Company: BIAF
Filing Date: 2025-04-22
Form Type: 424B3
Source: 0001641172-25-005598
Chunk: 102

Company: bioAffinity Technologies, Inc.
Filing Date: 2025-04-22
Form: 424B3
Chunk 102
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ations for Credit Losses

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 (“CRO’s), hospitals,
and independent laboratories. 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.

Discount Rate for Finance Leased Equipment

We follow Leases(“ASC 842”). In
February 2016, the FASB issued Topic ASC 842, under which a lessee is required to recognize most leases on its balance sheet. The Company
has elected to apply a third-party valuation incremental borrowing rate (“IBR”) as the discount rate by class of underlying
assets when the rate is not implicit in the lease.

Share-Based Compensation

We follow ASC 718, Compensation – Stock Compensation,
which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, directors,
and non-employees based on estimated fair values. We have used the Black-Scholes option pricing model to estimate grant date fair value
for all option 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.

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Accounting for Income Taxes

We are governed by U.S. income tax laws, which are
administered by the Internal Revenue