bioAffinity Technologies(BIAF) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. This section presents unaudited condensed consolidated financial statements and notes, detailing financial position, performance, and accounting policies - The financial statements include Condensed Consolidated Balance Sheets, Unaudited Condensed Consolidated Statements of Operations, Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity, Unaudited Condensed Consolidated Statements of Cash Flows, and Notes to Unaudited Condensed Consolidated Financial Statements[15][16][18] Key Financial Position Data (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--------------------------------- | :------------------------ | :---------------- | | Total assets | $4,751,075 | $6,513,667 | | Total liabilities | $6,887,183 | $3,911,631 | | Total stockholders' equity (deficit) | $(2,136,108) | $2,602,036 | Key Operating Results (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | | :--------------------------------- | :--------- | :--------- | | Net revenue | $3,123,080 | $4,804,043 | | Net loss | $(6,721,204) | $(4,072,094) | | Net loss per common share, basic and diluted | $(0.20) | $(0.38) | Key Cash Flow Data (Six Months Ended June 30) | Activity | 2025 (USD) | 2024 (USD) | | :--------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(4,288,981) | $(3,878,400) | | Net cash provided by financing activities | $4,050,738 | $1,927,813 | | Cash and cash equivalents at end of period | $802,835 | $801,311 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--------------------------------- | :------------------------ | :---------------- | | Cash and cash equivalents | $802,835 | $1,105,291 | | Accounts and other receivables, net | $421,869 | $1,139,204 | | Total current assets | $1,668,826 | $2,695,098 | | Total assets | $4,751,075 | $6,513,667 | | Accounts payable | $1,169,837 | $987,311 | | Accrued expenses | $1,048,034 | $1,398,722 | | Warrant liability | $3,974,911 | — | | Total liabilities | $6,887,183 | $3,911,631 | | Accumulated deficit | $(60,365,514) | $(53,644,310) | | Total stockholders' equity (deficit) | $(2,136,108) | $2,602,036 | Unaudited Consolidated Statements of Operations Unaudited Consolidated Statements of Operations (Three and Six Months Ended June 30) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $1,269,483 | $2,397,652 | $3,123,080 | $4,804,043 | | Total operating expenses | $3,785,043 | $4,485,450 | $8,265,779 | $8,837,071 | | Loss from operations | $(2,515,560) | $(2,087,798) | $(5,142,699) | $(4,033,028) | | Change in fair value of warrants issued | $(1,062,818) | — | $(1,062,818) | — | | Net loss | $(4,060,787) | $(2,110,279) | $(6,721,204) | $(4,072,094) | | Net loss per common share, basic and diluted | $(0.17) | $(0.19) | $(0.20) | $(0.38) | | Weighted average common shares outstanding | 24,021,546 | 11,389,308 | 20,148,211 | 10,655,483 | Unaudited Consolidated Statements of Changes in Stockholders' Equity Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Stockholders' Equity (Deficit) | | :-------------------------- | :------- | :------------------ | :----------------------- | :-------------------- | :----------------------------- | | Balance at Dec 31, 2024 | 15,227,619 | $106,593 | $56,139,753 | $(53,644,310) | $2,602,036 | | Stock-based compensation expense | 294,068 | $2,059 | $536,164 | — | $538,223 | | Sale of common stock, net | 7,784,904 | $54,494 | $187,834 | — | $242,328 | | Exercise of stock warrants | 4,870,010 | $34,090 | $1,524,486 | — | $1,558,576 | | Offering costs | — | — | $(356,067) | — | $(356,067) | | Net loss | — | — | — | $(6,721,204) | $(6,721,204) | | Balance at June 30, 2025 | 28,176,601 | $197,236 | $58,032,170 | $(60,365,514) | $(2,136,108) | Unaudited Consolidated Statements of Cash Flows Unaudited Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 (USD) | 2024 (USD) | | :--------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(4,288,981) | $(3,878,400) | | Net cash used in investing activities | $(64,213) | $(69,672) | | Net cash provided by financing activities | $4,050,738 | $1,927,813 | | Net decrease in cash and cash equivalents | $(302,456) | $(2,020,259) | | Cash and cash equivalents at beginning of period | $1,105,291 | $2,821,570 | | Cash and cash equivalents at end of period | $802,835 | $801,311 | Notes to Condensed Consolidated Financial Statements - The notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering operations, significant accounting policies, financial instrument valuations, lease obligations, equity activities, and subsequent events[26] - bioAffinity Technologies develops noninvasive diagnostics for early-stage lung cancer (CyPath Lung) and other lung diseases using flow cytometry and AI, and is also developing therapeutic discoveries for broad-spectrum cancer treatments[27] - The company had an accumulated deficit of approximately $60.4 million at June 30, 2025, and cash and cash equivalents of approximately $0.8 million, raising substantial doubt about its ability to continue as a going concern for at least twelve months[31] Net Revenue by Source (Six Months Ended June 30) | Revenue Source | 2025 (USD) | 2024 (USD) | | :--------------------------------- | :--------- | :--------- | | Patient service fees | $2,512,449 | $4,209,955 | | Histology service fees | $572,358 | $530,053 | | Medical director fees | $33,897 | $33,193 | | Department of Defense observational studies | — | $6,923 | | Other revenues | $4,376 | $23,919 | | Total net revenue | $3,123,080 | $4,804,043 | - Direct billing for CyPath Lung diagnostic test was approximately $323,000 for the six months ended June 30, 2025, an increase from $199,000 in the prior year[43] - The company's outstanding warrants totaled 28,193,118 at June 30, 2025, with a weighted average exercise price of $1.44. A warrant liability of $3,974,911 was recorded at June 30, 2025, primarily due to the May 2025 public offering and a $1.1 million change in fair value[81][93][65] - Subsequent events include stockholder approval for a reverse stock split and an increase in authorized common stock, a Nasdaq non-compliance notice regarding bid price and stockholders' equity, and further private placement and warrant inducement agreements in August 2025[96][97][99] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management discusses the company's financial condition, operations, and liquidity, highlighting performance and going concern issues - The company's core business involves developing noninvasive diagnostics for early-stage lung cancer (CyPath Lung) and other lung diseases using flow cytometry and AI, alongside advancing novel cancer therapeutic approaches[104][105][107] - CyPath Lung testing revenue increased approximately 62% to $323,000 for the six months ended June 30, 2025, compared to $199,000 for the same period in 2024[110] - Consolidated revenue decreased approximately 35% to $3.1 million for the six months ended June 30, 2025, from $4.8 million in 2024, primarily due to strategic actions to discontinue certain unprofitable pathology services[110] - The net loss for the six months ended June 30, 2025, was approximately $6.7 million, an increase from $4.1 million in the prior year, largely due to a $1.1 million loss on remeasurement of warrant liability[143][158] - The company faces substantial doubt about its ability to continue as a going concern, with cash and cash equivalents of $0.8 million at June 30, 2025, expected to support operations only through August 2025, necessitating further capital raises[127][160] Company Overview - bioAffinity Technologies develops noninvasive diagnostics for early-stage lung cancer (CyPath Lung) and other lung diseases using flow cytometry and AI, and is advancing novel cancer therapeutic approaches[104][105][107] - CyPath Lung sales in July 2025 represented a 72% increase over the previous monthly average for the first six months of 2025, with the company reaffirming a forecast of 3X year-over-year revenues for CyPath Lung[111] - Recent patent awards include grants in China for a novel cancer-killing composition and method, and an allowance in Canada for lung disease detection via flow cytometry[117][119][120] - The company received a Nasdaq notice on August 7, 2025, for non-compliance with the minimum bid price ($1) and minimum stockholders' equity ($2.5 million) requirements, and has requested a hearing appeal[126] Results of Operations (Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024) - Net loss for the three months ended June 30, 2025, was approximately $4.1 million, compared to $2.1 million for the same period in 2024[130] - Consolidated revenue decreased by $1.1 million (35%) to $1.3 million in Q2 2025, from $2.4 million in Q2 2024, primarily due to discontinuing certain unprofitable pathology services[133] - CyPath Lung testing revenue decreased approximately 5% to $153,000 in Q2 2025, despite an increase in tests delivered, attributed to revised revenue estimation based on recent collection data[133] Operating Expense Changes (Three Months Ended June 30, YoY) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :--------- | :--------- | :----------- | :--------- | | Direct costs and expenses | $1,016,602 | $1,407,710 | $(391,108) | (28)% | | Research and development | $311,372 | $402,433 | $(91,061) | (23)% | | Clinical development | $129,279 | $51,462 | $77,817 | 151% | | Selling, general and administrative | $2,214,561 | $2,472,775 | $(258,214) | (10)% | | Depreciation and amortization | $113,229 | $151,070 | $(37,841) | (25)% | | Total operating expenses | $3,785,043 | $4,485,450 | $(700,407) | (16)% | - Total other income (expense), net, was $(1.5) million in Q2 2025, a significant increase from $(17,000) in Q2 2024, primarily due to a $1.1 million loss on remeasurement of warrant liability[142] Results of Operations (Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024) - Net loss for the six months ended June 30, 2025, was approximately $6.7 million, compared to $4.1 million for the same period in 2024[143] - Consolidated revenue decreased by $1.7 million (35%) to $3.1 million for H1 2025, from $4.8 million for H1 2024, due to strategic actions to discontinue certain unprofitable pathology services[146] - CyPath Lung testing revenue increased approximately 56% to $323,000 for H1 2025, from $207,000 for H1 2024, with 390 tests delivered (vs 221)[146] Operating Expense Changes (Six Months Ended June 30, YoY) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :--------- | :--------- | :----------- | :--------- | | Direct costs and expenses | $2,384,462 | $2,981,151 | $(596,689) | (20)% | | Research and development | $678,758 | $796,072 | $(117,314) | (15)% | | Clinical development | $267,632 | $100,422 | $167,210 | 167% | | Selling, general and administrative | $4,667,110 | $4,658,719 | $8,391 | 0% | | Depreciation and amortization | $267,817 | $300,707 | $(32,890) | (11)% | | Total operating expenses | $8,265,779 | $8,837,071 | $(571,292) | (6)% | - Total other income (expense), net, was $(1.5) million for H1 2025, a significant increase from $(30,000) for H1 2024, primarily due to a $1.1 million loss on remeasurement of warrant liability[158] Liquidity, Capital Resources, and Going Concern - The company has funded operations primarily through equity sales, raising approximately $46.0 million gross proceeds since inception[159] - Net losses for the six months ended June 30, 2025, were $6.7 million, contributing to an accumulated deficit of approximately $60.4 million[160] - Cash and cash equivalents were $0.8 million at June 30, 2025, and $0.3 million as of August 14, 2025, which is expected to support operations only through August 2025[160] - Management concludes there is substantial doubt about the company's ability to continue as a going concern for at least twelve months, necessitating further capital raises through equity, debt, strategic relationships, or grants[160][161] Summary Statements of Cash Flows Summary Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 (USD) | 2024 (USD) | | :--------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(4,288,981) | $(3,878,400) | | Net cash used in investing activities | $(64,213) | $(69,672) | | Net cash provided by financing activities | $4,050,738 | $1,927,813 | | Cash and cash equivalents at beginning of period | $1,105,291 | $2,821,570 | | Cash and cash equivalents at end of period | $802,835 | $801,311 | - The increase in cash used in operating activities for H1 2025 was primarily due to an increased loss from operations and a fair value adjustment to the warrant liability[164] - Cash provided by financing activities significantly increased in H1 2025, driven by $4.4 million in net proceeds from equity transactions[166] Contractual Obligations and Commitments - The company's contracts for clinical trials and R&D generally provide for termination with notice, resulting in non-cancellable obligations that are not material[167] Critical Accounting Estimates - Key estimates include patient fee revenues (contractual allowances, implicit price concessions), patient fee receivables and credit losses (portfolio risk, historical collection data), discount rates for finance leases (incremental borrowing rate), stock-based compensation (Black-Scholes model), and accounting for income taxes (deferred tax assets/liabilities, valuation allowance)[169][170][171][172][173] Going Concern - The evaluation of the company's ability to continue as a going concern requires assessing future cash sources and uses for one year from the financial statement issuance date, acknowledging the inherent uncertainty in R&D activities[174] Off-Balance Sheet Arrangements - The company does not engage in transactions with unconsolidated entities or financial partnerships and had no off-balance sheet arrangements during the periods presented[175] Emerging Growth Company Status - The company is classified as both an 'emerging growth company' and a 'smaller reporting company,' which allows for reduced public company reporting requirements[176] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company, bioAffinity Technologies is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures due to its status as a smaller reporting company[177] ITEM 4. CONTROLS AND PROCEDURES. This section details the company's disclosure controls and procedures, confirming their effectiveness and reporting no material changes in internal control - The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they are effective[178] - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[179] PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The company has no material pending legal proceedings expected to adversely impact its financial position or operations - The company has no material pending legal proceedings[181] ITEM 1A. RISK FACTORS. This section updates risk factors, focusing on financial position, capital needs, profitability, and Nasdaq listing compliance - The company's business plan relies heavily on obtaining additional capital and financing to fund operations and achieve profitability, with no guarantee of sufficient income generation[183][184] - As of June 30, 2025, the company had an accumulated deficit of $60.4 million and $0.8 million cash on hand, with cash expected to last only through September 2025, raising substantial doubt about its ability to continue as a going concern[187] - The company received a Nasdaq notice for failing to meet the $1.00 minimum bid price requirement and the $2.5 million stockholders' equity requirement, posing a risk of de-listing[190][192] - Management collectively owns approximately 46.13% of the company's voting power, which could influence corporate decisions and potentially affect the trading price of common stock[194] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[196] ITEM 3. DEFAULTS UPON SENIOR SECURITIES. This section reports that there were no defaults upon senior securities for the period - No defaults upon senior securities were reported[197] ITEM 4. MINE SAFETY DISCLOSURE. This section states that the disclosure item regarding mine safety is not applicable to the company - Mine safety disclosure is not applicable to the company[198] ITEM 5. OTHER INFORMATION. This section provides other information, specifically regarding Rule 10b5-1 Trading Plans - None of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025[199] ITEM 6. EXHIBITS. This section lists the exhibits filed or furnished with the Quarterly Report on Form 10-Q, including various certifications and Inline XBRL documents - Exhibits include certifications (Section 302 and 906 of Sarbanes-Oxley Act), Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and Cover Page Interactive Data File[200] Signatures This section contains the official signatures of the registrant's authorized officers, certifying the filing of the report - The report was signed by Maria Zannes (Chief Executive Officer, President, Founder, and Director) and J. Michael Edwards (Vice President and Chief Financial Officer) on August 14, 2025[205]