BIAF US Equity☆

Item 1A. Risk Factors 25

Item 1B. Unresolved Staff Comments 52

Item 1C. Cybersecurity 53

Item 2. Properties 54

Item 3. Legal Proceedings 54

Item 4. Mine Safety Disclosures 54

PART II

Item 6. [Reserved] 55

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62

Item 8. Financial Statements and Supplementary Data 62

Item 9A. Controls and Procedures 63

Item 9B. Other Information 63

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 63

PART III

Item 10. Directors, Executive Officers and Corporate Governance 64

Item 11. Executive Compensation 64

Item 14. Principal Accountant Fees and Services 64

PART IV

Item 15. Exhibit and Financial Statement Schedules 65

Signatures 71

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 subsidiaries, OncoSelect® Therapeutics, LLC, a Delaware limited liability company, and Precision

Pathology Laboratory Services, LLC, a Texas 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;

● our anticipated uses of net proceeds from our financings;

● 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, conflict in the Middle

East, increasing economic uncertainty and inflationary pressures, 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, ir.bioaffinitytech.com, www.cypathlung.com and www.precisionpath.us) to share Company information.

Information contained on or that can be accessed through our websites is not, however, incorporated by reference in this Annual Report.

Investors should not consider any such information to be part of this Annual Report.

Forward-Looking

Statements

This

Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities

Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial

risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1. “Business,” Part I,

Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and

Results of Operations,” but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking

statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,”

“anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions.

These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties,

many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those

expressed, projected, or implied in or by the forward-looking statements.

You

should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that may cause

our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors,

we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking

statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking

statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our

objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

Unless the context requires otherwise, references to “we,” “us,” “our,” and “bioAffinity,”

refer to bioAffinity Technologies, Inc. and its subsidiaries.

Summary

of Risk Factors

Risks

Related to Our Financial Position

Risks

Related to Development and Commercialization of Our Diagnostic Tests

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

Risks

Related to the Operation of Our Commercial Laboratory Accredited by the College of American Pathologists (“CAP”) and the

U.S. Centers for Medicare and Medicaid (“CMS”) in Accordance with the Clinical Laboratory Improvements Amendments of 1988

(“CLIA”).

Risks

Related to Intellectual Property Rights

● Our competitive position depends on protection of our IP.

● We may become involved in lawsuits to protect or enforce our IP.

● Issued patents could be found invalid or unenforceable.

● If we do not obtain patent term extension, our business may be harmed.

● We enjoy only limited geographical protection with respect to certain patents.

Risks

Related to Government Regulations

Risks

Related to Ownership of Our Common Stock and Warrants

● An investment in our Company may involve tax implications.

PART

I

Item

1. Business

Business

Overview

We

develop noninvasive diagnostic laboratory tests to detect early-stage lung cancer and other diseases of the lung using flow cytometry

and automated analysis informed by machine learning, a form of artificial intelligence (AI). Our first commercial diagnostic test,

CyPath® Lung, identifies and analyzes cell populations using flow cytometry, including cancer and cancer-related cells,

that indicate a malignancy in the lung.

CyPath®

Lung addresses the need for noninvasive detection of early-stage lung cancer with the proven ability to detect the leading cancer

killer at its 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 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 or those patients who are likely without lung cancer and should continue

screening in accordance with guidelines. For patients with small pulmonary nodules less than 20 millimeters (mm),

CyPath® Lung has shown 92% sensitivity and 87% specificity with 88% accuracy in a clinical trial, offering the

potential to increase the overall diagnostic accuracy of lung cancer testing, which could lead to increased survival, fewer

unnecessary invasive procedures, reduced patient anxiety, and lower medical costs.

CyPath®

Lung is performed and offered by our wholly owned subsidiary PPLS, a clinical anatomic and pathology laboratory which we acquired by

purchasing the assets of Village Oaks Pathology Services, P.A., a Texas professional association. PPLS is a CAP-accredited and CLIA-certified

commercial laboratory that has been in operation for more than 18 years.

In

addition to CyPath® Lung, we are advancing development of our flow cytometry+AI platform for companion diagnostic

tests targeted at asthma and chronic obstructive pulmonary disease (“COPD”). Diagnostics under development are designed

to quantify the extent and type of inflammation in the lung associated with disease and further detect specific receptors in sputum

that may determine the effectiveness of new and emerging therapies for asthma and COPD that have proved to effectively treat

specific types of inflammation. Therapeutics for these lung diseases that are on the market or in development can help some but not

all patients, and often it is unknown before use whether a drug will be effective. Our tests in development are designed to help

determine the most effective use of new and emerging therapies for asthma and COPD and lessen the need for a trial-and-error

approach to proscribing treatment.

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 continue to advance research

and development for use of this technology for topical treatment of squamous cell skin cancer. We expect to present our findings at conferences

and publish our research in peer-reviewed journals in the near future. We intend to seek strategic partners to develop our therapeutic

discoveries which could result in broad-spectrum cancer treatments in the future.

Research

and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary PPLS and leased

laboratory space at The University of Texas at San Antonio (UTSA). UTSA provided notice in January 2026 that our lease would not be

renewed, and as a result we will relocate our research operations from UTSA to privately owned laboratory space.

Current

Year Financial Highlights

Key

financial results for the year ended December 31, 2025, include:

Recent

Developments

The

Start of Our Longitudinal Clinical Study

In March 2026, we enrolled our first patient in our clinical trial entitled “Detection of Early-Stage Lung Cancer in Sputum using Flow

Cytometry and an Automated Analysis Pipeline” (NCT07168993). The 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, is providing support

and funding associated with the trial at three collection sites – Brooke Army Medical Center in San Antonio, Texas, Walter Reed

Medical Center in Bethesda, Maryland, and the South Texas Audie L. Murphy Memorial Veterans Medical Center.

The approved trial protocol calls for enrollment

of up to 2,063 patients at 17 VA, military, academic and private medical centers who are at high risk for lung cancer with one or

more indeterminate pulmonary nodules between 6 mm to less than 30 mm. Patients enrolled in the trial will be followed until the

patient receives either a diagnosis of cancer or noncancer, with patients followed up to two years. The clinical trial will evaluate

the clinical performance of the test as a sensitive and specific noninvasive diagnostic to identify the presence of lung cancer in

high-risk individuals who have indeterminate pulmonary nodules as determined by CT imaging. To differentiate the investigational use

of our CyPath® Lung test that is offered for commercial sale and use, we use the name “FlowPathtm

Lung” in protocol documents and on collection kits provided to sites.

Continuation

of Research Studies with the Military

Following

the sale of tests to Brooke Army Medical Center (“BAMC”) beginning in the fourth quarter of 2023 and through 2024 as

part of an observational study, we began a collaboration with BAMC in the fourth quarter 2025 to collect and validate the clinical

utility of using CyPath® Lung to analyze sputum samples obtained by tracheal and bronchial suctioning for early

detection of lung cancer. Bronchoscopy is used commonly in the United States, with approximately 500,000 procedures performed

annually. The CyPath® Lung study with BAMC will explore an approach that could expand the utility of

bronchoscopy-collected samples for earlier, noninvasive lung cancer detection.

In

the first quarter of 2026, we began a research collaboration with BAMC to advance the development of companion diagnostic tests

targeted at asthma and COPD. The initial research study is designed to quantify the extent and type of inflammation in the lung

associated with disease and further determine the ability of our diagnostic platform to detect specific receptors in sputum that

determine the effectiveness of new and emerging therapies for asthma and COPD that have been proved to effectively treat specific

types of inflammation.

Positive Research Findings Advance Company’s

Pipeline Tests for Asthma

In March 2026, the Company presented positive research

findings for its platform technology’s ability to identify antibody drug receptors in sputum, including receptors for dupilumab,

a leading therapy for asthma and chronic obstructive pulmonary disease (“COPD”), and benralizumab, another asthma therapy.

The research, presented at the American Academy of Allergy, Asthma and Immunology’s annual conference, advances the Company’s

pipeline tests aimed at guiding personalized treatment decisions and improving disease monitoring for asthma and COPD sufferers.

Appointment of Nationally Recognized Lung Cancer

Authorities to its Medical and Scientific Advisory Board

In February 2026, we announced the appointment of

David Ost, MD, MPH, Chief of Pulmonary, Critical Care and Sleep Medicine at the University of Texas MD Anderson Cancer Center, Daniel

Sterman, MD, Chief of the Division of Pulmonary, Critical Care and Sleep Medicine at New York University Langone Medical Center, and J.

Scott Ferguson, MD, Director of Interventional Pulmonology at the University of Wisconsin School of Medicine and Public Health, to our

Medical and Science Advisory Board that includes recognized leaders in the field of lung cancer.

New Patient Case Studies Add to Real-World Evidence

of CyPath® Lung Reducing Diagnostic Burden

In February 2026, we announced two additional patient

case studies where a CyPath® Lung result of “Unlikely Malignancy” relieved patient anxiety and supported the

physician’s decision to continue repeat imaging rather than subjecting patients to invasive, risky and costly biopsies. The case

studies add to a growing number of reported cases where CyPath® Lung has made a decisive positive impact on patient care.

PPLS Continues to Meet Highest Standards for

Laboratory Operations

In January 2026, we announced that PPLS maintained

its accreditation across all laboratory service lines from the College of American Pathologists (CAP), considered the gold standard for

excellence. CAP accreditation signifies that a laboratory meets high standards of quality, accuracy and patient safety through comprehensive

peer-based inspections conducted every two years.

Public

and Private Offerings

In

October 2025, we entered into definitive agreements for the purchase and sale of 720,000 shares of common stock, par value $0.007 per

share, at a purchase price of $2.50 per share in a registered direct offering priced at-the-market under Nasdaq rules. The gross proceeds

from the offering were approximately $1.8 million before deducting placement agent fees and other offering expenses payable by us.

On

September 29, 2025, we consummated a best efforts public offering of an aggregate of (i) 1,047,694 shares of Common Stock and (ii) pre-funded

warrants to purchase up to 874,067 shares of Common Stock in lieu of shares of Common Stock. Each share was sold at a public offering

price of $2.50. Each pre-funded warrant was sold at a public offering price of $2.493. The total gross proceeds for the transaction were

approximately $4.8 million.

On

August 13, 2025, we entered into a securities purchase agreement with certain institutional and accredited investors, pursuant to which

the Company agreed to issue and sell in a private placement (i) 990 shares of our newly designated Series B Convertible Preferred Stock,

with a par value $0.001 per share and stated value of $1,000 per share, for gross proceeds to us of $990,000, which were initially convertible

into 143,476 shares of our Common Stock at an initial conversion price of $6.90 per share and (ii) warrants to purchase up to 223,824

shares of our Common Stock at an exercise price of $10.56 per share of Common Stock.

On

May 7, 2025, we completed a public offering of securities for gross proceeds of $3.25 million, before deducting agent fees and other

estimated expenses payable by us. The offering consisted of 338,541 shares of our Common Stock, of which 79,044 were pre-funded warrants,

together with warrants to purchase up to 507,812 shares of Common Stock, at a combined offering price for each share of Common Stock

(or pre-funded warrant) and accompanying warrant of $9.60 per share. The warrants have an exercise price of $10.56 per share and have

certain provisions that allow for additional shares to be issued in the event of a reverse split of Common Stock. Additionally, the

warrants include an anti-dilution adjustment which is subject to stockholder approval.

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) warrants 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 37,878 shares of Common Stock issued on October 21, 2024 (the

“October Warrants”), at the reduced exercise price of $17.40 per share. We received aggregate gross proceeds of approximately

$1.4 million, before deducting advisory fees and other expenses payable by 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 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.

See

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more detailed discussion

of the foregoing transactions.

Our

First Diagnostic Test – CyPath® Lung

Lung

cancer remains the most commonly diagnosed cancer and the leading cause of cancer-related deaths worldwide, claiming more than 1.8 million

lives with almost 2.5 million new cases reported in 2022, according to a 2024 article in CA: A Cancer Journal for Clinicians.

Lung cancer is the leading cause of cancer deaths in the European Union with an estimated 17 to 34 million people at high risk, according

to Cancer Epidemiology. China reported 1,060,600 cases of lung cancer in 2022. The American Lung Association (“ALA”)

estimated that screening for individuals at high risk for lung cancer has the potential to improve lung cancer survival rates by finding

disease at an earlier stage when it is more likely to be curable. An estimated 19.3 million Americans should have annual screening

for lung cancer, according to American Cancer Society recommendations. A study published in the New England Journal of Medicine

titled “Survival of patients with stage I lung cancer detected on CT screening” dated October 26, 2006, reported that the

survival rate of individuals with Stage I lung cancer who underwent surgical resection within one month after diagnosis had a 10-year

survival rate of 92%, as compared to the current overall five-year survival rate in the U.S. of 29.7% as reported by the ALA in its 2025

“State of Lung Cancer” report . Unfortunately, most lung cancer is detected in late stages. The results of a large national

clinical trial that was reported in the New England Journal of Medicine in an article dated August 4, 2011, titled “Reduced

Lung-Cancer Mortality with Low-Dose Computed Tomographic Screening” showed that screening for lung cancer using low-dose computed

tomography (“LDCT”) resulted in a reduction of the mortality rate by up to 20% as compared to screening by X-ray if LDCT

screening is used by patients at high risk for lung cancer on an annual basis. If half of the individuals at high risk were screened,

more than 12,000 lung cancer deaths could be prevented, according to the ALA. However, the New England Journal of Medicine article

also reported that LDCT was shown to have a low positive predictive value of less than 4%. This means that for every 100 people who receive

a positive result from LDCT screening and are suspected of having lung cancer, only four actually have the disease. A reliable, noninvasive,

and cost-effective diagnostic test can increase diagnosis of early-stage lung cancer while lowering the number of unnecessary and invasive

procedures for patients with a false positive result from LDCT screening. (A false positive test result indicates that the patient has

lung cancer when he or she does not have the disease.)

CyPath® Lung

is a test for early-stage lung cancer proven to detect curative Stage 1A lung cancer that is designed to meet the need for greater

diagnostic certainty. Based on our internal analysis, its use in conjunction with LDCT is predicted to improve the positive

predictive value (the probability that patients with a positive LDCT scan truly have the disease) by a factor of five. Our analysis

concludes that improving the positive predictive value of LDCT with the use of CyPath® Lung has the potential to

subject fewer patients to the stresses of misdiagnosis or unnecessary diagnostic procedures, such as biopsies, while also reducing

healthcare costs. Physicians receive a CyPath® Lung test result within three days of the sample arriving at the

laboratory that identifies patients who should undergo more aggressive follow-up procedures to confirm a suspected lung cancer or

guide and support a physician’s decision to monitor the patient using LDCT or CT imaging.

The

results of a clinical trial using CyPath® Lung, “Detection of Early-Stage Lung Cancer in Sputum using Automated

Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023, reported overall 88% specificity,

meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer

in a person with the disease. For the subset of patients in this trial who had lung nodules 20 millimeters or smaller or no nodules detected

by imaging, this trial resulted in 92% sensitivity, 87% specificity, 99% negative predictive value, and 88% accuracy. This 150-patient

test validation trial analyzed sputum from people at high risk for lung cancer including patients with the disease (N=28) and those who

were cancer-free (N=122). In the subset of 132 individuals with small nodules, 119 patients were cancer-free and 13 had confirmed lung

cancer. 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. Furthermore,

clinical trial results reported an Area Under the Curve (AUC) value of 0.89 for CyPath® Lung. AUC value indicates the

ability of a test to distinguish between positive and negative cases. An AUC value of 0.7 to 0.8 is considered acceptable; 0.8 to 0.9

is excellent; more than 0.9 is outstanding. In study participants with lung nodules less than 20 mm, the test performed with an AUC value

of 0.94.

A

study authored by two pulmonologists and published in 2024 in the peer-reviewed Journal of Health Economics and Outcomes Research

reported that adding CyPath® Lung to the standard of care for Medicare patients with a positive lung cancer screening

could have saved an average of $2,773 per patient for total cost savings of $379 million in 2022, while the screening could have saved

an average of $6,460 per patient for privately insured patients with a positive lung cancer screening for total cost savings of $891

million. The peer-reviewed study, “Economic Evaluation of a Novel Lung Cancer Diagnostic in a Population of Patients with a Positive

Low-Dose Computed Tomography Result,” attributes the savings to a reduction in follow-up diagnostic assessments, expensive follow-up

procedures, and procedure-related complications. Michael J. Morris, M.D., BAMC pulmonology and critical care physician and Assistant

Dean of Research at San Antonio Uniformed Services Health Education Consortium (“SAUSHEC”), and Sheila A. Habib, M.D., Director

of the Pulmonary Lung Nodule Clinic and the Lung Cancer Screening Program at the South Texas Veterans Health Care Systems’ Audie

L. Murphy Memorial Veterans Hospital and Assistant Professor at the University of Texas Health Science Center at San Antonio, were first

and second authors on the study. Economists John E. Schneider, Ph.D., and Maggie L. Do Valle, Master of Public Health, of Avalon Health

Economics also were authors on the study.

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. A patented algorithm developed

using machine learning, a form of AI, automatically analyzes a patient’s flow cytometry data to generate a physician’s report

within minutes after data acquisition that stratifies patients into one of two risk groups. A “Likely” result means cancer

has been detected. An “Unlikely” result means cancer has not been detected. The physician’s report also provides a

numerical probability score between 0.1 to 1.0, with 0.1 to less than 0.5 being a negative result and more than 0.5 to 1.0 considered

positive for lung cancer. The proprietary automated analysis software was developed and is wholly owned and patent protected by bioAffinity

Technologies.

The

flow cytometer is a well-established instrument used in many commercial laboratories. Flow cytometry collects data pertaining to properties

of single cells labeled with antibodies and dyes specific to cell types and characteristics. Sputum is an excellent sample for analysis

because it is in direct contact with any malignancy in the lungs and can provide information about its area of field cancerization and

the lung microenvironment.

In

particular, CyPath® Lung uses a synthetic porphyrin called meso-tetra (4-carboxyphenyl) porphyrin (“TCPP”).

Porphyrins are biological pigments that, when exposed to ultraviolet light at certain wavelengths, can result in the cell fluorescing

a red or purplish color that can be detected under a microscope or by flow cytometry, according to an article titled “Laboratory

Diagnosis of Porphyria,” published in Diagnostics (Basel) on July 26, 2021. Porphyrins can be man-made, like TCPP, or they

can be naturally occurring, like heme that is responsible for the red color in red blood cells. Cancer cells are known to take up certain

porphyrins in higher amounts than non-cancer cells, and the high affinity for cancer cells displayed by TCPP makes it an excellent bio-label

for cancer, according to an article published in Progress in Clinical and Biological Research in 1984 titled “A comparative

study of 28 porphyrins and their abilities to localize in mammary mouse carcinoma: uroporphyrin I superior to hematoporphyrin derivative.”

CyPath®

Lung evaluates sputum for the presence of cancer without the opportunity to introduced operator bias. Our approach allows the entire

sputum sample to be rapidly analyzed. The numerical analysis developed with machine learning captures complex interactions between lung

cancer, the microenvironment, and areas of field cancerization that would be 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 are informative

as to the presence of cancer in the lung. These findings are the result of our machine learning approach to automated analysis.

CyPath®

Lung uses sputum that is obtained noninvasively by patients in the privacy of their home. Physicians most often order the test

for patients after CT imaging reveals one or more pulmonary nodules that have a higher risk but are not certain to be lung cancer. A

patient collects his or her sample using a hand-held, noninvasive assist device, ICU Medical’s Acapella® Choice

Blue, that acts to break up mucus in the lungs and help a person cough up sputum from the lung into a collection cup. The Acapella®

Choice Blue has been 510(k)-cleared by the Food and Drug Administration (“FDA”) as a positive expiratory pressure device

to help mobilize lung secretions in people with certain lung conditions

The

sputum sample is shipped overnight by the patient to PPLS and processed into a single-cell suspension, then labeled with antibodies that

distinguish different cell types and the synthetic porphyrin TCPP that identifies cancer cells and/or cancer-associated cells. Our test

can collect sample data and analyze a sputum sample to produce a physician’s report in less than 20 minutes using integrated software

for high-throughput, user-friendly standardized analysis.

The

CyPath® Lung technology is based on scientific work originating at Los Alamos National Laboratory in collaboration with

St. Mary’s Hospital in Colorado. In the Los Alamos research study, sputum samples from lung cancer patients were differentiated

from non-cancer samples with 100% accuracy. This early research was conducted with sputum from 12 uranium miners. Microscope slides of

sputum samples were labeled with the synthetic fluorescent porphyrin TCPP. The Los Alamos research study of 12 uranium miners included

eight men with cancer and four healthy individuals. Researchers were blinded to the sample origin and looked for the presence of highly

fluorescent cells indicating uptake of TCPP as an indicator of lung cancer. The length of the study and specific follow-up was not reported,

but researchers did report that one patient in the study who had been incorrectly considered to be a healthy subject was correctly diagnosed

with cancer by the test. Later, a blinded clinical trial was conducted and results published in September 2015 in an article titled “Early

Detection of Lung Cancer with Meso-Tetra (4-Carboxyphenyl) Porphyrin-Labeled Sputum” in the Journal of Thoracic Oncology.

This study reported on an earlier version of CyPath® Lung that used a fluorescent 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 fluorescent 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 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 earlier 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 study concluded that optimizing the test to provide for analysis of the

entire sputum sample would improve results.

On

January 1, 2024, the Medicare reimbursement code 0406U specific for CyPath® Lung became effective. The Current Procedural

Terminology (“CPT”) Proprietary Laboratory Analysis (“PLA”) code specifically for use with CyPath®

Lung, is 0406U with the descriptor “Oncology (lung), flow cytometry, sputum, 5 markers (meso-tetra [\4- carboxyphenyl porphyrin

TCPP, CD206, onveniCD66b, CD3, CD19), algorithm reported as likelihood of lung cancer.”

We

have an agreement with Cardinal Health for logistical services assisting in the delivery of collection kits and

return of patient samples to PPLS. Laboratory reagents, supplies, and equipment are commercially available through multiple vendors. Sample

processing, labeling, and data collection can be accomplished by a laboratory technician skilled in general laboratory techniques. Data

analysis leading to a physician’s report is done by using automated analysis software fully integrated into the test.

To

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

the presence of lung cancer from sputum samples.

The

Cancer Diagnostics Market and CyPath® Lung

The

global lung cancer diagnostic market is projected to grow from an estimated $15.1 billion in 2023 to $34.8 billion by the end of 2034,

with a compound annual growth rate (“CAGR”) of 7.9%, according to a market research report issued by Transparency Market

Research in October 2024. Our Company has the potential to play a significant role in the global cancer diagnostic market because we

hold a strong and expanding IP portfolio for CyPath® Lung, a noninvasive, cost-effective, and high performing test that

has the potential to better patient outcomes.

In

particular, we believe the market for CyPath® Lung is poised for significant growth. The test is most often ordered

by physicians who need better clarity when patients present with small pulmonary nodules that are considered indeterminate, leaving

both physician and patient without a clear diagnostic path forward. In Gould et al. (2015), researchers reported that imaging

increasingly finds indeterminate pulmonary nodules with difficult choices: “watchful waiting” with serial CT scans or

invasive procedures. According to the National Lung Screening Trial Research Team (2011), lung cancer screening using low

dose CT can detect lung cancer at an early stage, but it has low specificity. Only about four out of 100 patients with a

suspicious finding will have lung cancer.In addition, Gould et al. observed that indeterminate pulmonary nodules are

increasingly found incidentally when imaging for other reasons.

Projected Number of Indeterminate Pulmonary

Nodules in the U.S.

As

shown below, the total number of indeterminate pulmonary nodules detected by lung cancer screening and incidentally is projected to increase

by 62% from 2.9 million in 2025 to 4.7 million in 2030, representing an estimated market of greater than $4.7 billion for

CyPath® Lung. The forecast is based on a percentage of 2024 reported cases of suspicious pulmonary nodules and assumes

a 10% compound annual growth for the 2024-2030 period based on 1) an increase in lung cancer screening from 18.1% in 2023 to close to

50% by 2030 due to growing adoption and awareness with improved access, and 2) improved ability to detect indeterminate nodules through

greater adherence to guideline recommendations and use of AI.

In

addition, CyPath® Lung’s ability to be used for surveillance of cancer survivors after they have completed treatment

represents an estimated market of $870 million over the next ten years. The total number of people living with lung cancer is projected

to increase by 28% from 680,450 survivors in 2025 to 871,580 in 2035.

Comparison

of CyPath® Lung to Current Standards of Care

As

seen in the above table, CyPath® Lung performs favorably compared to current Standards of Care, including more invasive

and riskier diagnostic procedures. Our business model is to address the need for a noninvasive, cost-effective, high-performing lung

cancer diagnostic that meets the need for more diagnostic certainty leading to quicker diagnosis at earlier stage for longer survival

and reduced medical costs.

CyPath®

Lung Business Development Plan

We

believe in the viability of our business plan based on the circumstances surrounding our business that are known to us as of the date

of this Annual 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 three phases of strategic expansion in the U.S. and the

European Union (“EU”) and Asia that are timed to maximize our resources and minimize market risk.

In

January 2025, we reported successful results from the Company’s CyPath® Lung pilot marketing program using Texas

for our beta launch with sales growth quarter-over-quarter and more than 600 tests delivered in 2024. Our test marketing approach allowed

us to refine future positioning and develop strategic insight for our CyPath® Lung test before expanding to a larger market.

In 2025, we more than doubled the number of tests sold and tripled our revenues. We expanded our sales team in the second half of 2025

to enter the Mid-Atlantic market.

In

2026, we will enter Phase 2 of our business plan with expansion into broader strategic markets aimed at providing national coverage,

including increasing our sales force and strategic partners in the Mid-Atlantic and entering the South Atlantic, Southeast, Northeast,

Midwest, West and federal markets. Phase 2 includes launching our longitudinal clinical trial that will provide additional validation

and further evidence of CyPath® Lung’s ability to detect early-stage lung cancer.

In

Phase 3 of our business plan, we expect to have achieved a national sales footprint upon which we can build and secure strategic partners

in the EU and Asia who can support entry into those markets. We also foresee establishing CyPath® Lung as a Standard of

Care for the federal and VA healthcare systems which can propel CyPath® Lung for adoption as a Standard of Care for the

entire U.S. healthcare system.

We

will continue to execute on strategic marketing and promotional collaborations that can accelerate growth, including collaboration with strategic partners that provide greater market access, marketing resources, and opportunities

to leverage existing relationships with physicians and their patients.

We

have developed messaging and marketing programs that will continue to grow both in size and scope as we penetrate the U.S. market, including

executing strategies that take advantage of practicing physicians who find significant benefits from using CyPath® Lung.

To date, we have published more than a dozen patient case studies. Peer-to-peer communication has been a driver for sales which is supported

by attending major conferences and presentations by key opinion leaders (“KOLs”) of case studies, digital marketing, social

media presence, and advertising to create an “inbound” lead generation mechanism that delivers our message to our target

audience.

The

Competition for CyPath® Lung

CyPath®

Lung has not been tested directly against its competitors’ products, but a comparison of the published performance numbers

provides evidence that CyPath® Lung is among the highest performing tests on the market. Furthermore, CyPath® Lung is

noninvasive – not even requiring a needle stick – and cost effective. Processing and analysis procedures are easy to perform.

Our competitive analysis reviewed published research that was sufficient to provide a scientific basis for evaluation.

Low

dose computer tomography (LDCT) is recommended as a screening test with eligibility driven by age and smoking history, but its low positive

predictive value (PPV) can lead to unnecessary invasive procedures on benign nodules. CyPath® Lung is recommended for

adults at high risk of lung cancer, particularly those with small or indeterminate pulmonary nodules discovered by LDCT, to assist doctors

in deciding whether to recommend invasive procedures such as biopsy or continue monitoring by LDCT. CyPath® Lung and competing

tests that assist in making such decisions may be categorized as (1) rule-out tests (2) rule-in tests, and (3) balanced tests. Rule-out

tests are designed to have high sensitivity and negative predictive value (NPV) to determine that the patient is unlikely to

have lung cancer and exclude the patient from unnecessary follow-up procedures. However, these tests also have lower specificity and

produce a greater number of false positives results. Rule-in tests by contrast have high specificity but lower sensitivity, providing

higher positive predictive value (PPV) so that a positive result predicts the patient does have lung cancer. The positive result may

lead to more aggressive follow-up procedures but with higher false-negative rates that can result in more invasive procedures on benign

nodules. Balanced tests are designed to achieve high sensitivity and specificity to both exclude patients without cancer

from unnecessary follow-up diagnostic procedures and accurately detect patients with early-stage cancer who can proceed to more aggressive

procedures to confirm diagnosis.

CyPath®

Lung is a balanced test, having demonstrated a sensitivity of 92% and a specificity of 87% and a NPV of 99% for patients with nodules under 20 mm in a

population with lung cancer prevalence of 18% (Lemieux 2023, Morris 2024). The high sensitivity and specificity of CyPath® Lung

make it a balanced test. In our analysis we will classify competitors as balanced tests, rule-out tests and rule-in tests.

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 (1) sputum is in close contact with the tumor and pre-cancerous areas

that shed cancer and pre-cancerous cells directly into the sputum, (2) can be obtained noninvasively, and (3) can be transported easily.

Moreover, sputum contains immune cell populations associated with the presence of a tumor. Second, our proprietary technology is straightforward.

CyPath® Lung uses well-established flow cytometry techniques to investigate cells contained in the sputum for characteristics

that indicate the likelihood of lung cancer, unlike molecular tests which can use labile genetic materials. Sample processing is well

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

is fully automated, allowing for non-biased, efficient test results. Third, CyPath® Lung has demonstrated 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, with a Medicare reimbursement code billable to both government and private insurance carriers. A 2024 study authored

by Michael Morris, M.D., and Sheila Habib, M.D., reported on CyPath® Lung’s economic impact when used as companion

test to the current standard of care predicting savings of more than $2,700 per Medicare patient and more than $6,400 per patient with

private payer insurance who have pulmonary nodules sized less than 30 mm. Fifth and as important as any of our test’s benefits,

CyPath® Lung is patient friendly, providing at-home, noninvasive sample collection.

The

recent economic journal article evaluating the significant healthcare cost benefits of using CyPath® Lung as a standard

of care (Morris, et al., 2024) shows that balanced tests, like CyPath® Lung, can be the most cost effective. Tests that

perform well are most useful to a physician and their patient because they provide the most information, allowing a quicker decision

on what follow-up path to choose: whether to move forward with more aggressive follow-up procedures after a CyPath® Lung

results in a “likely malignancy” or to follow a more conservative approach when the CyPath® Lung test result

is “unlikely malignancy”.

Building

on our Flow Cytometry Platform to Develop Asthma and COPD Companion Diagnostics

We are conducting research studies that expand our

platform technology to detect the type and severity of inflammation in the lung and design precision diagnostics that identify patients

who will benefit from effective but often expensive commercial therapies treating asthma and chronic obstruction pulmonary disease (“COPD”).

Major pharmaceutical companies offer very effective treatments for asthma and COPD that work well for some sufferers but not all. Many

patients must try a series of different types of treatments before finding an effective therapy. Our tests under development leverage

our expertise in using our proprietary flow cytometry platform equipped with automated AI analysis to develop tests that match asthma

and COPD patients with the most appropriate biologic therapies and monitor their ongoing conditions.

An

estimated 23 million adults in the U.S. and 27 million people in the EU have been diagnosed with asthma, and 4.2% of Chinese adults presented

with asthma in a representative sample of adults recruited for a national cross-sectional China Pulmonary Health study between 2012 and

2015, representing 45.7 million adults in China. Furthermore, an estimated 14.2 million U.S. adults had COPD in 2021, and approximately

36.6 million people in Europe had COPD in 2020, with the expectation that almost 50 million people in Europe will have COPD in 2050.

The diagnostics market for COPD alone was valued at $5.6 billion in 2023 and is expected to reach $8.2 billion by 2029, according to

a market research study published by Research and Markets in November 2023. We are building on our expertise in using sputum as

a sample for flow cytometric analysis to develop tests to detect COPD and asthma, including research to detect the presence of specific

therapeutic targets to identify patients who can benefit from specific treatments. We expect to begin patient studies in 2026.

OncoSelect®

Therapeutics Research

We

have completed and expect to report at one or more scientific conferences our findings describing the results of our research to advance

our own scientific discoveries demonstrating that inhibition of the expression of two specific cell membrane proteins results in the

selective killing of various cancer cell types grown in the laboratory with little or no effect on normal (non-cancerous) cells. We continue

to advance research for use of this technology as a topical treatment of squamous cell skin cancer. We expect to present our findings

at conferences and publish our research in peer-reviewed journals in the near future. We intend to seek strategic partners to develop

our therapeutic discoveries which could result in broad-spectrum cancer treatments in the future.

Our

therapeutic discoveries originated from our research on how TCPP, the synthetic porphyrin used in CyPath® Lung, enters

cancer cells. We conducted research to better understand the mechanism of TCPP’s selective uptake in cancer cells. Our research

identified receptors, cell-membrane proteins which capture small molecules outside of the cell and bring them inside the cell, that are

associated with TCPP. Experiments that we conducted confirmed that at least two of these receptors, CD320 and LRP2, contributed to TCPP

uptake by cancer cells. When these receptors were individually “knocked down” in cancer cells and therefore could not be

made by the cell, TCPP uptake was significantly decreased. Knock-down of CD320 and LRP2 receptors was achieved by introducing siRNA molecules

into the cells that cause the destruction of CD320 and LRP2 gene products. These gene products were the messenger (m)RNAs that are the

precursors of the receptor protein. An siRNA is a small, chemically synthesized piece of RNA that specifically binds to mRNA, prohibiting

the further production of the corresponding proteins. Thus, the reduction of CD320 or LRP2 mRNAs reduced the CD320 or LRP2 protein, respectively,

and resulted in decreased TCPP uptake in a variety of cancer cells, with a larger decrease observed when CD320 was knocked down. We subsequently

discovered that the simultaneous knockdown of these two cell-surface receptors, CD320 and LRP2, was deadly to cancer cells or inhibited

their growth significantly but left normal cells virtually unharmed.

We

designed siRNAs to effectively eliminate CD320 and LRP2 protein production. With these CD320 and LRP2 siRNAs, we achieved a reduction

of CD320 and LRP2 protein levels of up to 90%. Simultaneous siRNA knock-down of CD320 and LRP2 in normal cells, including skin fibroblasts

and breast epithelial cells, did not affect cell growth. However, knock-down of CD320 and LRP2 in cancer cell lines derived from diverse

tissues (lung, breast, prostate, brain, and skin cancers) inhibited cell growth or killed the cells, in some cases up to 80%.

Corporate

Information

We

were incorporated in the State of Delaware on March 26, 2014. Our principal executive office is located at 3300 Nacogdoches, Suite 216,

San Antonio, Texas 78217, and our telephone number at that address is (210) 698-5334. Our website address is https://www.bioaffinitytech.com/.

Information contained on or that can be accessed through our website is not incorporated by reference into this Annual Report. Investors

should not consider any such information to be part of this Annual Report.

Intellectual

Property Portfolio

We

strive to protect the proprietary technologies that we believe are important to our business, including pursuing and maintaining patent

protection intended to cover our commercialized diagnostic test, pipeline product candidates and their use, as well as other inventions

that are important to our business. In addition to patent protection, we also protect valuable company assets with copyright, trademark,

trade secret, and know-how through confidentiality agreements, invention assignment agreements, and a trade secret program to protect

aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. The confidentiality

agreements are designed to protect our proprietary information, and the invention assignment agreements are designed to gain company

control and ownership of technologies that are developed for us by our employees, consultants, or other third parties. We seek to preserve

the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises, physical and electronic

security of our information technology systems, and non-disclosure agreements with those that produce or receive company confidential

information. While we have confidence in our agreements and security measures, either may be breached, and we may not have adequate remedies.

In addition, our trade secrets may otherwise become known or independently discovered by competitors.

Our

commercial success depends in part upon our ability to obtain and maintain patent and other proprietary protection for commercially important

technologies, inventions, and trade secrets related to our business, defend and enforce our intellectual property rights, particularly

our patent rights, preserve the confidentiality of our trade secrets, and operate without infringing valid and enforceable intellectual

property rights of others.

The

patent positions for biotechnology companies like ours are generally uncertain and can involve complex legal, scientific, and factual

issues. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope

can be reinterpreted and even challenged after issuance. As a result, we cannot guarantee that any of our product candidates will be

protectable or remain protected by enforceable patents. We cannot predict whether the patent applications we are currently pursuing will

issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection

from competitors. Any patents that we hold may be challenged, circumvented, or invalidated by third parties.

As

of December 31, 2025, we and our OncoSelect® subsidiary have a patent estate that includes 19 issued U.S. and non-U.S. counterpart

patents including three U.S. patents and 16 counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, Italy, Mexico,

Japan, Spain, Sweden, and the United Kingdom. We and OncoSelect® own all patents and trademarks in our intellectual property

portfolio. One U.S. patent and nine counterpart non-U.S. patents directed at diagnostic applications expire in 2030, three non-U.S. patents

directed at a diagnostic application for lung cancer prediction expires in 2039, and one non-U.S. patent directed to an automated diagnostic

lung cancer prediction assay expires in 2042. One U.S. patent directed to siRNA therapeutic compounds and method of use for treating

cancer expires in 2042, one counterpart non-U.S. patent expires in 2039, and one U.S. patent and two counterpart non-U.S. patents directed

to therapeutic porphyrin conjugate compounds and method of use for treating cancer expire in 2037.

With

regard to our diagnostic patent portfolio, we have one issued U.S. patent and nine counterpart patents in Canada, China, France, Germany,

Hong Kong, Italy, Spain, Sweden, and the United Kingdom. Diagnostic lung health patents have issued in Australia, China and Japan. Our

diagnostic lung health patent applications, fall into one of two families: one directed at diagnosing lung health using flow cytometry