bioAffinity Technologies Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
BIAF$2.72+4.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001493152-24-019615
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001493152-24-031943
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 75 previous paragraphs and 94 current paragraphs.
47 unchanged; 21 reworded; 15 added; 7 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
On August 2, 2024 we entered into warrant exercise agreements with three existing accredited investors to exercise certain outstanding warrants (the “Existing Warrants”) to purchase an aggregate of 1,041,667 of shares of common stock, par value $0.007 per share (the “Common Stock”). In consideration for the immediate exercise in full of the Existing Warrants for gross cash proceeds of approximately $1,302,083, the exercising holders received in a private placement new unregistered warrants (the “New Warrants”) to purchase up to an aggregate of 1,302,083 shares of Common Stock (equal to 125% of the shares of Common Stock issued in connection with the exercise of the Existing Warrants) with an exercise price of $1.50 per share and are initially exercisable on the date that stockholder approval of the exercise of the New Warrants is obtained and will expire five years from the date of such approval. In connection with the exercise of the Existing Warrants, we agreed to reduce the exercise price of the Existing Warrants from $1.64 to $1.25 per share. The exercise of the Existing Warrants and the issuance of the New Warrants occurred on August 5, 2024.
Current report
On August 2, 2024, we also entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”), pursuant to which we issued to the Purchaser, (i) in a registered direct offering, 360,000 shares of Common Stock, and (ii) in a concurrent private placement, warrants (the “Private Warrants”) to purchase an aggregate of 450,000 shares of Common Stock (the “Private Warrant Shares”), with an exercise price of $1.50 (collectively, the “Offering”). We received aggregate gross proceeds from the Offering of approximately $450,000, before deducting fees payable to the placement agent and other estimated offering expenses payable by us.
Current report
Depreciation and Amortization
Current report
Depreciation and amortization expenses totaled $151,070 and $21,552 for the three months ended June 30, 2024 and 2023, respectively. The increase of approximately $130,000, or 601% for the three months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to the acquired assets from PPLS during the prior year acquisition.
Current report
Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023
Current report
Revenue
Current report
Operating Expenses
Current report
Direct costs and expenses
Current report
Research and Development Expenses
Current report
Clinical Development
Current report
Clinical development expenses totaled $100,422 and $54,888 for the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $46,000, or 83%, for the six months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to an increase in compensation costs and benefits as we added clinical development personnel.
Current report
Selling, General and Administrative
Current report
Other Income (Expense)
Current report
Depreciation and Amortization
Current report
Depreciation and amortization expenses totaled $300,707 and $43,236 for the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $257,000, or 596% for the six months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to the acquired assets from PPLS during the prior year acquisition.
Removed paragraphs (7)
Previous report
On March 6, 2024, we received aggregate gross proceeds of $2.5 million from the sale to four institutional investors (the “Purchasers”) of (1) 1,600,000 shares of our Common Stock in a registered direct offering, and (2) Common Warrants to purchase an aggregate of 1,600,000 shares of Common Stock (the “Common Warrants”) with an exercise price of $1.64 in a concurrent private placement (the “Transactions”).
Previous report
The Common Stock was offered pursuant to a shelf registration statement on Form S-3 (File No. 333-275608), which was declared effective on November 27, 2023, (as amended from time to time, the “Registration Statement”). The Common Warrants and the shares of Common Stock issuable upon exercise of the Common Warrants (the “Common Warrant Shares”) were issued in a concurrent private placement and were registered on a resale registration statement that was declared effective by the Securities and Exchange Commission on April 15, 2024. The Common Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of Common Stock issuable upon exercise of the Common Warrants (the “Stockholder Approval Date”) and will expire on the fifth anniversary of the Stockholder Approval Date. We are seeking stockholder approval of such issuance at our Annual Meeting of Stockholders being held on June 4, 2024.
Previous report
Pursuant to the terms of the Purchase Agreement, until 60 days following the closing of the Transactions, we were prohibited from issuing (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents, subject to certain exceptions. We have further agreed not to enter into an agreement involving a variable rate transaction until 12 months following the closing of the Transactions, provided however that the prohibition on “at-the-market offerings” and the issuance of common stock pursuant to an equity line of credit shall expire on the six-month anniversary of the closing date of this offering. In addition, our Chief Executive Officer and each of our directors have entered into lock-up agreements with the Company pursuant to which each of them has agreed not to, for a period of 60 days from the closing of the Transactions, offer, sell, transfer, or otherwise dispose of our securities, subject to certain exceptions. In addition, from the date of the Purchase Agreement until the date that is nine (9) months after the date of the Purchase Agreement, upon any issuance by the Company or any of its subsidiaries of Common Stock, common stock equivalents for cash consideration, Indebtedness (as defined in the Purchase Agreement) or a combination of units thereof for capital raising purposes other than an at-the-market offering (a “Subsequent Financing”), the Purchasers shall have the right to participate in the Subsequent Financing in an amount up to the percentage of such Purchaser’s participation in the Transactions on the same terms, conditions, and price provided for in the Subsequent Financing.
Previous report
WallachBeth Capital LLC acted as the placement agent for the offering and received a cash fee of 9.0% of the aggregate gross proceeds paid to us for the securities sold in the transactions and reimbursement of certain out-of-pocket expenses. As additional compensation we issued to WallachBeth Capital LLC a warrant (the “Placement Agent Warrant”) to purchase an aggregate of 32,000 shares of Common Stock, such number of shares equal to two percent (2.0%) of the number of shares of Common Stock issued in the registered direct offering, at an exercise price per share equal to $1.64, which is equal to the exercise price of the Common Warrants. The Placement Agent Warrant is exercisable via “cashless exercise” in certain circumstances.
Previous report
We also agreed to file a registration statement to register the resale of the Common Warrant Shares and the shares of Common Stock issuable upon exercise of the Placement Agent Warrant (the “Placement Agent Warrant Shares”) within 30 days of the date of the Purchase Agreement and to use commercially reasonable efforts to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares and until the Placement Agent does not own the Placement Agent Warrant or any Placement Agent Warrant Shares. We are also obligated to hold a stockholders’ meeting 90 days after the closing date and every three months thereafter seeking approval of the exercise of the Common Warrants. The registration statement was filed on April 4, 2024, and was declared effective by the SEC on April 15, 2024. We are seeking stockholder approval of such issuance at our Annual Meeting of Stockholders being held on June 4, 2024.
Previous report
Interest Income (Expense), net
Previous report
Interest income (expense), net was $6,127 for the three months ended March 31, 2024, compared to $38,654 for the three months ended March 31, 2023. The decrease in interest income of $32,527 is due to a lower cash balance in our money market savings account.
Reworded paragraphs (21)
Previous wording
This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis (the “MD&A”) is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report and should be read in conjunction with our interim unaudited condensed consolidated financial statements and notes elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024 (the “2023 Form 10-K”). The MD&A is also intended to provide you with information that will assist you in understanding our consolidated financial statements, the changes in key items in those consolidated financial statements from year to year, and the primary factors that accounted for those changes. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause the Company’s financial results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Quarterly Report and in the “Risk Factors” section of the 2023 Form 10-K.
Current wording
This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis (the “MD&A”) is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report and should be read in conjunction with our interim unaudited condensed consolidated financial statements and notes elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2023, included in the Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024 (the “2023 Form 10-K”). The MD&A is also intended to provide you with information that will assist you in understanding our consolidated financial statements, the changes in key items in those consolidated financial statements from year to year, and the primary factors that accounted for those changes. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause the Company’s financial results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Quarterly Report and in the “Risk Factors” section of the 2023 Form 10-K.
Previous wording
Data as of and for the three months ended March 31, 2024 and 2023, has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.
Current wording
Data as of and for the three and six months ended June 30, 2024 and 2023, has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.
Previous wording
bioAffinity Technologies, Inc. (the “Company,” “bioAffinity Technologies,” “we,” or “our”) develops noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung. We also are conducting early-stage research focused on advancing therapeutic discoveries that could result in broad-spectrum cancer treatments. We develop proprietary noninvasive diagnostic tests using technology that identifies cancer cells and cell populations indicative of a diseased state for analysis using proprietary platforms developed using AI. Research and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary, Precision Pathology Laboratory Services, LLC (“PPLS”), and The University of Texas at San Antonio.
Current wording
bioAffinity Technologies, Inc. (the “Company,” “bioAffinity Technologies,” “we,” or “our”) develops noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung. We also are conducting early-stage research focused on advancing therapeutic discoveries that could result in broad-spectrum cancer treatments. We have developed a proprietary noninvasive diagnostic test using technology that identifies cancer cells and cell populations indicative of a diseased state for analysis using proprietary platforms developed using AI. Research and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary, Precision Pathology Laboratory Services, LLC (“PPLS”), and The University of Texas at San Antonio.
Previous wording
To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath®Lung. As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. As of March 31, 2024, we had cash and cash equivalents of $2.5 million.
Current wording
To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath®Lung. As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. As of June 30, 2024, we had cash and cash equivalents of $0.8 million. As of August 9, 2024, after taking into account the August 2024 financing transactions, we had cash and cash equivalents of $1.5 million, which we expect will not support our operations beyond October.
Previous wording
Prior to the acquisition, Village Oaks, under the trade name Precision Pathology Services, had licensed and developed CyPath® Lung as an LDT for sale to physicians. The license agreement provided that revenues from the sale would be split evenly between the Company and Village Oaks. In the second quarter of 2022, prior to the acquisition, we started to recognize revenue as part of a limited beta market testing program of the CyPath®Lung test. We have never been profitable, and as of March 31, 2024, we had total working capital of $2.1 million and an accumulated deficit of approximately $46.7 million. We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to the acquisition. We intend to license our therapeutic products for clinical development should animal and pre-clinical studies prove successful.
Current wording
Prior to the acquisition, Village Oaks, under the trade name Precision Pathology Services, had licensed and developed CyPath® Lung as an LDT for sale to physicians. The license agreement provided that revenues from the sale would be split evenly between the Company and Village Oaks. In the second quarter of 2022, prior to the acquisition, we started to recognize revenue as part of a limited beta market testing program of the CyPath®Lung test. We have never been profitable, and as of June 30, 2024, we had total working capital of $26,000 and an accumulated deficit of approximately $48.7 million. We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to the acquisition. We intend to license our therapeutic products for clinical development should animal and pre-clinical studies prove successful.
Previous wording
Net loss for the three months ended March 31, 2024, was approximately $2.1 million, compared to a net loss of approximately $1.5 million for the three months ended March 31, 2023.
Current wording
Net loss for the three months ended June 30, 2024, was approximately $2.1 million, compared to a net loss of approximately $1.7 million for the three months ended June 30, 2023.
Previous wording
Operating expenses totaled $4.4 million and $1.6 million during the three months ended March 31, 2024 and 2023, respectively. The increase in operating expenses is the result of the following factors.
Current wording
Operating expenses totaled approximately $4.5 million and $1.8 million during the three months ended June 30, 2024 and 2023, respectively. The increase in operating expenses is the result of the following factors:
Previous wording
Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment, and allocated shared facilities. Direct costs and expenses totaled $1.6 million and $87 during the three months ended March 31, 2024 and 2023, respectively. The increase of approximately $1.6 million for 2024 compared to 2023 was primarily attributable to the laboratory operations of the newly acquired PPLS.
Current wording
Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment, and allocated shared facilities. Direct costs and expenses totaled $1.4 million and $1,234 during the three months ended June 30, 2024 and 2023, respectively. The increase of approximately $1.4 million for 2024 compared to 2023 was primarily attributable to the laboratory operations of the newly acquired PPLS in 2024 that did not exist in 2023.
Previous wording
Research and development expenses totaled $393,639 and $369,617 for the three months ended March 31, 2024 and 2023, respectively. The increase of approximately $24,000, or 6%, for the three months ended March 31, 2024, compared to the same period in 2023 was primarily due to an increase in compensation costs and benefits as we added research personnel, as well as a related increase in costs for lab supplies and reagents.
Current wording
Research and development expenses totaled $402,433 and $335,125 for the three months ended June 30, 2024 and 2023, respectively. The increase of approximately $67,000, or 20%, for the three months ended June 30, 2024, compared to the same period in 2023 was primarily due to an increase in compensation costs and benefits as we added research personnel, as well as a related increase in costs for lab supplies and reagents.
Previous wording
Clinical development expenses totaled $48,960 and $19,628 for the three months ended March 31, 2024 and 2023, respectively. The increase of approximately $29,000 or 149%, for the three months ended March 31, 2024, compared to the same period in 2023 was primarily attributable to an increase in compensation costs and benefits as we added clinical development personnel,
Current wording
Clinical development expenses totaled $51,462 and $35,260 for the three months ended June 30, 2024 and 2023, respectively. The increase of approximately $16,000, or 46%, for the three months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to an increase in compensation costs and benefits as we added clinical development personnel.
Previous wording
Selling, general and administrative expenses totaled approximately $2.2 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. The increase of approximately $1.0 million, or 90%, for the three months ended March 31, 2024, compared to the same period in 2023 was primarily attributable to acquired general and administrative costs from PPLS ($824,000) and an increase in employee compensation related to administrative and sales ($212,000) due to additional personnel and support services to support the launch of sales of our diagnostic test, CyPath® Lung.
Current wording
Selling, general and administrative expenses totaled approximately $2.5 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively. The increase of approximately $1.1 million, or 76%, for the three months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to acquired general and administrative costs from PPLS and an increase in employee compensation related to administrative and sales due to additional personnel and support services to support the launch of sales of our diagnostic test, CyPath® Lung.
Previous wording
Other income (expense), net totaled ($12,913) and $36,999 for the three-month period ended March 31, 2024, and 2023, respectively. The decrease in the net income of $49,912 is mostly contributed to a reduction in interest income of $32,527 is due to lower cash balance in money market savings account, and an increase in interest expense of $21,895 related to equipment finance lease from the acquired PPLS lab as compared to the same period last year.
Current wording
Other income (expense), net totaled ($17,062) and $42,764 for the three month period ended June 30, 2024 and 2023, respectively. The decrease in the other income of $59,826 is mostly attributable to a reduction in interest income of $38,938 which is due to lower cash balance in money market savings account, and an increase in interest expense of $20,889 related to equipment finance lease from the acquired PPLS lab as compared to the same period last year.
Previous wording
To date, we have funded our operations primarily through our IPO, subsequent registered direct offering, exercise of warrants, and the sale of our securities, resulting in gross proceeds of approximately $36.8 million. We have evaluated whether there are conditions and events that raise substantial doubt about our ability to continue as a going concern for at least one year after the date the condensed consolidated financial statements are issued.
Current wording
To date, we have funded our operations primarily through our IPO, subsequent registered direct offering, exercise of warrants, and the sale of our securities, resulting in gross proceeds of approximately $38.5 million. We have evaluated whether there are conditions and events that raise substantial doubt about our ability to continue as a going concern for at least one year after the date the condensed consolidated financial statements are issued.
Previous wording
We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue. For the three months ended March 31, 2024 and 2023, we had net losses of $2.1 million and $1.5 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $46.7 million as of March 31, 2024. Based on the Company’s current expected level of operating expenditures, current expected levels of revenue, and the cash and cash equivalents on hand at March 31, 2024, of $2.5 million, management concludes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements. We need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or through exercised outstanding warrants to support our future operations unless our revenue increases significantly. Our business plan includes expansion for our commercialization efforts which will require additional funding. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate revenue and raise capital from financing transactions. There can be no assurance that we will be successful in accomplishing these objectives.
Current wording
We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue. For the three months ended June 30, 2024 and 2023, we had net losses of $2.1 million and $1.7 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $48.7 million as of June 30, 2024. Despite our recent financings in August 2024, pursuant to which we raised gross proceeds of approximately $1.7 million, we believe our current cash and anticipated revenue from operations will not be sufficient to support our operations beyond November 2024. Based on the Company’s current expected level of operating expenditures, current expected levels of revenue, and the cash and cash equivalents on hand at June 30, 2024, of $0.8 million, management concludes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve (12) months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report. We need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or through exercised outstanding warrants to support our future operations unless our revenue increases significantly. Our business plan includes expansion for our commercialization efforts which will require additional funding. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate revenue and raise capital from financing transactions. There can be no assurance that we will be successful in accomplishing these objectives.
Previous wording
Net cash used in operating activities was approximately $2.3 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. The increase of approximately $0.8 million in cash used by operations during the three months ended March 31, 2024, compared to the same period in 2023 was primarily attributable to an increase of $528,000 in our loss from operations and an increase in Patient Accounts Receivables of $311,000 due to change in external professional medical billing providers effective March 1, 2024. The transition period from the previous to the new medical billing provider has caused a temporary delay in billing, as anticipated.
Current wording
Net cash used in operating activities was approximately $3.9 million and $2.9 million for the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $1.0 million in cash used by operations during the six months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to an increase of approximately $370,000 in our loss from operations and an increase in patient accounts receivables of $700,000 due to a change in external professional medical billing providers effective March 1, 2024. The transition period from the previous to the new medical billing provider has caused a temporary delay in billing and deposits, as anticipated.
Previous wording
The Company used $41,000 for the three months ended March 31, 2024, in investing activities related primarily to the purchase of computer and lab equipment, compared to $32,000 cash used in investing activities for the three months ended March 31, 2023.
Current wording
The Company used approximately $70,000 for the six months ended June 30, 2024, in investing activities related primarily to the purchase of computer and lab equipment, compared to approximately $36,000 cash used in investing activities for the six months ended June 30, 2023.
Previous wording
Net Cash Provided by Financing Activities
Current wording
Net Cash Provided by (Used In) Financing Activities
Previous wording
Cash provided in financing activities was approximately $2.0 million compared to cash used in financing activities of approximately $83,000 for the three months ended March 31, 2024 and 2023, respectively. The change in proceeds from prior year was primarily related to net proceeds from the direct offering of common stock securities for $2.5 million on March 8, 2024.
Current wording
Cash provided in financing activities was approximately $1.9 million compared to cash used in financing activities of approximately $210,000 for the six months ended June 30, 2024 and 2023, respectively. The change in proceeds from prior year was primarily related to net proceeds from the direct offering of common stock securities for $2.5 million on March 8, 2024.
Previous wording
We follow ASC 606,Revenue from Contracts with Customers, which requires revenue recognition in the period in which the service was performed. To be able to report timely net revenues for the period, estimates are used for a portion of uncollected balances. These estimates relate to third-party historical contractual discounts and adjustments (e.g., insurance providers) and patient historical uncollectible amounts. There can be a significant delay from the time a patient has been serviced to the invoicing of that service and then the net proceeds collected. Historical data is used to determine estimates for those “in service” revenues that have not been billed or collected at the reporting period.
Current wording
We follow ASC 606,Revenue from Contracts with Customers, which requires revenue recognition in the period in which the service was performed. To be able to report timely net revenues for the period, estimates are used for a portion of uncollected balances. These estimates relate to third-party historical contractual discounts and adjustments (e.g., insurance providers) and patient historical uncollectible amounts. There can be a significant delay from the time a patient has been serviced to the invoicing of that service and collection of net proceeds. Historical data is used to determine estimates for those “in service” revenues that have not been billed or collected at the reporting period.
Previous wording
We follow accounting considerations of CECL -Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. With the acquisition of PPLS and control of Village Oaks, the Company’s board-certified pathologists provide anatomic and clinical pathology services for patients and other customers. The Company’s other customer types include contract research organizations (“CROs”), hospitals, and independent laboratories. The Company enters into contracts with its customers for these services. The majority of the Company’s revenues stem from fees for services provided to patients, and thus in those arrangements the patient is the customer, although the services may be requested by a physician on the patient’s behalf. Furthermore, in addition to its contracts with patients, the Company separately contracts with third-party payors (insurance companies and governmental payors), who are typically responsible for all or the majority of the fees agreed upon for such services provided to patients. Historically, material amounts of gross charges are not collected due to various agreements with insurance companies, capped pricing levels for government payors, and uncollectible balances from individual payers. To estimate these allowances of credit losses, the Company assesses the portfolio risk segments and historical data on collection rates. These estimated allowances offset patient revenues and accounts receivables.
Current wording
We follow accounting considerations of CECL -Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. With the acquisition of PPLS and control of Village Oaks, the Company’s board-certified pathologists provide anatomic and clinical pathology services for patients and other customers. The Company’s other customer types include contract research organizations (“CROs”), hospitals, and independent laboratories. The Company enters into contracts with its customers for these services. The majority of the Company’s revenues stem from fees for services provided to patients, and thus in those arrangements the patient is the customer, although the services may be requested by a physician on the patient’s behalf. Furthermore, in addition to its contracts with patients, the Company separately contracts with third-party payers (insurance companies and governmental payers), who are typically responsible for all or the majority of the fees agreed upon for such services provided to patients. Historically, material amounts of gross charges are not collected due to various agreements with insurance companies, capped pricing levels for government payers, and uncollectible balances from individual payers. To estimate these allowances of credit losses, the Company assesses the portfolio risk segments and historical data on collection rates. These estimated allowances offset patient revenues and accounts receivables.
Previous wording
Our evaluation of our ability to continue as a going concern requires us to evaluate our future sources and uses of cash sufficient to fund our currently expected operations in conducting research and development activities one year from the date our consolidated financial statements are issued. We evaluate the probability associated with each source and use of cash resources in making our going concern determination. The research and development of our diagnostic tests and therapeutic products are inherently subject to uncertainty.
Current wording
Our evaluation of our ability to continue as a going concern requires us to evaluate our future sources and uses of cash sufficient to fund our currently expected operations and research and development activities one year from the date our consolidated financial statements are issued. We evaluate the probability associated with each source and use of cash resources in making our going concern determination. The research and development of our diagnostic tests and therapeutic products are inherently subject to uncertainty.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Net loss for the six months ended June 30, 2024, was approximately $4.1 million, compared to a net loss of approximately $3.3 million for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Post-acquisition, additional revenue streams have been consolidated starting September 19, 2023. PPLS generates three sources of revenue: (1) patient service fees, (2) histology service fees, and (3) medical director fees. Pre-acquisition, bioAffinity Technologies’ revenue was generated in three ways: (1) royalties from the Company’s diagnostic test, CyPath® Lung, (2) clinical flow cytometry services provided to Village Oaks related to the Company’s CyPath® Lung test, and (3) CyPath®Lung tests purchased by the DOD for an observational study, “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath®Lung Assay (NCT05870592),” and research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post-COVID-19 infection. The royalty income from CyPath®Lung and clinical flow cytometry services income, beginning September 19, 2023, are related party income and, therefore, eliminated from consolidated net revenues. See net revenue summarized in the table below.
Current report — wording carried from elsewhere
1 Patient services fees include direct billing for CyPath® Lung diagnostic test.
Current report — wording carried from elsewhere
2 Other revenues include pre-acquisition CyPath®Lung royalty income and laboratory services.
Current report — wording carried from elsewhere
Operating expenses totaled approximately $8.8 million and $3.4 million during the six months ended June 30, 2024 and 2023, respectively. The increase in operating expenses is the result of the following factors:
Current report — wording carried from elsewhere
Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment, and allocated shared facilities. Direct costs and expenses totaled $2,981,151 and $1,322 during the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $3.0 million for 2024 compared to 2023 was primarily attributable to the laboratory operations of the newly acquired PPLS in 2024 that did not exist in 2023.
Current report — wording carried from elsewhere
Our research and development expenses consist primarily of expenditures for lab operations, preclinical and clinical studies, compensation, and consulting costs.
Current report — wording carried from elsewhere
Research and development expenses totaled $796,072 and $704,742 for the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $91,000, or 13%, for the six months ended June 30, 2024, compared to the same period in 2023 was primarily due to an increase in compensation costs and benefits as we added research personnel, as well as a related increase in costs for lab supplies and reagents.
Current report — wording carried from elsewhere
Our selling, general and administrative expenses consist primarily of expenditures related to employee compensation, selling and marketing costs, legal, accounting and tax, other professional services, and general operating expenses.
Current report — wording carried from elsewhere
Selling, general and administrative expenses totaled approximately $4.7 million and $2.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase of approximately $2.1 million, or 82%, for the six months ended June 30, 2024, compared to the same period in 2023 was primarily attributable to acquired general and administrative costs from PPLS and an increase in employee compensation related to administrative and sales due to additional personnel and support services to support the launch of sales of our diagnostic test, CyPath®Lung.
Current report — wording carried from elsewhere
Other income (expense), net totaled ($29,975) and $79,763 for the six-month period ended June 30, 2024, and 2023, respectively. The decrease in the other income of approximately $110,000 is mostly attributable to a reduction in interest income of $71,465 which is due to lower cash balance in money market savings account, and an increase in interest expense of $42,784 related to equipment finance lease from the acquired PPLS lab as compared to the same period last year.