BIAF 10-K & 10-Q changes, risk factors and insider trading

As of December 31, 2024,2025, we had an accumulated deficit of $53.6$68.6 million and $1.1$6.4 million cash on hand. For the year 2024,2025, cash used in operations was $7.1$9.3 million and net loss was $9.0$14.9 million. Despite raising an additional $1.4 million in gross proceeds in February 2025 through a private placement offering, weWe 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. Our business plan includes includes expansion for our commercialization efforts which will require additional funding. If we are unable to improve our liquidity position, 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 relationship or grant, management anticipates that our cash resources are sufficient to continue operations through AprilJune 2025.2026. Our future is dependent upon the ability to obtain financing and upon future profitable operations from the development of new business opportunities. There 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, 2024,2025, has included an explanatory paragraph in its opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2024,2025, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.

We are a company with limited operating history, and our operations are subject to all of the risks inherent in establishing a new business enterprise. 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 aanatomical limitedlaboratory market launchservices offered by PPLS and the marketing of CyPath® Lung in Texas.Texas and the recent expansion into the Mid-Atlantic region and Veterans Administration. 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.

In addition, while we anticipate generating continued revenue from PPLS, our CAP-accredited, CLIA-certified clinical pathology laboratory, we do not expect to immediately derive substantive 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 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 PPLS laboratory 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.

We 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 2023 and2023, $9.4 million in 20242024, and $6.2 million in 2025 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.

We have a limited operating history operating a clinical laboratory, and the members of our management team have limited experience operating a CAP-accredited, CLIA-certified laboratory, which may limit the ability of investors to make an informed investment decision.

We began operating a clinical laboratory in September 2023. Previously, only our Chief Operating Officer, Xavier Reveles, had operated a CAP-accredited, CLIA-certified clinical laboratorylaboratory, and therefore it may be difficult for investors to analyze our ability to successfully operate a clinical laboratory. Our ability to generate revenue from the clinical laboratory will depend, in part, on our ability to attract and maintain customers and on the amount spent by the customers on such services. If our laboratory fails to attract customers and operate at sufficient capacity, our margins will suffer, and we may not be able to fund the costs we incur to operate it. The success of our clinical laboratory will also depend, in part, on our ability to attract and retain an appropriately skilled and sufficient workforce to operate the laboratory and our ability to comply with various quality standards and environmental, health and safety laws and regulations.

We have insufficient results for investors to use to identify historical trends. Investors should consider our prospects in light of the risk, expenses and difficulties we will encounter as an early-stage company with respect to operating a clinical laboratory. Our revenue and income potential for the clinical laboratory is unprovenunproven, and our business model is continually evolving. We are subject to the risks inherent to the operation of a new business enterprise and cannot assure you that we will be able to successfully address these risks.

Until we securecomplete FDAour clearanceprospective, forlongitudinal CyPath®clinical Lung as a Class II in vitro diagnostic,trial, we may encounter physicians who will not order an LDT.

We 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 thesome FDAphysicians or similar regulatory authorities outside the U.S., such as the European Medicines Agency.

PPLS is currently the only commercial laboratory offering CyPath® LungLung, and,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 DODmilitary observational study titled “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath® Lung Assay,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.

Our 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. Our 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.

We are highly dependent on the principal members of our management, scientific, and clinical teams, including Maria Zannes, J.D., our President and Chief Executive Officer, Xavier Reveles, MS, CG(ASCP)cm, our Chief Operating Officer, and J. Michael Edwards, our Chief Financial Officer, as well as Roby Joyce, M.D., the Medical Director of PPLS.Officer.

We will depend on third parties to manufacture our kits, reagentsreagents, and suppliessupplies, and helpto insupport certain commercialization and clinical development activities, including marketing support for our diagnostic teststests, and tothe design trial protocols, arrange for and monitor theof clinical trials, andthe collectarrangement and analyzeoversight of clinical trials, and the collection and analysis of data.

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

Our 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 CMS, the FDA FDA or foreign health authorities; (2) provide true, complete, and accurate information to CMS, the FDA or foreign health authorities; (3) comply with manufacturing standards we have established; (4) comply with healthcare fraud and abuse laws in the U.S. and similar foreign fraudulent misconduct laws; or (5) report financial information or data accurately or to disclose unauthorized activities to us.

Ensuring 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 consumingtime-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.

Continuing concerns over the U.S. healthcare system and energy costs, geopolitical issues, and the availability and cost of credit and government stimulus stimulus programs in the U.S. and other countries have contributed to increased volatility and diminished expectations for the global economy. economy. 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.

Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing trade, manufacturing, development, and investment in the countries where we currently conduct our business could adversely affect our business, reputation, financial condition, and results of operations. Changes or proposed changes in U.S. or other countries’ trade policies may result in restrictions and economic disincentives on international trade. The U.S. government has recently imposed, or is currently considering imposing, tariffs on certain trade partners. The impact of these tariffs is uncertain given recent court decisions; however, uncertainty can lead to greater instability. Tariffs, economic sanctions, and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S. goods. Further, any emerging protectionist or nationalist trends (whether regulatory- or consumer-driven) either in the U.S. or in other countries could affect the the trade environment. Our business, like many other corporations, would be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, the global economy, and our industry, and as a result, could have a material adverse effect on our business, financial condition, and results of operations.

Further, 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.

In 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 withdrawalRussian of the United Kingdom from the European Union, the Russian invasion of Ukraine, the warconflict 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.

PPLS’ future success will depend in part upon the continued relationships with existing customers, many of whom have developed professional relationships with pathologists who have established relationships with our customers. In particular, Roby Joyce, M.D. who is the Medical Director of PPLSpathologists and avice member of our Board of Directors, has a long-term relationship with certain PPLS clients. We cannot be assured that we will be able to retain his services. Although we have entered into a three-year employment agreement with him, there can be no assurance that the agreement will not be terminated prior to its expiration. We do not have an insurance policy on the life of Dr. Joyce, and we do not have “key person” life insurance policies for any of our other officers or advisors.versa. The loss of employees who have established business relationships with our clients could result in delays in services, loss of customers and sales, and diversion of management resources, which could adversely affect our operating results.

PPLS’ 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,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 uses standard industry billing codes, known as Current Procedural Terminology (“CPT”) codes, to bill for its diagnostic assays.assays and services. These codes can change over time. When codes change, there is a risk of an error being made in the claim adjudication process. These These 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.

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,our results of operations.

While 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,our and therefore our, revenue and business.

Since 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. The U.S. Patent and Trademark OfficeUSPTO has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents.

If we or a licensee initiateinitiates 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 a patent. Third parties may also raise similar claims before administrative bodies in the U.S. or abroad, even outside the context of litigation. 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.

PPLS currently offers CyPath® Lung is currently being offered as an LDT by PPLS. ShouldWhile a federal district court decision concluded FDA does not have jurisdiction to regulate LDTs, FDA could in the FDAfuture disagreedetermine that CyPath® Lung is not an LDT, or ifCongress thecould enact legislation FDA’sgranting regulatoryFDA approachauthority to LDTsregulate shouldLDTs, changewhich incould theadversely future,affect our commercialization strategy may be adversely affected, which wouldand negatively affect our results of operations and financial condition.

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

CyPath® 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”). Some types of SaMD are subject to medical device requirements, including in some cases 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.

In 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. ClearanceAuthorization by the FDA does not ensure approval by regulatory or payor authorities in other 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.

Even if we obtain FDA clearanceapproval of any of our diagnostic tests or therapeutic product candidates,candidates and obtain CMS validation for our diagnostic tests, 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.

The impact of changes to healthcare law and guidance, as well as other changes in the healthcare industry, and changes in healthcare spending is are currently unknown and may adversely affect our business model.

An investment in our Company generally,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.

Effective 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 that we will maintain adequate controls over our financial processes and reporting in the future. Furthermore, if we are able to rapidly grow 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 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.

OurCyPath® Lung, our first commercial diagnostic test, CyPath® Lung, addresses the need for noninvasive detection of early-stage lung cancer.cancer by detecting lung cancer as early as curative Stage 1A. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath® Lung to assist in their assessment of patients patients who are at high risk for lung cancer. The CyPath® Lung test enables physicians to more confidently identify patients who will likely benefit from timely intervention and more invasive follow-up procedures and those who are likely without lung cancer and should continue routine screening. CyPath® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs.

Commercial laboratory services, including CyPath©® Lung, are performed at our wholly owned subsidiary PPLS which we acquired by purchasing the the assets of Village Oaks Pathology Services, P.A., a Texas professional association d/b/a Precision Pathology Services, that included the the CAP-accredited and CLIA-certified commercial laboratory it owned. We now own and operate the clinical anatomic and clinical pathology laboratory. CyPath® Lung is offered for sale to physicians by PPLS.

On February 26, 2025, pursuant to the terms of a warrant inducement agreement (the “February Inducement Agreement”), we entered into with certain holders of existing warrants dated February 25, 2025, such holders exercised for cash (i) October Warrantswarrants to purchase an aggregate of up to 1,302,08243,402 shares of Common Stock,Stock issued on August 5, 2024 (the “August Warrants”), at the reduced exercise price of $0.58$17.40 per share, and (ii) August Warrantswarrants to purchase an aggregate of up to 1,136,39137,878 shares of Common Stock,Stock issued on October 21, 2024 (the “October Warrants”), at the reduced exercise price of $0.58$17.40 per share. We received aggregate gross proceeds of approximately $1.4 million, before deducting advisory fees and other expenses payable by us.it. In consideration of the immediate exercise of the October Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, we issued unregistered common warrants (the “February Warrants”) to purchase an aggregate of up to 2,926,166 97,538 shares of Common Stock (120% of the number of shares of Common Stock issuable upon exercise of the October Warrants and August Warrants) to such holders.

We have never been profitable, and as of December 31, 2024,2025, we had a working capital deficitsurplus of $0.4$4.7 million and an accumulated deficit deficit of approximately $53.6$68.6 million. We expect to continue to incur significant operating losses for the foreseeable future as we continue continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to accelerating sales of CyPath® Lung and cost-saving measures we recently instituted at PPLS. We intend to seek strategic partners for our therapeutic discoveries related to selective broad-spectrum cancer treatments through pre-clinical and clinical development.

Operating expenses totaled $18.3$16.7 million and $10.5$18.3 million for the years ended December 31, 20242025 and 2023,2024, respectively. The increasedecrease in operating expenses is the result of the following factors.

Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment equipment, and allocated shared facilities. Direct costs and expenses totaled approximately $6.0$4.2 million and $1.7$6.0 million during 2024the years ended December 31, 2025 and 2023,2024, respectively. The increasedecrease of approximately $4.3$1.8 million,million orfor 244%, 2025 compared to 2024 was primarily attributable to the laboratorytargeted strategic actions which occurred in March 2025, aimed at streamlining operations ofand PPLSreducing beingcosts owned for the full fiscal year 2024, comparedrelated to approximatelyour 3.5 monthslab in fiscal year 2023.operations.

Our research and development expenses consist primarily of expenditures for lab operations, preclinical studies, compensation, and consulting consulting costs. Research and development expenses remained consistent year-over-year, totaling $1.4 million and $1.5 million for the years ended December 31, 20242025 and 2023.2024, respectively.

Clinical development expenses totaled $321,655approximately $706,000 and $256,661$322,000 for the years ended December 31, 20242025 and 2023,2024, respectively. The increase of $64,994,approximately $384,000, or 25%119%, for the year ended December 31, 2025, compared to the same period in 2024 was primarily attributable to an increase in compensationprofessional costs andfees benefitsin as2025 werelated addedto clinicmanaging developmentour personnel.clinical strategy for our pivotal clinical trial.

Our selling, general and administrative expenses consist primarily of expenditures related to employee compensation, selling and marketing costs, legal, accounting and tax, and other professional services, and general operating expenses.

Selling, general and administrative expenses totaled approximately $9.9 million and $6.8$9.9 million for theeach yearsyear ended December 31, 20242025 and 2023, 2024, respectively. TheOur selling, general and administrative costs stayed level despite an increase of approximately $3.1$1.0 million,million orin 46%costs wasrelated primarily attributable to the laboratory operationsaddition of PPLSpersonnel beingand owned for the full fiscal year 2024, comparedservices to approximatelysupport 3.5 months in fiscal year 2023. Additionally, the increase was due to the expansionsales of salesour effortsdiagnostic fortest, CyPath® Lung, partiallyoffset offset by adecreases reductionin expenses from targeted strategic actions aimed at streamlining operations and reducing costs in legalour andlab professional fees.operations.

InterestOther incomeIncome (expenseExpense)

On February 26, 2025, pursuant to the terms of a warrant inducement agreement (the “February Inducement Agreement”), we entered into with certain holders of existing warrants dated February 25, 2025, such holders exercised for cash (i) Octoberwarrants to purchase an aggregate of up to 43,402 shares of Common Stock issued on August 5, 2024 (the “August Warrants”), at the reduced exercise price of $17.40 per share, and (ii) warrants to purchase an aggregate of up to 1,302,08237,878 shares of Common Stock,Stock issued on October 21, 2024 (the “October Warrants”), at the reduced exercise price of $0.58$17.40 per share, and (ii) August Warrants to purchase an aggregate of up to 1,136,391 shares of Common Stock, at the reduced exercise price of $0.58 per share. We received aggregate gross proceeds of approximately $1.4 million, before deducting advisory fees and other expenses payable by us.it. In consideration of the immediate exercise of the October Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, we issued unregistered common warrants to purchase an aggregate of up to 2,926,16697,538 shares of Common Stock (120% of the number of shares of Common Stock issuable upon exercise of the October Warrants and August Warrants) to such holders.

We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue. During 20242025 and 2023,2024, we had net losses of $9.0$14.9 million and $7.9$9.0 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $53.6$68.6 million as of December 31, 2024.2025. Based on our current expected level of operating expenditures and the cash on hand of approximately $390$4.0 thousandmillion at the time of this filing, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying consolidated financial statements. 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 AprilJune 2025.2026.

Cash and cash equivalents were approximately $1.1 $6.4 million as of December 31, 2024, which does not take into account the gross proceeds of $1.4 million that we received in February 2025. We need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or through exercised outstanding warrants to support our future operations. Our 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. There can be no assurance that we will be successful in accomplishing these objectives.

Net cash used in operating activities was approximately $7.3$9.3 million and $6.0$7.3 million for the years ended December 31, 20242025 and 2023,2024, respectively. The increase of approximately $1.3$2.0 million in cash used by operations during the years ended December 31, 2025, compared to the same period in 2024 was primarily attributable to thean laboratoryincrease operations of PPLS$5.9 beingmillion ownedin forour theloss fullfrom fiscaloperations, yeara 2024,decrease in accounts payable and accrued expenses by $0.5 million offset by a decrease in accounts receivable by $0.9 million compared to approximatelythe 3.5prior monthsyear, decrease in stock compensation by $0.3 million, decrease in fiscaldepreciation yearand 2023.amortization Additionally,by $0.1 million, and a fair value adjustment to the warrant increase wasliability dueby $3.8 million related to the expansionMay of2025 saleswarrant efforts for CyPath® Lung.agreement.

Prior to 2022, we had not generated any revenue. During the threesix months ended MarchJune 31,30, 2026, we generated revenue of approximately $1.4$2.9 million, and $6.2 million during the year ended December 31, 2025.

Even 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 our value 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 ouroperations. operations. A decline in our value could also cause you to lose all or part of your investment.

As of MarchJune 31,30, 2026, we had an accumulated deficit of $72.2$75.6 million and $3.1$2.4 million cash on hand. As of MayAugust 4,3, 2025,2026, our cash and cash equivalents were $1.7$1.0 million. Despite our recent financings, we will 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. Our 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 JuneAugust 2026. 2026. Based on our current expected level of operating expenditures, current expected levels of revenue, and the cash and cash equivalents on hand at MarchJune 31,30, 2026, of $3.1$2.4 million, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report. Our future is dependent upon our 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, 2025, has included an explanatory paragraph in its opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2025, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.

Data as of and for the three and six months ended MarchJune 31,30, 2026 and 2025, has been derived from our unaudited condensed consolidated financial statements statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.

Through our wholly owned subsidiary, OncoSelect® Therapeutics, LLC, we have conducted research that has led to discoveries and advancement of novel cancer therapeutic approaches that specifically and selectively target cancer cells. We expectwill continue to present our findings at academic and industry conferences and expect to publish our research findings in thepeer-reviewed near future.journals. We intend to seek strategic partners as we progress into in vivo studies to develop our therapeutictherapeutics discoveries whichtargeted couldat resultsquamous inand broad-spectrumbasal cancercell treatmentsskin in the future.cancers.

Research and optimization of our platform technologies are now conducted in laboratories at our wholly owned subsidiary PPLS and leased laboratory space at The University of Texas at San Antonio.space.

Key financial results for the threesix months ended MarchJune 31,30, 2026, include:

To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath® Lung. As a result, since our inception in 2014, we have funded our operations principally through private and public sales of our equity, issuance of debt, and the exercise of outstanding warrants and stock options. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $2.4 million. As of August 3, 2026, we had cash and cash equivalents of $3.0 million. As of May 4, 2026, we had cash and cash equivalents of $1.7$1.0 million, which we expect will support our operations through JuneAugust 2026. We have incurred significant losses and negative cash flows from operations since inception and expect to continue to incur losses and negative cash flows for the foreseeable future. Based on the Company’s current expected level of operating expenditures and the cash and cash equivalents on hand at March 31,June 30, 2026, management concludes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying condensed consolidated financial statements.

Prior to acquisition of the clinical pathology laboratory by PPLS, Village Oaks, under the trade name Precision Pathology Services, had licensed and developed CyPath® Lung as a laboratory developed test (“LDT”) for sale to physicians. The license agreement provided that revenues from the sale would be split evenly between the Company and Village Oaks. In the second quarter of 2022, prior to the acquisition, we started to recognize revenue as part of a limited beta market testing program of the CyPath® Lung test. We have never been profitable, and as of MarchJune 31,30, 2026, we had a working capital of approximately $1.2 million and an accumulated deficit of approximately $72.2$75.6 million. We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials.

Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

Net loss for the three months ended MarchJune 31,30, 2026, was approximately $3.6$3.4 million, compared to a net loss of approximately $2.7$4.1 million for for the three months ended MarchJune 31,30, 2025.

1 Patient services fees include direct billing for CyPath® Lung diagnostic test of approximately $361,000tests and $169,000 foranatomical the three months ended March 31, 2026testing and 2025,pathology services respectively.wholly unrelated to CyPath® Lung including those services discontinued due to unprofitability.

Operating expenses totaled approximately $5.0$4.8 million and $4.5$3.8 million forduring the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase increase in operating expenses is the result of the following factors:

Our direct costs and expenses areconsist primarily of direct labor for pathology services, laboratory supplies and reagents, laboratory equipment, and allocated shared facilities. Direct costs and expenses totaled $0.9$1.1 million and $1.4$1.0 million during the three months ended MarchJune 30, 31, 2026 and 2025, respectively. The decreasecosts ofwere approximately $439,000, or 32%, for 2026consistent compared to 2025the wassame primarilyperiod in prior year, with an increase of $70,000 attributable to the targetedaddition strategicof actionspersonnel whichto occurredprocess in March 2025, aimed at streamlining operations and reducing coststests related to the sale of CyPath® Lung, as well as to process tests related to our lab operations.clinical study.

Research and development expenses totaled approximately $349,000$362,000 and $367,000$311,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decreaseincrease of $18,000,$50,000, or 5%,16%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025 was primarily attributable to aan decreaseincrease in compensationlab supplies and moving costs andrelated benefitsto andrelocating labour supplies.laboratory facilities in June 2026.

Clinical development expenses totaled approximately $334,000$476,000 and $138,000$129,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase of $196,000,$347,000, or 141%,268%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025 was primarily attributable to beginningopening clinical trial sites and enrolling patients in our pivotallongitudinal clinical trial.trial opened in March 2026. As of June 30, 2026, 11 clinical sites have been activated for enrollment, including nine Department of Veterans Affairs (VA) and military medical centers that have begun patient enrollment. Financial support for the trial has been provided by t he John P. Murtha Cancer Center Research Program (MCCRP), a research program within the Department of Surgery at the Uniformed Services University of the Health Sciences in Bethesda, Maryland.

Selling, general and administrative expenses totaled approximately $3.2$2.9 million and $2.5$2.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase of approximately 790,000,$644,000, or 32%,29%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025 was primarily attributable to an increase in employeestock compensation relatedexpense, to administrativesales and salesmarketing costs due to additional personnel personnel and support services to support the growth ofexpand sales of our diagnostic test, CyPath® Lung.

Depreciation and amortization expenses totaled $115,000$62,000 and $155,000$113,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease of approximately 40,000,$51,000, or 26%,46%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025 was primarily attributable to the termination of a financing lease in April 2025 due to the Company’s targeted strategic actions announced in March 2025.

InterestDirect incomecosts (expense)and expenses

To date, we have funded our operations primarily from the private and public sales ofthrough our equity,IPO, exercise of stock options and warrants, and the issuancesale of debt,our securities, resulting in gross proceeds of approximately $58.2$61.4 million. We have evaluated whether there are conditions and events that raise substantial doubt about our ability to continue as a going concern for at least one year after the date the condensed consolidated financial statements are issued.

We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue. For the threesix months ended endedJune March 31,30, 2026 and 2025, we had net losses of $3.6$7.0 million and $2.7$6.7 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $72.2$75.6 million as of MarchJune 31,30, 2026. Despite our recent financing in 2025,June 2026 in which we raised gross proceeds of $3.2 million, we believe our current cash and anticipated revenue from operations will not be sufficient to support our operations through June August 2026. Based on our current expected level of operating expenditures, current expected levels of revenue, and the cash and cash equivalents on hand at MarchJune 31,30, 2026, of $3.0$2.4 million, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report. We need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or through exercised outstanding warrants to support our future operations unless our revenue increases significantly. Our 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. There can be no assurance that we will be successful in accomplishing these objectives.

Net cash used in operating activities was approximately $3.2$6.4 million and $1.6$4.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increase of approximately $1.6$2.4 million in cash used by operations during the threesix months ended MarchJune 31, 30, 2026, compared to the same period in 2025 was primarily attributable to an increase of approximately$0.3 $970,000million in our loss from operations, operations offset by a decrease ofin approximatelyaccounts receivable $352,000by related$1.1 million compared to stockthe compensationprior and depreciation and amortization, an increase in patient accounts receivables of approximately $318,000, offset byyear, an increase of approximatelystock $20,000based incompensation accountsof payable$0.3 million compared to the prior year, and accrued expenses.a fair value adjustment to the warrant liability by $1.1 million related to the May 2025 warrant agreement.

We used approximately $6,000$96,000 for the threesix months ended MarchJune 31,30, 2026, in investing activities related primarily to the purchase of computer and laboratorylab equipment, compared to $51,000approximately $64,000 used in investing activities for the threesix months ended MarchJune 31,30, 2025.

Net Cash UsedProvided inby Financing Activities

Cash used provided in financing activities was approximately $0.1$2.5 million compared to cash provided by financing activities of approximately $1.0 $4.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The change isin proceeds from prior year was primarily attributablerelated to net proceeds from the additionalequity capital raised during the first quartertransactions of 2025$2.7 million offset by payments for loans and finance leases of $0.1 million, compared to no capital raises in the firstprior quarteryear net proceeds of 2026.$4.4 million offset by payments for loans and finance leases of $0.2 million.

We enter into contracts in the normal course of business with third-party contract organizations for clinical trials and other services and products used for research and development and operating purposes. These contracts generally provide for termination following a certain period after notice, and therefore we believe that any non-cancelablenon-cancellable obligations under these agreements are not material.

We follow accounting considerations of CECL - Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. With the acquisition of PPLS and control of Village Oaks, the Company’s board-certified pathologists provide anatomic and clinical pathology services for patients and other customers. The Company’s other customer types include contract research organizations (“CRO’sCROs”), hospitals, and independent laboratories. The majority of the Company’s revenues stem from fees for services provided to patients, and thus, in those arrangements, the patient is the customer, although the services may be requested by a physician on the patient’s behalf. Furthermore, in addition to its contracts with patients, the Company separately contracts with third-party payors (insurance companies and governmental payors), who are typically responsible for all or the majority of the fees agreed upon for such services provided to patients. Historically, material amounts of gross charges are not collected due to various agreements with insurance companies, capped pricing levels for government payorspayors, and uncollectible balances from individual payers. To estimate these allowances of credit losses, the Company assesses the portfolio risk segments and historical data on collection rates. These estimated allowances offset patient revenues and accounts receivables.

We follow Leases (“ASC 842”).842, Leases. In February 2016, the FASB issued Topic ASC 842, under which a lessee is required to recognize most leases on its balance sheet. The Company has elected to apply a third-party valuation incremental borrowing rate (“IBR”) as the discount rate by class of underlying assets when the rate is not implicit in the lease.