BIAF US Equity☆

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

(Mark

One)

For

the fiscal year ended December 31, 2022.

OR

For

transition period from ____ to ____.

Commission

File Number 001-41463

bioAffinity

Technologies, Inc.

(Exact

Name of Registrant as Specified in its Charter)

(Address of Principal Executive Offices) (Zip Code)

(210)698-5334

(Registrant’s Telephone Number, Including Area Code)

Securities

registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common stock, par value $0.007 per share BIAF The Nasdaq Stock Market LLC

Tradeable Warrants to purchase Common Stock BIAFW The Nasdaq Stock Market LLC

Securities

registered pursuant to section 12(g) of the Act: None.

Indicate

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☐ No ☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

☐ No ☒

Indicate

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days.

Yes

☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files).

Yes

☒ No ☐

Indicate

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☐

Emerging growth company ☒

If

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered

public accounting firm that prepared or issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based

compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ☐

Indicate

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The

registrant was not a public company as of the last business day of its most recently completed second fiscal quarter and, therefore,

cannot calculate the aggregate market value of the voting and non-voting common equity held by non-affiliates as of such date.

The

number of shares outstanding of the issuer’s common stock, $0.007 par value, is 8,462,953 as of March 20, 2023.

DOCUMENTS

INCORPORATED BY REFERENCE

Portions

of the registrant’s definitive proxy statement relating to the 2023 annual meeting of stockholders are incorporated by reference

into Part III of this Annual Report on Form 10-K where indicated. Such definitive proxy statement will be filed with the Securities and

Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 31, 2022.

TABLE

OF CONTENTS

Page

Cautionary Note Regarding Forward-Looking Statements 3

PART I

Item 1. Business 5

Item 1A. Risk Factors 14

Item 1B. Unresolved Staff Comments 14

Item 2. Properties 14

Item 3. Legal Proceedings 15

Item 4. Mine Safety Disclosures 15

PART II

Item 6. [Reserved] 16

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 25

Item 8. Financial Statements and Supplementary Data 25

Item 9A. Controls and Procedures 25

Item 9B. Other Information 26

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 26

PART III

Item 10. Directors, Executive Officers and Corporate Governance 26

Item 11. Executive Compensation 26

Item 14. Principal Accounting Fees and Services 26

PART IV

Item 15. Exhibits, Financial Statement Schedules 27

Signatures 29

Throughout

this Annual Report on Form 10-K (the “Annual Report”), the terms “bioAffinity,” “bioAffinity Technologies,”

“we,” “us,” “our” or “Company” refer to bioAffinity Technologies, Inc., a Delaware corporation,

and its wholly owned subsidiary, OncoSelect® Therapeutics, LLC, a Delaware limited liability company.

CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This

Annual Report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are predictive

in nature, depend on or refer to future events or conditions, and are sometimes identified by words such as “may,” “could,”

“plan,” “project,” “predict,” “pursue,” “believe,” “expect,”

“estimate,” “anticipate,” “intend,” “target,” “seek,” “potentially,”

“will likely result,” “outlook,” “budget, “objective,” “trend,” or similar expressions

of a forward-looking nature and the negative versions of such expressions. The forward-looking information contained in this report is

generally located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

but may be found in other locations as well. The forward-looking statements in this report generally relate to the plans and objectives

for future operations of bioAffinity Technologies, Inc. and are based on our management’s reasonable estimates of future results

or trends. Although we believe these forward-looking statements are reasonable, all forward-looking statements are subject to various

risks and uncertainties, and our projections and expectations may be incorrect. The factors that may affect our expectations regarding

our operations include, among others, the following:

● our projected financial position and estimated cash burn rate;

● our estimates regarding expenses, future revenues, and capital requirements;

● the success, cost, and timing of our clinical trials;

● our dependence on third parties in the conduct of our clinical trials;

● the results of market research conducted by us or others;

● our reliance on third parties;

● the increased expenses associated with being a public company; and

● other factors discussed elsewhere in this Annual Report.

Many

of the foregoing risks and uncertainties, as well as risks and uncertainties that are currently unknown to us, are or may be exacerbated

by factors such as the ongoing conflict between Ukraine and Russia, escalating tensions between China and Taiwan, increasing economic

uncertainty and inflationary pressures, the evolving nature of the COVID-19 pandemic and the emergence of new viral variants, and any

consequent worsening of the global business and economic environment. New factors emerge from time to time, and it is not possible for

us to predict all such factors. Should one or more of the risks or uncertainties described in this Annual Report or any other filing

with the Securities and Exchange Commission (the “SEC”) occur, or should the assumptions underlying the forward-looking statements

we make herein and therein prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking

statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future

events, or otherwise, except as required by law.

You

should read this Annual Report and the documents that we reference within it with the understanding that our actual future results, performance,

and events and circumstances may be materially different from what we expect.

Website

and Social Media Disclosure

We

use our websites (www.bioaffinitytech.com and ir.bioaffinitytech.com) and at times our corporate Twitter account (@bioAffinity) and LinkedIn

account (www.linkedin.com/company/bioaffinitytechnologies) to distribute company information. The information we post through these channels

may be deemed material. Accordingly, investors should monitor these channels and review our press releases, filings with the SEC, and

public conference calls and webcasts. In addition, investors and others can be automatically notified in real time when new information

is posted on our websites by visiting the homepage of our Company website at www.bioaffinitytech.com and subscribing to “News from

bioAffinity Technologies” or visiting the “Email Alerts” section of our investor relations website at ir.bioaffinitytech.com/news-events/email-alerts

and enrolling an email address. Information contained on or that can be accessed through our websites and social media channels is not,

however, incorporated by reference in this Annual Report. Investors should not consider any such information to be part of this Annual

Report.

PART

I

Item

1. Business.

Business

Overview

bioAffinity

Technologies, Inc. (the “Company,” “we,” or “our”) develops noninvasive, early-stage diagnostics

to detect and researches targeted therapies to detect and treat lung cancer and other diseases of the lung at the cellular level. Our

Company also is conducting early-stage research focused on advancing therapeutic discoveries that could result in broad-spectrum cancer

treatments. We develop proprietary noninvasive diagnostic tests and cancer therapeutics using technology that preferentially targets

cancer cells and cell populations indicative of a diseased state.

The

Company was formed as a Delaware corporation on March 26, 2014. On June 15, 2016, we formed OncoSelect® Therapeutics,

LLC, a Delaware limited liability company and wholly owned subsidiary of the Company. Research and optimization of our platform technologies

are conducted in our laboratories at The University of Texas at San Antonio.

Our

first diagnostic test, CyPath® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer

is the leading cause of cancer-related deaths. Physicians are able to order CyPath® Lung to assist in their assessment

of patients who are at high risk for lung cancer. The CyPath® Lung test enables physicians to more confidently distinguish

between patients who will likely benefit from timely intervention and more invasive follow-up procedures from patients who are likely

without lung disease and should continue annual 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.

Through

our wholly owned subsidiary, OncoSelect® Therapeutics, LLC, our research has led to discoveries and advancement of novel

cancer therapeutics that specifically and selectively target cancer cells. We are focused on expanding our broad-spectrum platform technologies

to continue developing tests that detect and therapies that target various types of cancer and potentially other diseases.

Information

regarding the general development of bioAffinity’s business can be found in the “Business” section of our final IPO

prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”)

on September 2, 2022 (the “Final Prospectus”) (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm).

Our

First Diagnostic Test – CyPath® Lung

Overview

of the CyPath® Lung Methodology

Lung

cancer is the leading cause of cancer-related death worldwide, claiming nearly 1.8 million lives annually.1 Individuals

at high risk for lung cancer are recommended for annual screening by low-dose computed tomography (“LDCT”). Apart from LDCT,

there is currently no reliable noninvasive method that can detect lung cancer at an early stage. Our first diagnostic test, CyPath®

Lung, is designed to be a cost-effective,2 noninvasive, early-stage lung cancer diagnostic. Using CyPath®

Lung in conjunction with LDCT is predicted to improve the positive predictive value (the proportion of true positive results) by

a factor of five.2 Improving the positive predictive value of LDCT with the use of CyPath® Lung can result

in fewer patients unnecessarily subjected to invasive diagnostic procedures, earlier detection of lung cancer, and a reduction in healthcare

costs.3

3 Ibid.

CyPath®

Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics

indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor. The flow cytometer is a well-established

instrument used in many commercial laboratories that records properties of labeled and unlabeled single cells. Sputum is an excellent

sample for analysis because it is in direct contact with any malignancy in the lungs and can thus provide a snapshot of the tumor itself,

its microenvironment, and its area of field cancerization. While studies have shown that expert cytological analysis of sputum can detect

cancerous and pre-malignant cells,4 the process of looking at microscopy slides is an extremely laborious approach and demands

years of expertise. CyPath® Lung uses flow cytometry and automated data analysis developed by artificial intelligence

(AI) that allows for an entire sample of sputum to be examined for cost-effective, large-scale screening or diagnosis.

In

particular, CyPath® Lung uses a synthetic porphyrin called meso-tetra (4-carboxyphenyl) porphine

(“TCPP”), which is a naturally highly fluorescent porphyrin that has an unusually high affinity for cancer and

cancer-associated cells.5 The uptake and retention of TCPP in cancerous tissue and its fluorescent properties make TCPP

an excellent bio-label for cancer. As used in CyPath® Lung, the proportion of cells with high TCPP fluorescence

intensity in a patient’s sputum sample is a significant predictor of lung cancer. bioAffinity holds multiple patents

protecting its use of TCPP for the diagnosis, monitoring, and treatment of cancer. In addition, the Company has multiple domestic

and foreign patent applications to protect the use of flow cytometry and its AI-developed automated analysis platform in the

detection of lung cancer and other lung diseases using sputum as a sample.

We

developed an algorithm using AI to distinguish samples from high-risk patients who had lung cancer from those who are cancer-free. Precision

Pathology Services (“Precision Pathology”) developed CyPath® Lung for sale as a Laboratory Developed Test

(an “LDT”) in accordance with the standards of the College of American Pathologists (“CAP”) and the regulations

and guidance of the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) program, which is administered by the Centers

for Medicare and Medicaid Services (“CMS”). In developing the test as an LDT, Precision Pathology developed and integrated

software into the test protocol, which generated high-throughput and user-friendly, standardized analysis of flow cytometric sample data.

Our test can analyze an average sputum sample containing about 20 million cells in less than 20 minutes. A physician’s report is

generated within minutes after data acquisition. The test can be put into routine lab use without requiring expert evaluation of samples

or being subject to operator bias. Our approach allows the entire sputum sample to be rapidly analyzed. The numerical analysis developed

by AI captures complex interactions between lung cancer, the microenvironment, and areas of field cancerization that would be difficult

if not impossible for individuals to predict or detect reliably by eye. For example, during test development, we discovered that viability

staining density suggests a link with apoptosis, or cell death, that is linked to many cancers, including lung cancer. Our model also

suggests that specific markers of immune cell populations may be informative as to the presence of cancer in the lung. These findings

are the result of our AI approach to automated analysis.

To

our knowledge, CyPath® Lung is the first cancer diagnostic that combines automated flow cytometric analysis to predict

the presence of lung cancer from sputum samples.

Clinical

Validation, Certification, and Classification of CyPath® Lung

A

19-month test validation clinical trial of CyPath® Lung6 collected sputum noninvasively from people at high

risk for lung cancer, including patients with the disease (N=28) and those cancer-free (N=122). Patients collected their sputum sample

over three days at home before bringing their sample to the clinical collection site. Samples were shipped overnight to the laboratory

for analysis. Study participants in the high-risk cohort had a CT to confirm they did not have lung cancer. Those in the cancer cohort

had imaging and a biopsy that confirmed lung cancer. After providing a sputum sample, participants were released from the study after

a physician either confirmed the individual was cancer-free by examination of CT imaging or confirmed the presence of lung cancer by

biopsy. Flow cytometry and patient data used in analysis to produce the results included (1) the proportion of cells with a high ratio

of high TCPP fluorescence intensity over cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity

caused by the viability dye (FVS510) over cell size; (3) the proportion of cells that were CD206 negative but positive for one or more

of the following markers: CD66b (granulocytes), CD3 (T cells), and CD19 (B cells); and (4) patient age.

More

than half of those in the cancer cohort had lung cancer in the earlier Stages I-II. The analysis, performed on an LSRII flow cytometer,

resulted in 92% sensitivity and 87% specificity in the subgroup of these patients (N=132) who had no nodules or lung nodules smaller

than 20 mm on their LDCT scan, while eight out of 10 (80%) of Stage I tumors were correctly identified. Sensitivity is the percentage

of persons with the disease – in this case lung cancer – who are correctly identified by the test. Specificity is the percentage

of persons without lung cancer who are correctly identified by the test. The cancer group included all lung cancer types, but mostly

squamous cell carcinoma and adenocarcinoma lung cancer (in near equal numbers), showing that CyPath® Lung detects all

types of lung cancer.

Following

completion of the test validation trial, CyPath® Lung was evaluated independently by Precision Pathology, which developed

the test for sale as an LDT in accordance with CAP/CLIA standards. An LDT is a type of in vitro diagnostic (“IVD”)

test that is developed, validated, and performed within a single laboratory. CyPath® Lung has been validated and is being

performed by Precision Pathology, a CAP-accredited, CLIA-certified clinical pathology laboratory in San Antonio, Texas, pursuant to a

joint development agreement with the Company. In third quarter 2022, Precision was inspected by CAP in accordance with CAP/CLIA regulatory standards and regulations

resulting in continued accreditation for the laboratory and the CyPath® Lung test as an LDT.

As

part of CAP/CLIA certification, Precision Pathology evaluated the performance of CyPath® Lung employing its own laboratory

technicians and a different flow cytometer, the Navios EX. Results of Precision Pathology’s certification were comparable to those

from the test validation trial and demonstrated that CyPath® Lung remains robust to differences in sample handling, processing,

and the type of flow cytometer.

bioAffinity

Technologies intends to voluntarily seek FDA clearance of the CyPath® Lung as a Class II IVD medical device for the detection

of lung cancer. The Company has designed its pivotal trial with guidance from its clinical research organization (“CRO”),

Courante Oncology, and has prepared a pre-submission that will be submitted to the FDA for review and feedback. We anticipate a three-year

diagnostic trial including an 18-month patient enrollment of approximately 1,800 patients, with participants followed for at least one

year after enrollment to determine whether they have lung cancer. Similar to the test validation trial, the planned pivotal trial will

analyze flow cytometry and patient data including (1) the proportion of cells with a high ratio of high TCPP fluorescence intensity over

cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity caused by the viability dye (FVS510) over

cell size; (3) the proportion of cells that were CD206 negative but positive for one or more of the following markers: CD66b (granulocytes),

CD3 (T cells), and CD19 (B cells); and (4) patient age. Patient enrollment is scheduled to begin in 2023 at up to 20 collection sites.

Assuming the study is successful, we intend to submit a de novo classification request to the FDA within six months of study completion.

The

Patient- and Physician-Friendly CyPath® Lung Process

CyPath®

Lung is designed to be noninvasive and patient friendly. The diagnostic process uses sputum that is obtained noninvasively in the privacy

of a patient’s home. Physicians order the test for their patients after lung cancer screening reveals a lung nodule considered

to be indeterminate because of the nodule size and lack of suspicious characteristics. Lung nodules are considered indeterminate if their

size is between 6-20 mm in diameter. Lung nodules of that size are associated with a lung cancer risk as low as 0.5% and up to 16%.7

For

the CyPath® Lung test, patients are given a small sample collection kit during an office visit with their physician. (See

Figure 1 below.) From the privacy of the patient’s home, the patient collects a sample of his or her sputum over three days using

a hand-held assist device that comes in the collection kit called an acapella® Choice Blue made by Smiths Medical, which

acts to break up mucus in the patient’s lung and facilitates the patient’s ability to cough up sputum from the lung into

a collection cup that is also supplied with the kit. In addition to the kit’s step-by-step instructions, an instructional video

and a live patient coach are available by calling 855-MYLUNGS to help patients with sample collection. With the patient’s permission,

the patient coach will proactively call or text patients to offer assistance. After the three-day sample of sputum is collected in the

collection cup, the patient puts the collection cup into the kit and uses a pre-addressed envelope provided in the kit to overnight the

sample to the laboratory.

7 Gierada et al; https://pubmed.ncbi.nlm.nih.gov/25326638/.

At

the laboratory, the sputum is processed by technicians into a single-cell suspension and labeled with TCPP, which preferentially binds

to cancer cells and/or cancer-related cells. Cells are also stained with fluorescently labeled antibodies that identify hematopoietic

and epithelial cells within the sputum sample. A viability dye is used to eliminate dead cells. The sputum sample is analyzed using flow

cytometry, which allows an average sputum sample containing about 20 million cells to be profiled in less than 20 minutes. A laboratory

technician skilled in general laboratory techniques can accomplish sample processing, labeling, and data collection.

Physicians

receive test results within three days after the laboratory receives the patient’s sputum sample. CyPath® Lung testing

helps identify patients who should undergo more aggressive follow-up procedures to confirm a suspected lung cancer. When CyPath®

Lung sample analysis determines a patient is unlikely or very unlikely to have lung cancer, the result can serve to support a physician’s

decision to monitor this patient by following a recommended LDCT screening routine.

Figure

1. Patient- and Physician-Friendly CyPath® Lung Process.

CyPath®

Lung Research and Clinical Studies

The

high affinity of TCPP for cancer and cancer-related cells and its fluorescent nature makes it an excellent bio-label for cancer. The

CyPath® Lung technology is based on this concept and scientific work originating at Los Alamos National Laboratory in

collaboration with St. Mary’s Hospital in Colorado. A blinded clinical trial8 (Patriquin, et. al, 2015) of an earlier

version of CyPath® Lung used a microscope to directly identify cells labeled with TCPP in one-third or less of the sputum

sample. For each trial participant, researchers manually scanned 12 microscope slides labeled with TCPP for the presence of red fluorescing

cells (“RFCs”) displaying a spectral signature that indicated uptake of TCPP in the cell. In addition to measuring the spectral

signature, the fluorescent intensity and cell size of RFCs were measured. The test data, including fluorescent intensity over cell size,

was analyzed. The Patriquin trial was conducted over 24 months and resulted in 81% test accuracy, 77.9% sensitivity, and 65.7% specificity

in the ability to correctly differentiate between samples from lung cancer patients and those at high risk who were cancer-free. The

Patriquin trial required participants to provide a sputum sample and CT imaging of the lungs. Those in the cancer cohort underwent a

biopsy to confirm lung cancer. High-risk patients displaying indeterminate nodules were followed for 18 months to confirm they were cancer-free.

The Patriquin study concluded that optimizing the test to provide for analysis of the entire sputum sample would improve results.

The

Company continued development of its lung cancer diagnostic technology culminating in a flow cytometry-based CyPath® Lung

test incorporating automated AI analysis that evaluates the entire sputum sample. A blinded diagnostic trial of the advanced test9

(Lemieux, et al, 2023) resulted in 92% sensitivity and 87% specificity in the subgroup of these patients (N=132) who had no nodules

or lung nodules smaller than 20 mm on their LDCT scan, while eight out of 10 (80%) of Stage I tumors were correctly identified. The cancer

group included all lung cancer types, but mostly squamous cell carcinoma and adenocarcinoma lung cancer (in near equal numbers), showing

that CyPath® Lung detects all types of lung cancer.

All

studies performed to date are summarized in the table below.

CyPath®

Lung Studies and Clinical Trials

Study Description Results

The

Cancer Diagnostics Market and CyPath® Lung

The

global cancer diagnostic market is projected to grow from an estimated $172.3 billion in 2022 to $293.5 billion in 2030, with a compound

annual growth rate (“CAGR”) of 6.8%.14 The market worldwide for lung cancer diagnostic tests was estimated at

$2.6 billion in 2022 and is projected to reach $4.7 billion by 2030, with a CAGR of 7.8% over 2022-2030.15 bioAffinity Technologies

has the potential to play a significant role in the cancer diagnostic market because our platform is noninvasive, easy to use, cost-effective,

and has a potential to lead to better patient outcomes. (See Analysis of the Potential Diagnostic, Patient And Economic Impact of

CyPath® Lung When Used After LDCT Screening to Detect Lung Cancer, bioAffinity Technologies Internal Analysis with citations,

2022; attached as Appendix I of the Company’s Final Prospectus filed with the SEC on September 2, 2022, pursuant to Rule 424(b)(4)

under the Securities Act) (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm).

CyPath®

Lung is currently utilized as a diagnostic tool for detecting early-stage lung cancer. bioAffinity is conducting research for the

expansion of its flow cytometric platform technology to detect and monitor lung diseases, such as Chronic Obstructive Pulmonary Disease (COPD) and asthma, and other cancers.

The

Company licensed CyPath® Lung to Precision Pathology, which began marketing CyPath® Lung in Texas as an

LDT in accordance with CAP/CLIA regulations pursuant to the terms of the joint development agreement between the Company and Precision

Pathology. Limited funds were available to market CyPath® Lung until the Company completed its IPO in September 2022.

CyPath® Lung is sold to physicians who order CyPath® Lung for patients at high risk for lung cancer after

an LDCT confirms the presence of lung nodule(s).

As

a front-end diagnostic tool used in conjunction with LDCT, the Company’s lung cancer test will help determine whether more expensive,

specialized, and/or invasive tests are warranted. CyPath® Lung compares favorably to current standards of care for diagnosing

lung cancer, including invasive biopsies, as seen in the table shown below.

Comparison

of CyPath® Lung to Current Standards of Care

CyPath® Lung‌16 High risk 82% 88% None

CyPath® Lung High risk – nodules less than 20 mm 92% 87% None

Low Dose CT screening17 High risk 93.80% 73.40% Radiation exposure

FDG PET imaging‌18 Suspicious lung nodules 88% 75% Radiation exposure

bioAffinity’s

business model is to immediately address the need for a quick-to-market, noninvasive, cost-effective lung cancer diagnostic that will

save lives and reduce medical costs. The Company is ready to capture a growing market. The U.S. Preventive Services Task Force recommended

doubling the number of Americans at high risk for lung cancer who are recommended for annual screening from 9 million to an estimated

18 million. China has an estimated 300 million smokers.46 The European Union is estimated to have 34 million people at high

risk for lung cancer. Following its entry into the U.S. market, the Company expects to pursue CE marking of CyPath® Lung

for sale in the European Union and is pursuing collaboration with a strategic partner to develop the test for the China market.

bioAffinity

conducted market research with pulmonologists, oncologists, cardiothoracic surgeons, radiologists, and internists engaged in the diagnosis

and treatment of lung cancer to help assess these stakeholders’ reactions to the new diagnostic, CyPath® Lung. Research

revealed a strong interest in CyPath® Lung, driven by the high level of unmet clinical need for noninvasive diagnostics.

A survey conducted with 240 pulmonologists and internists, the primary audience for the test, showed that 96% would use CyPath®

Lung if it were available today as an adjunct used for diagnosis after LDCT screening. Physicians see the value of a noninvasive

diagnostic technology with the ability to confirm or rule out cancer and reduce the number of costly invasive procedures that result

from LDCT’s low positive predictive rate.

CyPath®

Lung Business Development Plan

We

believe in the viability of the Company’s Business Plan based on the circumstances surrounding our business that are known to us

as of the date of this report. However, the timing, strategies, and stages of our Business Plan may evolve in light of new circumstances

that cannot be predicted with certainty at this time. Our Business Plan envisions four phases of expanding market entry into the U.S.,

the EU, and worldwide that are timed to maximize Company resources and minimize market risk. Phase 1 of our Business Plan begins with

a controlled market launch of the Company’s LDT CyPath® Lung in Texas followed by expansion into the Southwest market

area. Limited marketing was undertaken prior to the IPO that provided funds necessary to begin our controlled market launch. In February

2023, the Company announced that the marketing and advertising firms of Havas Health & You and Trinity Life Sciences had been engaged

to build the CyPath® Lung brand and position it for success in the cancer diagnostics sector. Havas Health & You,

the world’s largest global health network, is creating the branding and broader marketing strategy to align with the need for a

patient-friendly diagnostic that gives physicians another tool to assess the potential or presence of lung cancer in their high-risk

patients. Trinity Life Sciences is providing advisory services, insights, and analytics to bioAffinity Technologies’ marketing

strategy for CyPath® Lung. The Company expects to begin a staged nationwide expansion of sales and marketing following

the successful completion of its controlled launch in 2023. Phase 2 of our Business Plan anticipates entering the EU market with CyPath®

Lung as a CE-marked IVD test with sales in the Netherlands, followed by a staged EU expansion. Phase 3 of our Business Plan focuses

on the marketing of an FDA-cleared CyPath® Lung test, beginning with a pivotal clinical trial in the U.S. Phase 4 of our

Business Plan accelerates the market presence of CyPath® Lung in countries in Asia, Eastern Europe, and Australia after

obtaining FDA marketing authorization in 2026.

At

each phase of commercialization, bioAffinity Technologies will develop messaging and marketing programs, including key convention attendance,

digital marketing, social media presence, and advertising, to create an “inbound” lead generation mechanism that delivers

our message to our target audience. In addition, bioAffinity will collaborate with key opinion leaders (“KOLs”) to expand

our third-party reference and speaking pool of experts. The Company will provide support and collateral materials, including posters,

presentations, videos, and peer-reviewed papers, to our KOLs who will present data and their experience with CyPath® Lung

at key meetings. This content can be shared across platforms, including websites and sales tools, and will be used as references to support

our product claims as well as sales and marketing efforts to physicians, reference laboratories, and patients. We will also work with

lung cancer advocacy groups throughout all phases to support the message that routine screening can diagnose cancer at an early stage

and save lives.

The

Competition for CyPath® Lung

In

2022, we evaluated 67 companies advancing tests for the early detection of lung cancer that provided at least a scientific foundation

for their tests. These competitors are investigating lung cancer screening and diagnostic methods that use various types of collected

samples (blood, breath, nasal epithelial cells, saliva, sputum, and urine) or imaging systems. Of those 67 companies, we found that only

11 had conducted clinical studies in a manner and with results that could lead to further analysis. The majority of these 11 tests are

in research and development, with only four tests on the market and one available to a limited number of medical centers. Although CyPath®

Lung was never tested directly against any of these five tests, comparison of the published performance numbers suggests CyPath®

Lung might outperform them all. (See Summary of Comparative Performance Analysis of Tests on the Market, bioAffinity Technologies

Internal Analysis, 2022; attached as Appendix II of the Company’s Final Prospectus (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm)).

From

the 67 companies we evaluated, we found only seven tests, including CyPath® Lung, that represent a balanced test for early

lung cancer detection and that have advanced to the point that there is sufficient data for evaluation. Of our six competitors with well-balanced

tests (two sell the same test; one in the U.S. and one in China), four companies (20/20 GeneSystems48,49; Nuclexi50;

Savicell51; Visongate52) conducted their studies on a population that does not match the high-risk population for

which the test is intended. Their clinical data, therefore, is suspect as it applies to the population of patients who actually will

use the test. The two remaining balanced tests are not on the market.

We

believe there are many reasons why CyPath® Lung is a superior test when compared to its competitors. First, lung sputum

is an excellent medium for early lung cancer detection because sputum is in close contact with the tumor and pre-cancerous areas that

shed cancer and pre-cancerous cells directly into the sputum, can be obtained noninvasively, and can be transported easily. Moreover,

sputum contains immune cell populations in reaction to the presence of a tumor. Second, bioAffinity’s proprietary technology is

straightforward. bioAffinity’s CyPath® Lung platform technology is not a molecular test and does not collect genetic

material that requires immediate processing. CyPath® Lung uses well-established flow cytometry techniques to investigate

cells contained in the sputum for characteristics that indicate whether cancer is present. Sample processing is straightforward, and

laboratory technicians can be easily trained. Reagents used by the test are widely available. Data acquisition and analysis is fully

automated, allowing for efficient test results. Third, CyPath® Lung has shown high specificity and sensitivity that is

similar to far more invasive and more expensive procedures currently used to detect lung cancer. Fourth, CyPath® Lung

is cost effective. Existing CPT cost codes that have a reimbursable track record have been identified for use with CyPath. Fifth and

as important as any of our test’s benefits, CyPath® Lung is patient friendly, providing at-home sample collection

that is noninvasive and offers particular benefit during a public healthcare crisis like the coronavirus pandemic.

For

a discussion of our competitors and competitive analysis, please see the “Business – The Competition for CyPath®

Lung” section of our Final Prospectus (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm).

Research and Development

Activities

The Company is continuing its

research and development activities pertaining to diagnostics that include multiple studies we believe will support FDA final approval

of CyPath® Lung, which we will seek after the pivotal trial is complete. Our scientists also have begun preliminary studies

toward the development of CyPath® Lung for detection of Chronic Obstructive Pulmonary Disease (COPD) and the assay’s

use with bronchoalveolar lavage fluid (BAL). With regard to therapeutic research, the Company continues its experiments focused on establishing

proof-of-concept for our discovery that the silencing or knockdown of two genes that each encode a cell surface receptor results in cancer

death without much harm to healthy cells with the intent of advancing toward animal studies.

Intellectual

Property Portfolio

As

of March 31, 2023, the Company and its subsidiary OncoSelect have a patent estate that includes 14 issued U.S. and foreign counterpart

patents, including two U.S. patents and twelve foreign counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, Italy,

Mexico, Spain, Sweden, and the United Kingdom. One U.S. patent and nine counterpart foreign patents directed at diagnostic applications

expire in 2030. Therapeutic patents registered in Australia, China Mexico and the U.S. expire in 2037.

With

regard to our diagnostic test CyPath® Lung and other diagnostic candidates, we have one issued U.S. patent and nine foreign

counterpart patents in Canada, China, France, Germany, Hong Kong, Italy, Spain, Sweden, and the United Kingdom. With regard to our diagnostic

patent applications, one family is directed at diagnosing lung health using flow cytometry, and the other family is directed at proprietary

compensation beads used to calibrate the flow cytometry instrument and used in CyPath® Lung data acquisition. Pending

applications directed at diagnosing lung health include one pending U.S. non-provisional patent application and eight foreign counterpart

patent applications in Australia, Canada, China, European Patent Office, Hong Kong, Japan, Mexico, and Singapore filed in 2019, one Patent

Cooperation Treaty (PCT) International Application directed to the composition of compensation beads and one PCT International Application

directed to diagnosing lung health using flow cytometry were filed in 2022.

With

regard to our therapeutic product candidates, we have one issued U.S. patent, two pending U.S. patent applications, three issued foreign

patents, ten foreign applications pending in Canada, China, European Patent Office, Hong Kong, India, and Japan and one pending PCT International

Application,. The therapeutic intellectual property is made up of four families directed at our therapeutic product candidates, including

two families directed at siRNA product candidates, one family directed at soluble CD320 used in the treatment of cancer, and one family

directed at porphyrin conjugates for treating cancer.

Government

Regulation

For

a discussion of the extensive government regulation that the Company and our IVD medical device, CyPath® Lung, are subject

to, please see the “Business – Government Regulation” section of our Final Prospectus (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm).

Our

Employees

The

Company places significant emphasis on the recruitment, development, and retention of its employees who include award-winning scientists

dedicated to advancing scientific discovery from bench to bedside. Of the Company’s 14 employees, all of whom are employed full-time

by the Company, one holds an MD and seven hold PhDs in biology or medicinal chemistry. Approximately nine employees are engaged in research

and development and approximately five in sales or general administration.

Our

Executive Vice President and Chief Medical and Science Officer, Vivienne Rebel, holds an MD and PhD. Business development is led by our

Vice President of Operations, Xavier Reveles, who has 25 years of experience as a clinical geneticist skilled in the creation and management

of CLIA clinical laboratories, coding, and CPT reimbursement valuations. Mr. Reveles is board certified by the American Society of Clinical

Pathology as a clinical specialist in cytogenetics who has successfully launched multiple diagnostics and commercial laboratories. The

innovative and collaborative culture at bioAffinity is in part responsible for the high degree of retention and professional advancement.

Of those employees hired prior to 2022, most have been with the Company for more than five years of its nine-year history. Outside partnerships

and collaborations that advance business and scientific research are encouraged, allowing the Company to multiply workforce efforts without

expending significant capital.

Item

1A. Risk Factors.

As

a smaller reporting company, we are not required to provide disclosure pursuant to this Item 1A. However, in addition to other information

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

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

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

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

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

condition, and operating results.

Item

1B. Unresolved Staff Comments.

None.

Item

2. Properties.

In

June 2015, we were accepted into the “New Venture Incubator Program,” which was established by The University of Texas at

San Antonio (“UTSA”) to foster research by assisting technology-based businesses and entrepreneurs. Pursuant to the terms

of a license agreement, UTSA grants us a license for the temporary use of approximately 1,250 square feet of laboratory and office space

in room SRL 1.424 inside the Science Research Laboratories on UTSA’s campus. In exchange, we pay a licensing fee of $3,081

per month. The license agreement has a one-year term that we can extend by requesting a term extension from UTSA. Since 2016,

UTSA has granted each of our annual requests for a license extension.

We

rent additional corporate office space from Venture Point (formerly known as WorkHub Elite Business Center) pursuant to a membership

agreement that is renewable on a monthly basis. Currently, we rent several office suites for a monthly fee of approximately $ 5, 000

per month. We do not own any real property.

Management

believes that the combination of our rented and licensed office and laboratory spaces are adequate to meet our current needs and expected

level of operations.

Item

3. Legal Proceedings.

We

are not currently a party to any current or pending material legal proceedings. From time to time, however, the Company may be involved

in various disputes and litigation matters that arise in the ordinary course of business. The Company may face claims brought by third

parties, or, from time to time, the Company may make claims or take legal actions to assert our rights. Regardless of the outcome, any

such claims or legal proceedings could adversely impact our business, reputation, operating results, and financial condition because

of defense and settlement costs, diversion of resources, and other factors. Results of actual and potential litigation are inherently

uncertain, and there can be no assurances that favorable outcomes will be obtained.

Item

4. Mine Safety Disclosures.

Not

applicable.

PART

II

Item

5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market

Information.

Our

common stock, par value $0.007 per share (the “Common Stock”) trades under the symbol “BIAF.” Our tradeable warrants,

each to purchase one share of Common Stock (collectively, the “Tradeable Warrants”), trade under the symbol “BIAFW.”

Our Common Stock and Tradeable Warrants trade on The Nasdaq Capital Market.

Use

of Proceeds from Initial Public Offering

On

September 6, 2022, we completed our IPO of 1,282,600 Units at an Offering Price of $6.125 per Unit. Each Unit consisted of one share

of Common Stock, one Tradeable Warrant exercisable for the purchase of one share of Common Stock at an exercise price of $7.35 per share,

and one Non-tradeable Warrant exercisable for the purchase of one share of Common Stock at an exercise price of $7.656 per share. The

total number of shares of Common Stock sold in the IPO does not include the Over-Allotment Option that we granted to the Underwriters

to purchase additional shares of Common Stock, Tradeable Warrants, and/or Non-tradeable Warrants. The Underwriters exercised a portion

of their Over-Allotment Option and purchased 110,167 Tradeable Warrants at a purchase price of $0.01 per warrant, and 110,167 Non-tradeable

warrants at a purchase price of $0.01 per warrant. The shares of Common Stock and Tradeable Warrants underlying the Units offered in

our IPO and the Over-Allotment Option were registered for sale pursuant to our Registration Statement on Form S-1, as amended (File No.

333-264463), filed with and declared effective by the SEC on August 29, 2022.

The

aggregate offering price for the registered shares of Common Stock and Tradeable Warrants was approximately $7.9 million. We received

net proceeds of approximately $6.0 million from the IPO, after deducting underwriting discounts and commissions of approximately $0.7

million and offering expenses of approximately $1.2 million. The representative of the Underwriters was WallachBeth Capital, LLC. No

payments for the foregoing expenses were made by us to any of our officers, directors, or persons owning ten percent (10%) or more of

our Common Stock, or to the associates of any of the foregoing, or to their affiliates, other than payments in the ordinary course of

business to our officers for salaries, bonuses, and expense reimbursements.

There

has been no material change in the planned use of proceeds as described in our Final Prospectus filed with the SEC on September 2, 2022

(see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm). The expected use of net proceeds from

the IPO represents our intentions based upon our present plans and business conditions. We cannot predict with certainty all of the particular

uses for the proceeds of the IPO or the amounts that we will actually spend on the uses set forth above. Accordingly, our management

will have broad discretion in the application of the net proceeds we received from the IPO, and investors will be relying on the judgment

of our management regarding the application of our net proceeds. While we expect to use the net proceeds for the purposes described above,

the timing and amount of our actual expenditures will be based on many factors, including cash flows from operations, the anticipated

growth of our business, and the availability and terms of alternative financing sources to fund our growth.

Holders

of Record.

As

of March 20, 2023, there were approximately 68

holders of record of shares of our Common Stock. This number does not reflect the beneficial holders of our common stock who hold

shares in street name through brokerage accounts or other nominees.

Dividends.

We

have never declared or paid any cash dividends on our capital stock. We intend to retain all available funds and future earnings, if

any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the foreseeable

future. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of

directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions,