bioAffinity Technologies (BIAF) risk factors, FY2024 10-K

Risks Related to Our Financial Position

1. 01Prior to 2022, we had not generated any revenue. During the years ended December 31, 2024, and December 31, 2023, we generated revenue of approximately $9.4 million and $2.5 million, respectively
2. 02We must raise additional capital to fund our operations in order to continue as a going concern
3. 03We have a limited operating history, which makes it difficult to evaluate our current business and future prospects
4. 04We 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
5. 05We 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
6. 06We 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

Risks Related to our Diagnostic Product

1. 07Until we secure FDA clearance for CyPath® Lung as a Class II in vitro diagnostic, we may encounter physicians who will not order an LDT
2. 08We 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 Agency
3. 09Clinical trials are expensive, time consuming, and may not be successful

Risks Related to Our Diagnostic Tests

1. 10If our tests do not perform as expected, our operating results, reputation and business will suffer
2. 11We may experience difficulties that delay or prevent our development, introduction, or marketing of enhanced or new tests
3. 12If 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
4. 13Even 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
5. 14If 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
6. 15We are currently dependent upon our pathology laboratory PPLS to offer and perform CyPath® Lung
7. 16If 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
8. 17We 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
9. 18Our 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
10. 19Our lack of operating experience may make it difficult to manage our growth which could lead to our inability to implement our business plan
11. 20We 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
12. 21We 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
13. 22In 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 we develop
14. 23Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
15. 24We face intense competition in the biotechnology and pharmaceutical industries
16. 25The 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
17. 26Healthcare cost containment initiatives and the growth of managed care may limit our returns
18. 27Declining general economic or business conditions, including tariff and customs regulations, may have a negative impact on our business
19. 28Global climate change and related regulations could negatively affect our business

Risks Related to the Operation of a CAP/CLIA Laboratory

1. 29The operations of PPLS will depend in part upon prior relationships with existing customers and our ability to continue such relationships with these customers
2. 30PPLS may be unable to effectively maintain equipment or generate revenue when its equipment is not operational
3. 31If 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
4. 32PPLS 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
5. 33Security 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
6. 34If PPLS uses hazardous chemicals in a manner that causes injury, PPLS could be liable for damages
7. 35If PPLS is unable to successfully scale its operations to support demand for CyPath® Lung, its business could suffer
8. 36Billing for PPLS’ services is complex, and PPLS must dedicate substantial time and resources to the billing process to be paid
9. 37As PPLS introduces new assays, PPLS will need to add new codes to its billing process as well as its financial reporting systems. Failure 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
10. 38PPLS 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

Risks Related to Intellectual Property Rights

1. 39Intellectual property rights do not necessarily address all potential threats to our competitive advantage
2. 40If 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
3. 41Our competitive position depends on protection of our intellectual property
4. 42Diagnostic tests and therapeutic products we develop could be subject to infringement claims asserted by others
5. 43We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming, and ultimately unsuccessful
6. 44If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
7. 45Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our diagnostic tests and therapeutic product candidates
8. 46Obtaining 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
9. 47Patent terms may be inadequate to protect our competitive position on our diagnostic tests or therapeutic product candidates for an adequate amount of time
10. 48Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO
11. 49If we do not obtain patent term extension in the U.S. under the Hatch-Waxman Act and in foreign countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our diagnostic tests or therapeutic product candidates, our business may be harmed
12. 50We 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
13. 51If 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

Risks Related to Government Regulations

1. 52Although 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
2. 53Delay 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
3. 54Failure by our laboratory to comply with applicable laws pertaining to LDTs or IVDs could adversely affect our business, results of operations, and financial condition
4. 55Even if we obtain FDA clearance of any of our diagnostic tests or therapeutic product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential
5. 56The impact of changes to healthcare law and guidance, as well as other changes in the healthcare industry, and changes in healthcare spending is currently unknown and may adversely affect our business model

Risks Related to Ownership of Our Common Stock and Warrants

1. 57Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our Common Stock
2. 58We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our Common Stock
3. 59Our Common Stock market price may never exceed the exercise price of our outstanding warrants
4. 60Holders 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
5. 61Our failure to file a registration statement to register the shares of Common Stock issuable upon exercise of the warrants that we issued in February 2025 will result in a breach of the terms of the warrant inducement agreement
6. 62The financial and operational projections that we may make from time to time are subject to inherent risks
7. 63Our 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
8. 64Our 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
9. 65An 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
10. 66Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
11. 67Our Certificate of Incorporation permits “blank check” Preferred Stock, which can be designated by our Board without stockholder approval
12. 68Provisions 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
13. 69Certain 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
14. 70Our 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
15. 71Our management collectively owns a substantial percentage of our Common Stock
16. 72If 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