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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with GAAP in the U.S. requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these significant judgments and estimates on historical experience and other assumptions it believes to be reasonable based upon information presently available. Actual results could differ from those estimates under different assumptions, judgments, or conditions.

 
Principles of Consolidation

Principles of Consolidation

 

The Company’s consolidated financial statements reflect its financial statements, those of its wholly owned subsidiaries, and certain variable interest entities where the Company is the primary beneficiary. The accompanying consolidated financial statements include all the accounts of the Company, its wholly owned subsidiaries, OncoSelect® Therapeutics, LLC and PPLS, and the variable interest entity, Village Oaks. All significant intercompany balances and transactions have been eliminated.

 

In determining whether the Company is the primary beneficiary of a variable interest entity, it applies a qualitative approach that determines whether it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in the Company consolidating or deconsolidating one or more of its collaborators or partners.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

For the purpose of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates market value, because of the short maturity of these instruments.

 
Concentration of Risk

Concentration of Risk

 

The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flow.

 
Advertising Expense

Advertising Expense

 

The Company expenses all advertising costs as incurred. Advertising expense was $171,822 and $131,125 for the six months ended June 30, 2025 and 2024, respectively, and $143,616 and $119,205 for the three months ended June 30, 2025 and 2024, respectively.

 
Loss Per Share

Loss Per Share

 

Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of the Company’s Common Stock outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of shares of Common Stock outstanding during the period and the weighted-average number of dilutive Common Stock equivalents outstanding during the period, using the treasury stock method. Dilutive Common Stock equivalents are comprised of in-the-money stock options, convertible notes payable, unvested restricted stock, and warrants based on the average stock price for each period using the treasury stock method.

 

 

The following potentially dilutive securities have been excluded from the computations of weighted-average shares of Common Stock outstanding as of June 30, 2025 and 2024, as they would be anti-dilutive:

 

       
   As of June 30, 
   2025   2024 
Shares underlying options outstanding   304,125    337,810 
Shares underlying warrants outstanding   28,193,118    8,838,669 
Shares underlying unvested restricted stock   282,940    246,044 
Anti-dilutive securities   28,780,183    9,422,523 

 
Revenue Recognition

Revenue Recognition

 

To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

 

Post-acquisition of PPLS, 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. The Company recognizes as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods sold or services rendered primarily upon completion of the testing process (when results are reported) or when services have been rendered.

 

The Company follows a standard process, which considers historical denial and collection experience and other factors (including the period of time that the receivables have been outstanding), to estimate contractual allowances and implicit price concessions, recording adjustments in the current period as changes in estimates. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation.

 

       
   For the six months ended
June 30,		 
   2025   2024 
Patient service fees1  $2,512,449   $4,209,955 
Histology service fees   572,358    530,053 
Medical director fees   33,897    33,193 
Department of Defense observational studies   —    6,923 
Other revenues   4,376    23,919 
Total net revenue  $3,123,080   $4,804,043 

 

  1 Patient services fees include direct billing for CyPath® Lung diagnostic test of approximately $323,000 and $199,000 for the six months ended June 30, 2025 and 2024, respectively.

 
Property and Equipment

Property and Equipment

 

In accordance with ASC 360-10, Accounting for the Impairment of Long-Lived Assets, the Company periodically reviews the carrying value of its long-lived assets, such as property, equipment, and definite-lived intangible assets, to test whether current events or circumstances indicate that such carrying value may not be recoverable. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows. If an asset’s carrying value exceeds such estimated cash flows (undiscounted and with interest charges), the Company records an impairment charge for the difference. The Company did not record any impairment for the three and six months ended June 30, 2025, or for the fiscal year ended December 31, 2024.

 

Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. Amortization of leasehold improvements is computed using the shorter of the lease term or estimated useful life of the asset. Additions and improvements are capitalized, while repairs and maintenance are expensed as incurred. Useful lives of each asset class are as follows:

 

SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIFE

Asset Category   Useful Life
Computer equipment   3-5 years
Computer software   3 years
Equipment   3-5 years
Furniture and fixtures   5-7 years
Vehicles   5 years
Leasehold improvements   Lesser of lease term or useful life

 

 
Intangible Assets

Intangible Assets

 

The Company’s acquisition of PPLS on September 18, 2023 identified goodwill and intangible assets. Goodwill represents the purchase price in excess of fair values assigned to the underlying identifiable net assets of the acquired business. The Company tests goodwill for impairment annually and, therefore, does not record amortization. The intangible assets and their respective useful lives are as follows: trade names and trademarks (18 years) and customer relationships (14 years). Intangible assets, net of accumulated amortization, are summarized as follows as of June 30, 2025, and December 31, 2024:

 

   June 30,   December 31, 
   2025   2024 
Cost          
Goodwill  $1,404,486   $1,404,486 
Trade names and trademarks   150,000    150,000 
Customer relationships   700,000    700,000 
Cost   2,254,486    2,254,486 
Accumulated amortization          
Trade names and trademarks   (14,861)   (10,694)
Customer relationships   (89,167)   (64,167)
Accumulated amortization   (104,028)   (74,861)
Intangible assets, net  $2,150,458   $2,179,625 

 

The Company incurred amortization of intangible assets of $29,167 for each of the six months ended June 30, 2025 and 2024, and $14,583 for each of the three months ended June 30, 2025 and 2024.

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its related disclosures.

 
Segment Information

Segment Information

 

The Company is organized into two operating segments, Diagnostic Research and Development (“R&D”) and Laboratory Services, whereby its chief operating decision maker (“CODM”) assesses the performance of and allocates resources. The CODM is the Chief Executive Officer. Diagnostic R&D includes research and development and clinical development on diagnostic tests and therapeutic discoveries. Any revenues assigned to Diagnostic R&D are proceeds received from observational studies. Laboratory services include all the operations from Village Oaks and PPLS in addition to sales and marketing costs of CyPath® Lung from bioAffinity Technologies.

 

             
   Three months ended June 30,   Six months ended June 30, 
   2025   2024   2025   2024 
Net revenue:                    
Diagnostic R&D  $—   $4,038   $—   $6,923 
Laboratory services 1   1,269,483    2,393,614    3,123,080    4,797,120 
Total net revenue   1,269,483    2,397,652    3,123,080    4,804,043 
                     
Operating expenses:                    
Diagnostic R&D   (440,651)   (453,895)   (946,390)   (896,494)
Laboratory services   (1,646,471)   (2,535,285)   (3,914,127)   (5,272,284)
General corporate activities   (1,697,921)   (1,496,270)   (3,405,262)   (2,668,293)
Total operating loss   (2,515,560)   (2,087,798)   (5,142,699)   (4,033,028)
                     
Non-operating income (expense), net   (1,516,243)   (17,062)   (1,540,826)   (29,975)
Net loss before income tax expense   (4,031,803)   (2,104,860)   (6,683,525)   (4,063,003)
Income tax expense   (28,984)   (5,419)   (37,679)   (9,091)
Net loss  $(4,060,787)  $(2,110,279)  $(6,721,204)  $(4,072,094)

 

1 The majority of the decrease versus the prior year is primarily due to discontinuing certain unprofitable pathology services to focus on CyPath® Lung and other high-margin services.

 

 
Research and Development

Research and Development

 

Research and development costs are charged to expense as incurred. The Company’s research and development expenses consist primarily of expenditures for laboratory operations, preclinical studies, compensation, and consulting costs.

 
Accrued Research and Development Costs

Accrued Research and Development Costs

 

The Company records accrued liabilities for estimated costs of research and development activities conducted by service providers, which include preclinical studies. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued expenses in the accompanying condensed consolidated balance sheets and within research and development expense in the accompanying condensed consolidated statements of operations.

 

The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with service providers. The Company makes significant judgments and estimates in determining the accrued expenses balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. The Company has not experienced any material differences between accrued costs and actual costs incurred since its inception.

 
Regulatory Matters

Regulatory Matters

 

Regulations imposed by federal, state, and local authorities in the U.S. are a significant factor in providing medical care. In the U.S., drugs, biological products, and medical devices are regulated by the Federal Food, Drug, and Cosmetic Act (“FDCA”), which is administered by the Food and Drug Administration (“FDA”) and the Centers for Medicare & Medicaid Services (“CMS”). The Company has not yet obtained marketing authorization from the FDA but is able to market its CyPath® Lung test as a laboratory developed test (“LDT”) sold by our wholly owned subsidiary PPLS, a clinical pathology laboratory accredited by the College of American Pathologists (“CAP”) and certified under the Clinical Laboratory Improvement Amendments (“CLIA”).