authorized number of our directors to be changed only by resolution of our Board;

advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our Board;

that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written

our stockholders from calling a special meeting of our stockholders;

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.

because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the

“DGCL”), which prohibits a person who owns 15% or more of our outstanding voting stock from merging or combining with us

for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock,

unless the merger or combination is approved in a prescribed manner.

These provisions could discourage potential acquisition proposals

and could delay or prevent a change in control transaction.

They could also have the effect of discouraging others from making tender

offers for our Common Stock, including transactions that may be in your best interests.

These provisions may also prevent changes in

our management or limit the price that investors are willing to pay for our stock.

provisions in our Charter and A&R Bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading

price of our Common Stock.

Charter and A&R Bylaws contain provisions that could depress the trading price of our Common Stock by acting to discourage, delay,

or prevent a change of control of our Company or changes in our management that the stockholders of our Company may deem advantageous.

These provisions include the following:

the Board to establish the number of directors and fill any vacancies and newly created directorships;

the issuance of “blank check” preferred stock that our Board could use to implement a stockholder rights plan;

stockholders from calling special meetings of stockholders;

stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

that the Board is expressly authorized to adopt, amend, alter, or repeal our bylaws;

the forum for certain litigation against us to Delaware;

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.

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.

provisions of the DGCL may have anti-takeover effects that could delay, defer, or discourage another party from acquiring control of

the Company, prevent changes in our Board or management, and make certain transactions more challenging that stockholders might otherwise

believe to be in their best interests.

are subject to the provisions of Section 203 of the DGCL, which generally prohibits us from engaging in a “business combination,”

meaning a merger, asset sale, or other transaction resulting in a stockholder’s financial benefit, with an “interested stockholder”

for a three-year period following the time that such stockholder becomes an interested stockholder, unless the business combination is

approved in a manner prescribed by Section 203.

Section 203 defines an “interested stockholder” as a person who, together

with affiliates and associates, owns, or within three years did own, 15% or more of a corporation’s outstanding voting stock.

provisions may have the effect of delaying, deferring, or preventing changes in control of our Company and of averting changes in our

Board or management.

They are expected to discourage certain types of coercive takeover practices and inadequate takeover bids, and as

a consequence, they might also inhibit temporary fluctuations in the market price of our Common Stock that often result from actual or

rumored hostile takeover attempts.

These provisions could make it more difficult to accomplish transactions that stockholders might otherwise

deem to be in their best interests.

Charter designates a state or federal court located within the state of Delaware as the exclusive forum for substantially all disputes

between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us

or our directors, officers, or employees.

Charter provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law,

the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach

of a fiduciary duty owed by any of our directors, officers, stockholders, or employees to us or our stockholders, or (3) any action asserting

a claim arising pursuant to any provision of the DGCL, our Charter, or our A&R Bylaws or as to which the DGCL confers jurisdiction

on the Court of Chancery of the State of Delaware, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery

does not have jurisdiction, the federal district court for the District of Delaware) in all cases subject to the court having jurisdiction

over indispensable parties named as defendants.

These exclusive-forum provisions do not apply to claims under the Securities Act.

27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the

Exchange Act or the rules and regulations thereunder.

As a result, the exclusive forum provision will not apply to suits brought to enforce

any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability

created by the Securities Act or the rules and regulations thereunder.

However, our Charter and our A&R Bylaws contain a federal

forum provision which provides that unless we consent in writing to the selection of an alternative forum, the federal district courts

will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities

We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance

with the federal securities laws and the rules and regulations thereunder.

person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented

to this provision.

This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its

choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors,

officers, and other employees.

If a court were to find the exclusive forum provision in our Charter to be inapplicable or unenforceable

in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results

of operations.

limitation-of-liability and indemnification provisions in our Charter and A&R Bylaws may discourage stockholders from bringing a

lawsuit against our directors and officers for breaches of their fiduciary duties, may reduce the likelihood of derivative litigation

against our directors and officers, even though an action, if successful, might benefit the Company and other stockholders, and may adversely

impact stockholders’ investments to the extent that the Company pays the costs of settlement and damage awards against directors

and officers as required by these indemnification provisions.

Charter contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the DGCL.

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:

breach of the director’s duty of loyalty to us or our stockholders;

act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL;

transaction from which the director derived an improper personal benefit.

Charter and our A&R Bylaws require us to indemnify our directors and officers and allow us to indemnify other employees and agents

to the fullest extent permitted by the DGCL.

Subject to certain limitations and limited exceptions, our Charter and A&R Bylaws also

require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required

or permitted.

we believe that including the limitation-of-liability and indemnification provisions in our Charter, A&R Bylaws, and indemnification

agreements is necessary to attract and retain qualified persons such as directors, officers, and key employees, those provisions may

discourage stockholders from bringing a lawsuit against our directors and officers for breaches of their fiduciary duties.

They may also

reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit

us and other stockholders.

Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of

settlement and damage awards against directors and officers as required by these indemnification provisions.

management collectively owns a substantial percentage of our Common Stock.

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.

As a result, investors may be prevented from affecting matters involving our Company, including:

composition of our Board and, through it, any determination with respect to our business direction and policies, including the appointment

and removal of officers;

determinations with respect to mergers or other business combinations;

acquisition or disposition of assets;

corporate financing activities.

this concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business

combination that might otherwise be beneficial to our stockholders.

This significant concentration of share ownership may also adversely

affect the trading price for our Common Stock because investors may perceive disadvantages in owning stock in a company that is controlled

by a small number of stockholders.

securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price

and trading volume could decline.

trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about

us or our business.

Securities and industry analysts do not currently, and may never, publish research on our Company.

If no or only

very few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our Common

Stock would be negatively affected.

If one or more of the analysts who cover us downgrade our Common Stock or publish inaccurate or unfavorable

research about our business, our Common Stock price would likely decline.

If one or more of these analysts cease coverage of us or fail

to publish reports on us regularly, demand for our Common Stock could decrease, which might cause our Common Stock price and trading

volume to decline.

we fail to establish and maintain an effective system of internal control or disclosure controls and procedures are not effective, we

may not be able to report our financial results accurately and timely or to prevent fraud.

Any inability to report and file our financial

results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock.

internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.

Section 404 of the Sarbanes-Oxley

Act of 2002 (“SOX”) requires us to evaluate and report on our internal controls over financial reporting and, depending on

our future growth, may require our independent registered public accounting firm to annually attest to our evaluation, as well as issue

its own opinion on our internal controls over financial reporting.

The process of implementing and maintaining proper internal controls

and complying with Section 404 is expensive and time consuming.

We cannot be certain that the measures we will undertake will ensure

that we will maintain adequate controls over our financial processes and reporting in the future.

Furthermore, if we are able to rapidly

grow our business, the internal controls that we will need may become more complex, and significantly more resources will be required

to ensure our internal controls remain effective.

Failure to implement required controls or difficulties encountered in their implementation

could harm our operating results or cause us to fail to meet our reporting obligations.

If we or our auditors discover a material weakness

in our internal controls, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors’ confidence

in our financial statements and harm our stock price.

In addition, non-compliance with Section 404 could subject us to a variety of administrative

sanctions, including the suspension of trading, ineligibility for future listing on one of the Nasdaq Stock Markets or national securities

exchanges, and the inability of registered broker-dealers to make a market in our Common Stock, which may reduce our stock price.

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

What changed 10-K

Item 1A. Risk Factors