DEF: BioAffinity Seeks Shareholder Nod for Reverse Split, Capital Raise

BioAffinity Technologies, Inc. calls for its Annual Meeting to approve a reverse stock split, significant equity plan expansion, and authorization for future dilutive capital raises.

Summary

• The Annual Meeting of Stockholders will be held on April 30, 2026, to vote on ten key proposals.
• Shareholders will vote on the election of six director nominees and the ratification of WithumSmith+Brown, PC as the independent registered public accounting firm for fiscal year 2026.
• Approval is sought for the issuance of up to 271,500 shares of common stock upon the exercise of August 2025 Warrants, which could generate approximately $2.9 million in gross proceeds if exercised for cash.
• Shareholders will consider approving anti-dilution provisions for August 2025 Warrants (up to 365,620 shares, floor price $4.50) and Series B Convertible Preferred Stock (up to 131,884 shares, floor price $3.00), which would increase the number of shares issuable upon exercise/conversion if dilutive issuances occur.
• An amendment to the 2024 Equity Incentive Plan is proposed to increase the number of shares reserved for issuance from 66,666 to 1,000,000 shares.
• Authorization is requested to issue up to 10 million shares of common stock (or convertible securities) in one or more non-public offerings, with a total aggregate consideration not exceeding $10 million, at a maximum discount of 35% below market price, by March 31, 2026.
• Approval is also sought for any change of control that may result from these potential non-public offerings under Nasdaq rules.
• A reverse stock split proposal is on the agenda, with a ratio ranging from 1-for-2 to 1-for-250, at the Board's discretion, primarily to increase the per-share trading price and maintain Nasdaq listing compliance.
• An adjournment proposal allows for further proxy solicitation if insufficient votes are received for key proposals.
• As of the Record Date (March 13, 2026), there were 4,498,675 shares of common stock outstanding, with a closing trading price of $2.12 per share.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with caution. While the company highlights progress in diagnostics, the necessity of a reverse stock split to maintain Nasdaq listing and the proposals for substantial potential dilution from warrants, equity plans, and future offerings indicate underlying financial and market challenges.

Positives

• The company is committed to developing noninvasive diagnostics for lung cancer and other lung diseases, with growing adoption and use of its first test, CyPath Lung.
• Management expresses encouragement regarding technological advancements in early-stage diagnosis.
• The authorization to issue securities in non-public offerings could provide up to $10 million in additional capital for general corporate purposes, including strategic M&A initiatives.
• The proposed increase in the 2024 Equity Incentive Plan shares aims to attract, motivate, and retain highly qualified talent, aligning compensation with stockholder interests.

Negatives

• The various proposals for warrant exercises, anti-dilution adjustments, equity plan expansion, and future non-public offerings collectively represent significant potential dilution for existing stockholders.
• The need for a reverse stock split (ratio 1-for-2 to 1-for-250) indicates the company is at risk of failing to meet Nasdaq's minimum bid price requirement ($1.00 per share), which is a negative signal regarding stock performance.
• Failure to approve the Warrant Exercise Proposal (Proposal No. 3) could mean the company cannot permit the exercise of August 2025 Warrants and may incur substantial additional costs and expenses, losing up to $2.9 million in potential gross proceeds.
• Failure to approve the Warrant Anti-Dilution Adjustment Proposal (Proposal No. 4) or Series B Anti-Dilution Adjustment Proposal (Proposal No. 5) would result in substantial additional costs and expenses due to ongoing meeting requirements until approval or warrant/preferred stock expiration.
• If the Reverse Stock Split is implemented, existing stockholders will hold fewer shares, and there is no assurance it will result in a sustained increase in stock price or prevent delisting.
• The Reverse Stock Split may decrease the liquidity of the common stock and could result in some stockholders owning odd lots, leading to higher transaction costs.
• The Reverse Stock Split could lead to a decrease in the overall market capitalization if the per-share price does not increase proportionally.
• The increase in authorized shares post-reverse split, combined with the Offering Proposal, could lead to further dilution in future financings.

Risks

• Failure to maintain Nasdaq listing compliance due to not meeting the $1.00 minimum bid price requirement, potentially leading to delisting and trading on over-the-counter markets with reduced liquidity and investor interest.
• Significant dilution of existing stockholders' ownership interests from the issuance of shares upon warrant exercises, anti-dilution adjustments, equity incentive plan awards, and future non-public offerings.
• Uncertainty regarding the effectiveness of a reverse stock split in achieving a sustained increase in stock price or improving liquidity.
• Potential for increased trading costs for stockholders holding odd lots after a reverse stock split.
• Risk that the market may view a reverse stock split negatively, leading to a decrease in overall market capitalization.
• The potential for future capital raises to be highly dilutive, especially if offered at a discount of up to 35% below market price.
• The possibility of a change of control resulting from future non-public offerings, which could concentrate voting power among a few stockholders.
• Reliance on stockholder approval for several key proposals (warrant exercises, anti-dilution adjustments, equity plan, future offerings, reverse split) to avoid substantial additional costs or to enable strategic actions.

Future Outlook

The company anticipates the additional shares requested under the 2024 Equity Incentive Plan amendment, combined with existing available shares, to be sufficient for a period of two years. It may seek to raise additional capital through non-public offerings of up to $10 million by March 31, 2026, for general corporate purposes, including strategic M&A initiatives. The Board may implement a reverse stock split to increase the per-share trading price and maintain Nasdaq listing, with the exact ratio to be determined based on market conditions and other factors.

Management Comments

• "I am greatly encouraged by the growing adoption and use by physicians of our first test, CyPath Lung, a noninvasive test for lung cancer, and of the technological advancements that our team continues to make in its fight to address the urgent need for noninvasive, early-stage diagnosis." Maria Zannes, President and CEO
• "Your trust in our team and belief in our technology are invaluable." Maria Zannes, President and CEO
• "Our team of scientists and business professionals is driven by its mission to increase detection of cancer at early stage when accurate diagnosis leads to longer lives, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs." Maria Zannes, President and CEO

Industry Context

StockSavvy.ai notes that bioAffinity Technologies operates in the competitive and rapidly evolving noninvasive diagnostics market, particularly for lung cancer. The emphasis on early-stage detection aligns with broader healthcare trends focusing on preventative and less invasive diagnostic methods to improve patient outcomes and reduce costs. The company's strategy to expand its equity incentive plan and seek authorization for future capital raises is typical for emerging growth companies in the biotech sector that require substantial funding for R&D, commercialization, and potential M&A. However, the necessity of a reverse stock split to maintain Nasdaq listing suggests challenges in sustaining investor confidence and market valuation, a common hurdle for smaller biotech firms.

Comparison to Industry Standards

• The filing does not provide specific comparisons to other comparable companies, projects, or industry benchmarks regarding financial performance, product adoption rates, or market share.
• StockSavvy.ai observes that the proposed increase in the equity incentive plan to 1,000,000 shares, representing approximately 20% of fully diluted common stock, is a significant dilution percentage that warrants careful consideration by investors, though not uncommon for early-stage biotech companies heavily reliant on equity compensation.
• The need for a reverse stock split to maintain a minimum bid price is a common occurrence for smaller public companies, particularly in the biotech sector, that face challenges in sustaining market valuation and liquidity, contrasting with more established industry players that typically maintain higher stock prices.

Management Changes

Corporate Governance

Related Party Transactions

• PPLS acquired the laboratory assets of Village Oaks Pathology Services, P.A., d/b/a Precision Pathology Services, for $3.5 million, including $1 million paid in 564,972 shares of restricted common stock to the Joyce Trust (related to Dr. Roby Joyce, a director).
• PPLS entered into a Management Services Agreement with Village Oaks, where PPLS provides management services for 70% of Village Oaks' net revenues, with an initial term of 20 years.
• A Succession Agreement was entered into with Dr. Joyce, restricting disposal of his equity in Village Oaks and outlining transfer upon certain events. In December 2025, Dr. Joyce transferred his interest to Dr. Humphreys, leading to a new Succession Agreement with Dr. Humphreys.
• PPLS entered into a Professional Services Agreement with Village Oaks for pathology interpretation services.
• Dr. Roby Joyce had an Executive Employment Agreement for a three-year term as Medical Director and Laboratory Director of PPLS at a base salary of $333,333.34 per year, including a company car and board appointment.
• Warrants owned by Mr. Girgenti (Executive Chairman), Ms. Zannes (President/CEO), and Dr. Joyce (Director), among others, were amended on September 17, 2023, to become exercisable upon an increase in authorized common stock, which occurred on June 5, 2024.
• Timothy P. Zannes (Executive Vice President, Secretary, General Counsel, and brother of Maria Zannes) received a salary of $90,000 and a bonus of $18,000 for fiscal year 2025, and is scheduled to receive $90,000 in 2026.
• Peter Zannes Fatland (son of Maria Zannes) was offered employment as Associate Pulmonary Sales Executive, effective April 15, 2026, with an annual base salary of $80,000, up to $30,000 in variable compensation, and $1,000 monthly expense reimbursement.

Stakeholder Impact

• **Shareholders**: Face significant potential dilution from the exercise of existing warrants (271,500 shares), potential anti-dilution adjustments (up to 365,620 shares for warrants, 131,884 for Series B Preferred Stock), expansion of the equity incentive plan (to 1,000,000 shares), and future non-public offerings (up to 10 million shares). The reverse stock split will reduce the number of shares held but not the percentage ownership (except for fractional shares cashed out).
• **Employees**: Benefit from the proposed expansion of the 2024 Equity Incentive Plan, which aims to provide sufficient shares for continued equity awards, serving as an important tool for attraction, motivation, and retention.
• **Customers**: The company's mission to increase detection of cancer at an early stage with noninvasive diagnostics like CyPath Lung aims to benefit patients by leading to longer lives, fewer unnecessary invasive procedures, reduced anxiety, and lower medical costs.
• **Management/Directors**: Will continue to receive equity-based compensation, aligning their interests with long-term company success. The separation of CEO and Executive Chairman roles is intended to leverage their distinct expertise for business growth and strategic goals.
• **Creditors/Investors**: The potential capital raise of up to $10 million could improve the company's financial liquidity and ability to fund operations and strategic initiatives, which could be positive for creditors and future investors, but existing investors face dilution.

Next Steps

• Hold the Annual Meeting of Stockholders on April 30, 2026, to vote on the proposed corporate actions.
• If approved, the Board will determine the specific ratio for the reverse stock split (between 1-for-2 and 1-for-250) and publicly announce it before implementation.
• If approved, the company may proceed with non-public offerings to raise up to $10 million by March 31, 2026.
• The company will continue to grant equity awards under the amended 2024 Equity Incentive Plan, if approved.
• Robert Anderson and Roby Joyce will not stand for re-election at the Annual Meeting, and their terms will expire.

Key Dates

Recommendation

The filing reveals several highly dilutive proposals, including the exercise of existing warrants, potential anti-dilution adjustments, a substantial increase in the equity incentive plan, and authorization for future non-public offerings that could issue up to 10 million shares at a significant discount. Most critically, the company is seeking approval for a reverse stock split (up to 1-for-250) to maintain its Nasdaq listing, which is a strong indicator of a distressed stock price and underlying operational or market challenges. While management highlights progress in diagnostics, the cumulative effect of these actions points to significant shareholder value erosion and a high-risk investment profile. A seasoned investor would likely view these proposals as a signal to exit or significantly reduce exposure.

Keywords

Proxy Statement, Annual Meeting, Reverse Stock Split, Equity Incentive Plan, Warrants, Anti-Dilution, Capital Raise, Nasdaq Listing, Dilution, Corporate Governance, Lung Cancer Diagnostics, CyPath Lung, Biotechnology, Healthcare