Company: BIAF
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001840
Chunk: 444

Company: bioAffinity Technologies, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 2
Chunk 444
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 grants. The assumptions we use in calculating the fair value of
share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application
of management judgment. As such, as we use different assumptions based on a change in factors, our stock-based compensation expense could
be materially different in the future.

Accounting
for Income Taxes

We
are governed by U.S. income tax laws, which are administered by the Internal Revenue Service (“IRS”). We follow ASC 740,
Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that
some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference
becomes deductible.

Assessment
of Goodwill and Intangible Assets

Our
indefinite-lived assets include Goodwill and Intangible Assets resulting from the acquisition of PPLS. Goodwill represents the purchase
price in excess of fair values assigned to the underlying identifiable net assets of the acquired business. Goodwill and Intangible Assets
are reviewed annually for impairment unless circumstances dictate the need for more frequent assessment.

In
performing impairment tests for our Goodwill in 2024, in accordance with ASC 350 - Intangibles – Goodwill and Other, we
opted to complete a quantitative assessment at the PPLS level as opposed to relying on a qualitative assessment as permitted in the
guidance. This quantitative assessment required that the estimated fair value of PPLS’ net assets, including Goodwill, be
calculated and compared to the carrying amount. If that estimated fair value is in excess of the carrying amount, no impairment is
recognized. We performed this assessment as of December 31, 2024. We estimated the fair value of the net assets tested using a
discounted cash flow model. The income-based approach required significant judgment to estimate future cash flows, including revenue
growth inclusive of long