Company: BIAF
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023405
Chunk: 22

Company: bioAffinity Technologies, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 22
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 as a result of the May 2025 public offering. The Company revalued and recognized an aggregate of $3.8 million in change
in fair value of warrants issued before adjusting the warrant liability to equity classified warrants.

Note
9. LEASES

The
Company has one operating lease for its real estate and office space for the CAP/CLIA laboratory, as well as multiple finance leases
for lab equipment in Texas that were acquired through the September 18, 2023, acquisition. On April 1, 2025, the Company terminated one
of the finance leases related to lab equipment due to the Company’s targeted strategic actions announced in March 2025. Additionally,
the Company entered into another operating lease on September 1, 2024, with regard to office space. The Company has operating leases
consisting of office space with remaining lease terms ranging from 1.8 to 4.9 years as of September 30, 2025. The Company has finance
leases consisting of lab equipment with remaining lease terms ranging from approximately 0.6 to 1.3 years as of September 30, 2024, for
which the Company has determined that it will use the equipment for a major part of its remaining economic life.

The
lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach as of the date
of inception of the leases to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked
itself against other companies of similar credit ratings and comparable quality and derived imputed interest rates ranging from 6.41%
to 8.07% for the lease term lengths.

Leases
with an initial term of 12 months or less are not recorded on the balance sheet. There are no material residual guarantees associated
with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease
agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord,
as is customary with these types of charges for office space. The Company has not entered into any lease arrangements with related parties,
and the Company is not the sublessor in any arrangement.

The
Company’s existing leases contain escalation clauses and renewal options. The Company has evaluated several factors in assessing
whether there is reasonable certainty that the Company will exercise a contractual renewal option. For leases with renewal options that
are reasonably certain to be