| Delaware | | | 8731 | | | 27-0480143 | |
| (State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) | |
| Barry I. Grossman Tamar A. Donikyan Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 370-1300 | | | Brad L. Shiffman Blank Rome LLP 1271 Avenue of the Americas New York, NY 10020 Telephone: (212) 885-5000 | |
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☒ | | | Smaller reporting company ☒ | |
| | | | Emerging growth company ☒ | |
Title of Each Class of Security Being Registered | | | Amount Being Registered(1) | | | Proposed Maximum Offering Price per Security(2) | | | Proposed Maximum Aggregate Offering Price(1)(2) | | | Amount of Registration Fee(3) | | |||||||||
Common Stock, $0.0001 par value | | | | | | | $ | | | | | $ | 20,000,000 | | | | | $ | 2,182 | | | |
Common Stock underlying Representative’s Warrants, $0.0001 par value | | | | | | | $ | | | | | $ | 1,250,000 | | | | | $ | 136.38 | | | |
Total | | | | | | | | | | | | | $ | 21,250,000 | | | | | $ | 2,318.38 | | |
| PRELIMINARY PROSPECTUS | | | SUBJECT TO COMPLETION | | | DATED | |
| | | Per Share | | | Total | | ||||||
Initial public offering price | | | | $ | | | | | $ | | | ||
Underwriting discount(1) | | | | $ | | | | | $ | | | ||
Proceeds, before expenses, to iSpecimen Inc. | | | | $ | | | | | $ | | | |
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| | | | F-1 | | |
| | | Years Ended December 31, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2020 | | | 2019 | | ||||||||||||
| | | | | | | | | | | | | | | (Unaudited) | | |||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | | | $ | 4,298,350 | | | | | $ | 4,394,818 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Total operating expenses | | | | | 8,178,439 | | | | | | 7,751,119 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (3,880,089) | | | | | | (3,356,301) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other expense, net | | | | | (1,003,961) | | | | | | (2,117,751) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss | | | | | (4,727,050) | | | | | | (5,347,052) | | | | | | (3,058,540) | | | | | | (3,378,221) | | |
Net loss per common share – basic and diluted(1) | | | | $ | (0.91) | | | | | $ | (1.03) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding – basic and diluted(1) | | | | | 5,190,810 | | | | | | 5,196,485 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | As of December 31, | | | As of September 30, 2020 | | ||||||||||||
| | | 2019 | | | 2018 | | ||||||||||||
| | | | | | | | | | | | | | | (Unaudited) | | |||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Current assets | | | | $ | 1,580,662 | | | | | $ | 2,303,502 | | | | | $ | 3,359,897 | | |
Total assets | | | | | 4,214,588 | | | | | | 4,044,626 | | | | | | 6,047,240 | | |
Current liabilities | | | | | 15,760,261 | | | | | | 11,295,302 | | | | | | 20,261,087 | | |
Total liabilities | | | | | 15,760,261 | | | | | | 11,295,302 | | | | | | 20,570,856 | | |
Convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Total stockholders’ deficit | | | | | (22,718,749) | | | | | | (18,423,752) | | | | | | (25,696,692) | | |
| | As of September 30, 2020 | | | As of September 30, 2020 | | ||||||||||||||||||||||||||||||||
| | Actual | | Pro forma | | Pro forma as adjusted | | | Actual | | Pro forma | | Pro forma as adjusted | | ||||||||||||||||||||||||
| | (Unaudited) | | | (Unaudited) | | ||||||||||||||||||||||||||||||||
Cash | | | $ | 957,246 | | | | $ | — | | | | $ | — | | | | | $ | 957,246 | | | | $ | — | | | | $ | — | | | ||||||
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | $ | 5,489,728 | | | | $ | — | | | | $ | — | | | | | $ | 5,489,728 | | | | $ | — | | | | $ | — | | | ||||||
Bridge notes payable, net of debt issuance costs | | | | 4,588,504 | | | | | | | | | | | | | | | | 4,588,504 | | | | | | | | | | | | | ||||||
Bridge notes payable, related parties | | | | 1,905,000 | | | | | | | | | | | | | | | | 1,905,000 | | | | | | | | | | | | | ||||||
Notes payable (including short-term maturities of $473,239) | | | | 783,008 | | | | | | | | | | | | | | | | 783,008 | | | | | | | | | | | | | ||||||
Total Debt | | | | 12,766,240 | | | | | | | | | | | | | ||||||||||||||||||||||
Total debt | | | | 12,766,240 | | | | | | | | | | | | | ||||||||||||||||||||||
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding, actual; shares outstanding pro forma; and shares outstanding pro forma as adjusted | | | | 7,999,997 | | | | | | | | | | | | | | | | 7,999,997 | | | | | | | | | | | | | ||||||
Series A-1 convertible preferred stock, $0.0001 par value, 556,550 shares authorized, 556,540 issued and outstanding, actual; shares outstanding pro forma; and shares outstanding pro forma as adjusted | | | | 561,041 | | | | | | | | | | | | | | | | 561,041 | | | | | | | | | | | | | ||||||
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding, actual; shares outstanding pro forma; and shares outstanding pro forma as adjusted | | | | 2,612,038 | | | | | | | | | | | | | | | | 2,612,038 | | | | | | | | | | | | | ||||||
Total convertible preferred stock | | | | 11,173,076 | | | | | | | | | | | | | | | | 11,173,076 | | | | | | | | | | | | | ||||||
Stockholders’ Deficit: | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Stockholders’ deficit: | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Common stock, $0.0001 par value, 16,000,000 shares authorized; 5,363,365 shares outstanding, actual; shares outstanding pro forma; and shares outstanding pro forma as adjusted | | | | 537 | | | | | | | | | | | | | | | | 537 | | | | | | | | | | | | | ||||||
Additional paid-in capital | | | | 1,766,986 | | | | | | | | | | | | | | | | 1,766,986 | | | | | | | | | | | | | ||||||
Treasury stock, at cost, 171,908 shares | | | | (172) | | | | | | | | | | | | | | | | (172) | | | | | | | | | | | | |
| | | As of September 30, 2020 | | |||||||||
| | | Actual | | | Pro forma | | | Pro forma as adjusted | | |||
| | | (Unaudited) | | |||||||||
Accumulated deficit | | | | | (27,464,043) | | | | | | | | |
Total stockholders’ deficit: | | | | | (25,696,692) | | | | | | | | |
Total | | | | $ | (1,757,376) | | | | | | | | |
|
| Assumed initial public offering price per share of common stock | | | | | | $ | — | | | |
| Historical net tangible book value (deficit) per share as of September 30, 2020 | | | | | | | | | | |
| Increase per share attributed to the conversion of outstanding preferred stock | | | | | | | $ | — | | |
| Pro forma net tangible book value per share as of September 30, 2020 before this offering | | | | | | | | — | | |
| Increase in pro forma as adjusted net tangible book value per share attributable to investors in this offering | | | | | | | | | | |
| Pro forma as adjusted net tangible book value per share after this offering | | | | | | | | | | |
| Dilution per share to new common stock investors in this offering | | | | | | | $ | | | |
| | | Shares purchased | | | Total consideration | | | Average price per share | | |||||||||||||||||||||
| | | Number | | | Percentage | | | Amount | | | Percentage | | ||||||||||||||||||
Existing Shareholders | | | | | 5,363,365 | | | | | | % | | | | | | 1,737,720 | | | | | | % | | | | | $ | 0.32 | | |
New Investors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2020 | | | 2019 | | ||||||||||||
| | | | | | | | | | | | | | | (Unaudited) | | |||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | | | $ | 4,298,350 | | | | | $ | 4,394,818 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 2,127,900 | | | | | | 2,362,495 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 993,329 | | | | | | 1,210,079 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 1,413,059 | | | | | | 1,313,881 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 792,778 | | | | | | 673,439 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 914,633 | | | | | | 736,799 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 1,936,740 | | | | | | 1,454,426 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 8,178,439 | | | | | | 7,751,119 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (3,880,089) | | | | | | (3,356,301) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (1,724,450) | | | | | | (1,214,983) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | 551,000 | | | | | | (946,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | 168,859 | | | | | | 41,733 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 630 | | | | | | 1,499 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (1,003,961) | | | | | | (2,117,751) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (4,884,050) | | | | | | (5,474,052) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | 157,000 | | | | | | 127,000 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (4,727,050) | | | | | $ | (5,347,052) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per common share – basic and diluted(1) | | | | $ | (0.91) | | | | | $ | (1.03) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding – basic and diluted(1) | | | | | 5,190,810 | | | | | | 5,196,485 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
Pro forma net loss per common share – basic and diluted (unaudited)(2) | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
Pro forma weighted average common shares outstanding – basic and diluted (unaudited)(2) | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | |
| | | As of December 31, | | | As of September 30, 2020 | | ||||||||||||
| | | 2019 | | | 2018 | | ||||||||||||
| | | | | | | | | | | | | | | (Unaudited) | | |||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | 53,893 | | | | | $ | 1,130,364 | | | | | $ | 957,246 | | |
Working capital(1) | | | | | (14,179,599) | | | | | | (8,991,800) | | | | | | (16,901,190) | | |
Total assets | | | | | 4,214,588 | | | | | | 4,044,626 | | | | | | 6,047,240 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,350,278 | | | | | | 4,801,189 | | | | | | 5,489,728 | | |
Derivative liability for embedded conversion features | | | | | 2,214,000 | | | | | | 2,765,000 | | | | | | 2,290,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 3,586,326 | | | | | | 1,117,286 | | | | | | 4,588,504 | | |
Bridge notes payable, related parties | | | | | 1,655,000 | | | | | | 1,050,000 | | | | | | 1,905,000 | | |
Note payable, current portion | | | | | — | | | | | | — | | | | | | 473,239 | | |
Note payable, net of current portion | | | | | — | | | | | | — | | | | | | 309,769 | | |
Convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Total stockholders’ deficit | | | | | (22,718,749) | | | | | | (18,423,752) | | | | | | (25,696,692) | | |
| | | Three Months Ended September 30, | | | Change | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | Dollars | | | Percentage | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 1,557,440 | | | | | | 225% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 417,197 | | | | | | 86% | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 110,447 | | | | | | 36% | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 149,432 | | | | | | 42% | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | (72,652) | | | | | | (35)% | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 14,603 | | | | | | 6% | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 128,780 | | | | | | 20% | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 747,807 | | | | | | 34% | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | 809,633 | | | | | | (53)% | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (14,618) | | | | | | 3% | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | 104,000 | | | | | | (66)% | | |
Other income | | | | | — | | | | | | 29 | | | | | | (29) | | | | | | (100)% | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | (69) | | | | | | (44)% | | |
Other income (expense), net | | | | | (523,390) | | | | | | (612,674) | | | | | | 89,284 | | | | | | (15)% | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | (39,250) | | | | | | (100)% | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | 859,667 | | | | | | (41)% | | |
| | | Nine Months Ended September 30, | | | Change | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | Dollars | | | Percentage | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Revenue | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | | | | $ | 2,458,464 | | | | | | 82% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 2,032,111 | | | | | | 1,506,820 | | | | | | 525,291 | | | | | | 35% | | |
Technology | | | | | 1,131,695 | | | | | | 778,892 | | | | | | 352,803 | | | | | | 45% | | |
Sales and marketing | | | | | 1,305,897 | | | | | | 1,029,049 | | | | | | 276,848 | | | | | | 27% | | |
Supply development | | | | | 395,200 | | | | | | 593,377 | | | | | | (198,177) | | | | | | (33)% | | |
Fulfillment | | | | | 642,140 | | | | | | 701,037 | | | | | | (58,897) | | | | | | (8)% | | |
General and administrative | | | | | 1,431,262 | | | | | | 1,561,532 | | | | | | (130,270) | | | | | | (8)% | | |
Total operating expenses | | | | | 6,938,305 | | | | | | 6,170,707 | | | | | | 767,598 | | | | | | 12% | | |
Loss from operations | | | | | (1,471,930) | | | | | | (3,162,796) | | | | | | 1,690,866 | | | | | | (53)% | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (1,517,697) | | | | | | (1,209,857) | | | | | | (307,840) | | | | | | 25% | | |
Change in fair value of derivative liability | | | | | (76,000) | | | | | | 725,000 | | | | | | (801,000) | | | | | | (110)% | | |
Other income | | | | | 6,691 | | | | | | 151,073 | | | | | | (144,382) | | | | | | (96)% | | |
Interest income | | | | | 396 | | | | | | 609 | | | | | | (213) | | | | | | (35)% | | |
Other income (expense), net | | | | | (1,586,610) | | | | | | (333,175) | | | | | | (1,253,435) | | | | | | 376% | | |
Benefit from income taxes | | | | | — | | | | | | 117,750 | | | | | | (117,500) | | | | | | (100)% | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | | | | $ | 319,681 | | | | | | (9)% | | |
| | | Years Ended December 31, | | | Change | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | Dollars | | | Percentage | | ||||||||||||
Revenue | | | | $ | 4,298,350 | | | | | $ | 4,394,818 | | | | | $ | (96,468) | | | | | | (2)% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of Revenue | | | | | 2,127,900 | | | | | | 2,362,495 | | | | | | (234,595) | | | | | | (10)% | | |
Technology | | | | | 993,329 | | | | | | 1,210,079 | | | | | | (216,750) | | | | | | (18)% | | |
Sales and marketing | | | | | 1,413,059 | | | | | | 1,313,881 | | | | | | 99,178 | | | | | | 8% | | |
Supply development | | | | | 792,778 | | | | | | 673,439 | | | | | | 119,339 | | | | | | 18% | | |
Fulfillment | | | | | 914,633 | | | | | | 736,799 | | | | | | 177,834 | | | | | | 24% | | |
General and administrative | | | | | 1,936,740 | | | | | | 1,454,426 | | | | | | 482,314 | | | | | | 33% | | |
Total operating expenses | | | | | 8,178,439 | | | | | | 7,751,119 | | | | | | 427,320 | | | | | | 6% | | |
Loss from operations | | | | | (3,880,089) | | | | | | (3,356,301) | | | | | | (523,788) | | | | | | 16% | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (1,724,450) | | | | | | (1,214,983) | | | | | | (509,467) | | | | | | 42% | | |
Change in fair value of derivative liability | | | | | 551,000 | | | | | | (946,000) | | | | | | 1,497,000 | | | | | | (158)% | | |
Interest income | | | | | 168,859 | | | | | | 41,733 | | | | | | 127,126 | | | | | | 305% | | |
Other income | | | | | 630 | | | | | | 1,499 | | | | | | (869) | | | | | | (58)% | | |
Other expense (income), net | | | | | (1,003,961) | | | | | | (2,117,751) | | | | | | 1,113,790 | | | | | | (53)% | | |
Benefit from income taxes | | | | | 157,000 | | | | | | 127,000 | | | | | | 30,000 | | | | | | 24% | | |
Net loss | | | | $ | (4,727,050) | | | | | $ | (5,347,052) | | | | | $ | 620,002 | | | | | | (12)% | | |
| | | Nine Months Ended September 30, | | | Change | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | Dollars | | | Percentage | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Net cash flows used in operating activities | | | | $ | (263,728) | | | | | $ | (1,851,395) | | | | | $ | 1,587,667 | | | | | | (86)% | | |
Net cash flows used in investing activities | | | | �� | (865,927) | | | | | | (1,119,244) | | | | | | 253,317 | | | | | | (23)% | | |
Net cash flows provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | | | | | (340,666) | | | | | | (14)% | | |
Net increase (decrease) in cash and cash equivalents | | | | $ | 903,353 | | | | | $ | (596,965) | | | | | $ | 1,500,318 | | | | | | | | |
| | | Years Ended December 31, | | | Change | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | Dollars | | | Percentage | | ||||||||||||
Net cash flows used in operating activities | | | | $ | (2,679,900) | | | | | $ | (2,681,749) | | | | | $ | 1,849 | | | | | | —% | | |
Net cash flows used in investing activities | | | | | (1,475,245) | | | | | | (1,025,637) | | | | | | (449,608) | | | | | | 44% | | |
Net cash flows provided by financing activities | | | | | 3,078,674 | | | | | | 3,515,306 | | | | | | (436,632) | | | | | | (12)% | | |
Net decrease in cash and cash equivalents | | | | $ | (1,076,471) | | | | | $ | (192,080) | | | | | $ | (884,391) | | | | | | | | |
| | | Nine Months Ended September 30, | | | Year Ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | | | | $ | (4,727,050) | | | | | $ | (5,347,052) | | |
Income tax benefit | | | | | — | | | | | | (117,750) | | | | | | (157,000) | | | | | | (127,000) | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | | | | | (551,000) | | | | | | 946,000 | | |
Interest expense | | | | | 1,517,697 | | | | | | 1,209,857 | | | | | | 1,724,450 | | | | | | 1,214,983 | | |
Depreciation & amortization | | | | | 632,988 | | | | | | 475,801 | | | | | | 634,965 | | | | | | 469,173 | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | | | | | 360,379 | | | | | | 113,921 | | |
Adjusted EBITDA | | | | $ | (751,258) | | | | | $ | (2,195,450) | | | | | $ | (2,715,256) | | | | | $ | (2,729,975) | | |
| | | September 30, 2020 | | | 2019 | | | 2018 | | |||||||||
Americas | | | | | 87.9% | | | | | | 97.7% | | | | | | 99.5% | | |
Europe, Middle East, and Africa (“EMEA”) | | | | | 3.8% | | | | | | 0.2% | | | | | | 0.4% | | |
Asia Pacific (“APAC”) | | | | | 8.3% | | | | | | 2.1% | | | | | | 0.1% | | |
| | | September 30, 2020 | | | 2019 | | | 2018 | | |||||||||
Americas | | | | | 94.2% | | | | | | 77.5% | | | | | | 97.6% | | |
Europe, Middle East, and Africa (EMEA) | | | | | 3.6% | | | | | | 22.5% | | | | | | 1.5% | | |
Asia Pacific (APAC) | | | | | 2.2% | | | | | | 0.0% | | | | | | 0.9% | | |
| | | As of December 31, | | | CAGR 2016-19 | | | As of September 30, | | |||||||||||||||||||||||||||||||||
Sales Pipeline Stage — Totals | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | ||||||||||||||||||||||||
Inquiries | | | | $ | 54,266 | | | | | $ | 26,530 | | | | | $ | 26,237 | | | | | $ | 11,057 | | | | | | 69.9% | | | | | $ | 56,751 | | | | | $ | 39,807 | | |
Quotes | | | | $ | 36,569 | | | | | $ | 17,851 | | | | | $ | 16,464 | | | | | $ | 6,763 | | | | | | 75.5% | | | | | $ | 49,805 | | | | | $ | 24,245 | | |
Purchase Orders | | | | $ | 12,053 | | | | | $ | 8,228 | | | | | $ | 5,185 | | | | | $ | 2,109 | | | | | | 78.8% | | | | | $ | 9,961 | | | | | $ | 5,842 | | |
Revenue | | | | $ | 4,298 | | | | | $ | 4,395 | | | | | $ | 3,067 | | | | | $ | 1,448 | | | | | | 43.7% | | | | | $ | 5,466 | | | | | $ | 3,008 | | |
| | | As of December 31, | | | CAGR 2016-19 | | | As of September 30, | | |||||||||||||||||||||||||||||||||
Sales Pipeline Stage — Averages (in thousands) | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | ||||||||||||||||||||||||
Inquiries | | | | $ | 42.1 | | | | | $ | 23.2 | | | | | $ | 17.8 | | | | | $ | 18.8 | | | | | | 30.9% | | | | | $ | 54.1 | | | | | $ | 40.4 | | |
Quotes | | | | $ | 47.1 | | | | | $ | 34.1 | | | | | $ | 20.3 | | | | | $ | 16.5 | | | | | | 41.8% | | | | | $ | 79.9 | | | | | $ | 41.4 | | |
Purchase Orders | | | | $ | 35.6 | | | | | $ | 26.3 | | | | | $ | 9.8 | | | | | $ | 7.0 | | | | | | 72.0% | | | | | $ | 30.9 | | | | | $ | 22.8 | | |
| | | As of December 31, | | | CAGR 2016-19 | | | As of September 30, | | |||||||||||||||||||||||||||||||||
Average Selling Price | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | ||||||||||||||||||||||||
Per Specimen Shipped | | | | $ | 329.18 | | | | | $ | 163.98 | | | | | $ | 95.46 | | | | | $ | 35.48 | | | | | | 110.1% | | | | | $ | 314.31 | | | | | $ | 324.73 | | |
| | | As of December 31, | | | CAGR 2016-19 | | | As of September 30, | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | ||||||||||||||||||||||||
Cumulative Number of Customer Organizations | | | | | 234 | | | | | | 176 | | | | | | 140 | | | | | | 69 | | | | | | 50.2% | | | | | | 308 | | | | | | 212 | | |
Number of Active Customer Organizations | | | | | 110 | | | | | | 99 | | | | | | 108 | | | | | | 56 | | | | | | 25.2% | | | | | | 162 | | | | | | 102 | | |
Name | | | Age | | | Position | | |||
Christopher Ianelli | | | | | 53 | | | | Chief Executive Officer, President, and Director | |
Jill Mullan | | | | | 56 | | | | Chief Operating Officer, Secretary, Treasurer, and Director | |
Benjamin Bielak | | | | | 51 | | | | Chief Information Officer | |
Tracy Curley | | | | | 59 | | | | Chief Financial Officer | |
Andrew L. Ross | | | | | 72 | | | | Chairman of the Board | |
George “Bud” Scholl | | | | | 61 | | | | Director | |
Steven Gullans | | | | | 67 | | | | Director | |
John L. Brooks III | | | | | 69 | | | | Director Nominee | |
Margaret H. Lawrence | | | | | 45 | | | | Director Nominee | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Option awards ($)(1) | | | All other compensation ($) | | | Total ($) | | ||||||||||||||||||
Christopher Ianelli, | | | | | 2019 | | | | | $ | 250,000 | | | | | $ | — | | | | | $ | 297,587 | | | | | $ | — | | | | | $ | 547,587 | | |
Chief Executive, President and Director | | | | | 2018 | | | | | $ | 220,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 220,000 | | |
Jill Mullan, | | | | | 2019 | | | | | $ | 230,000 | | | | | $ | — | | | | | $ | 397,617 | | | | | $ | — | | | | | $ | 627,617 | | |
Chief Operating Officer, Secretary and Treasurer | | | | | 2018 | | | | | $ | 220,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 220,000 | | |
Benjamin Bielak | | | | | 2019 | | | | | $ | 220,000 | | | | | $ | — | | | | | $ | 25,500 | | | | | $ | — | | | | | $ | 245,500 | | |
Chief Information Officer | | | | | 2018 | | | | | $ | 205,000 | | | | | $ | — | | | | | $ | 202,800 | | | | | $ | — | | | | | $ | 407,800 | | |
Tracy Curley | | | | | 2019 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Chief Financial Officer | | | | | 2018 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Plan | | | Number of Shares Issued | | | Number of Shares Reserved for Issuance | | | Number of Shares underlying Outstanding Options or Warrants | | | Number of Shares Remaining Available for Future Issuance | | ||||||||||||
2010 Stock Incentive Plan | | | | | 868,427 | | | | | | 1,500,000 | | | | | | 631,573 | | | | | | — | | |
2013 Stock Incentive Plan | | | | | 329,922 | | | | | | 1,713,570 | | | | | | 792,468 | | | | | | 591,180 | | |
| | | Option Awards | | ||||||||||||||||||||||||
Name | | | Number of securities underlying unexercised options (#) exercisable | | | Number of securities underlying unexercised options (#) unexercisable | | | Equity incentive plan awards; Number of securities underlying unexercised unearned options (#) | | | Option exercise price ($) | | | Option expiration date | | ||||||||||||
Christopher Ianelli | | | | | 9,375 | | | | | | 15,625 | | | | | | — | | | | | $ | 1.02 | | | | January 31, 2029 | |
Christopher Ianelli | | | | | 266,752 | | | | | | — | | | | | | — | | | | | $ | 1.02 | | | | July 12, 2029 | |
Jill Mullan | | | | | 107,000 | | | | | | — | | | | | | — | | | | | $ | 1.08 | | | | June 29, 2026 | |
Jill Mullan | | | | | 9,375 | | | | | | 15,625 | | | | | | — | | | | | $ | 1.02 | | | | January 31, 2029 | |
Jill Mullan | | | | | 364,821 | | | | | | — | | | | | | — | | | | | $ | 1.02 | | | | July 12, 2029 | |
Benjamin Bielak | | | | | 65,000 | | | | | | 65,000 | | | | | | — | | | | | $ | 1.56 | | | | June 14, 2028 | |
Benjamin Bielak | | | | | 9,375 | | | | | | 15,625 | | | | | | — | | | | | $ | 1.02 | | | | January 31, 2029 | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Option awards ($)(1) | | | All other compensation ($) | | | Total ($) | | ||||||||||||||||||
Andrew Ross, | | | | | 2019 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Chairman of the Board | | | | | 2018 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Bud Scholl | | | | | 2019 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Director | | | | | 2018 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Steven Gullans | | | | | 2019 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Director | | | | | 2018 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
| | Shares beneficially owned prior to the offering | | Shares beneficially owned after the offering | | | Shares beneficially owned prior to the offering | | Shares beneficially owned after the offering | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name of beneficial owner | | Common stock | | Options exercisable within 60 days | | Aggregate number of shares beneficially owned | | % | | Assuming no exercise of option to purchase additional shares | | % | | Assuming exercise of option to purchase additional shares | | % | | | Common stock | | Options exercisable within 60 days | | Aggregate number of shares beneficially owned | | % | | Assuming no exercise of option to purchase additional shares | | % | | Assuming exercise of option to purchase additional shares | | % | | ||||||||||||||||||||||||||||||||||||||||
5% or more stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Anna-Maria & Stephen Kellen Foundation(1) | | | | 1,091,187(2) | | | | | — | | | | | 1,091,187 | | | | | 8.7% | | | | | | | | | | | | | | 1,091,187(2) | | | | | — | | | | | 1,091,187 | | | | | 8.7% | | | | | | | | | | | ||||||||||||||||
OBF Investments | | | | 1,388,784(3) | | | | | — | | | | | 1,388,784 | | | | | 11.1% | | | | | | | | | | | | | | 1,388,784(3) | | | | | — | | | | | 1,388,784 | | | | | 11.1% | | | | | | | | | | | ||||||||||||||||
Named executive officers and directors: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Andrew L. Ross | | | | 4,740,153(4) | | | | | — | | | | | 4,740,153 | | | | | 37.9% | | | | | | | | | | | | | | 4,740,153(4) | | | | | — | | | | | 4,740,153 | | | | | 37.9% | | | | | | | | | | | ||||||||||||||||
Christopher Ianelli | | | | 1,903,933(5) | | | | | 277,689 | | | | | 2,181,622 | | | | | 17.0% | | | | | | | | | | | | | | 1,903,933(5) | | | | | 277,689 | | | | | 2,181,622 | | | | | 17.0% | | | | | | | | | | | ||||||||||||||||
Jill Mullan | | | | 274,859(6) | | | | | 482,758 | | | | | 757,617 | | | | | 5.8% | | | | | | | | | | | | | | 274,859(6) | | | | | 482,758 | | | | | 757,617 | | | | | 5.8% | | | | | | | | | | | ||||||||||||||||
Steven Gullans | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | | | | | ||||||||||||||||
All current directors and executive officers as a group (4 persons) | | | | 6,918,945 | | | | | 760,447 | | | | | 7,679,392 | | | | | 57.8% | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
John L. Brooks III | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Margaret H. Lawrence | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
All current directors and executive officers as a group (6 persons) | | | | 6,918,945 | | | | | 760,447 | | | | | 7,679,392 | | | | | 57.8% | | | | | | | | | | |
Underwriters | | | Number of Shares | | |||
ThinkEquity, a division of Fordham Financial Management, Inc. | | | | | | | |
| | | | | | | |
Total | | | | | | |
| | | | | | | | | Total | | |||
| | | Per Share | | | Without Over-Allotment | | | With Over-Allotment | | |||
Public offering price | | | | $ | | | | | | | | | |
Underwriting discount (7.5%) | | | | $ | | | | | | | | | |
Proceeds, before expenses, to us | | | | $ | | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-27 | | | |
| | | | | F-28 | | | |
| | | | | F-29 | | | |
| | | | | F-30 | | | |
| | | | | F-31 | | |
| | | December 31, 2019 | | | December 31, 2018 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 53,893 | | | | | $ | 1,130,364 | | |
Accounts receivable | | | | | 833,580 | | | | | | 1,025,833 | | |
Accounts receivable – unbilled | | | | | 454,576 | | | | | | — | | |
Inventory | | | | | 54,908 | | | | | | 47,287 | | |
Prepaid expenses and other current assets | | | | | 79,227 | | | | | | 100,018 | | |
Tax credit receivable, current portion | | | | | 104,478 | | | | | | — | | |
Total current assets | | | | | 1,580,662 | | | | | | 2,303,502 | | |
Property and equipment, net | | | | | 119,921 | | | | | | 149,098 | | |
Internally developed software, net | | | | | 2,306,882 | | | | | | 1,437,425 | | |
Tax credit receivable, net of current portion | | | | | 179,522 | | | | | | 127,000 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 4,214,588 | | | | | $ | 4,044,626 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 737,794 | | | | | $ | 696,912 | | |
Accrued expenses | | | | | 471,348 | | | | | | 291,759 | | |
Accrued interest | | | | | 1,745,515 | | | | | | 573,156 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,350,278 | | | | | | 4,801,189 | | |
Derivative liability for embedded conversion features | | | | | 2,214,000 | | | | | | 2,765,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 3,586,326 | | | | | | 1,117,286 | | |
Bridge notes payable, related parties | | | | | 1,655,000 | | | | | | 1,050,000 | | |
Total current liabilities | | | | | 15,760,261 | | | | | | 11,295,302 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at December 31, 2019 and 2018 (preference in liquidation of $10,122,925) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,550 shares authorized, 556,540 issued and outstanding at December 31, 2019 and 2018 (preference in liquidation of $746,415) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at December 31, 2019 and 2018 (preference in liquidation of $3,778,652) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 and 5,360,240 issued and outstanding at December 31, 2019 and 2018 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,686,389 | | | | | | 1,322,336 | | |
Treasury stock, 171,908 shares at December 31, 2019 and 2018, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (24,405,503) | | | | | | (19,746,453) | | |
Total stockholders’ deficit | | | | | (22,718,749) | | | | | | (18,423,752) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 4,214,588 | | | | | $ | 4,044,626 | | |
| | | Years Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Revenue | | | | $ | 4,298,350 | | | | | $ | 4,394,818 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of revenue | | | | | 2,127,900 | | | | | | 2,362,495 | | |
Technology | | | | | 993,329 | | | | | | 1,210,079 | | |
Sales and marketing | | | | | 1,413,059 | | | | | | 1,313,881 | | |
Supply development | | | | | 792,778 | | | | | | 673,439 | | |
Fulfillment | | | | | 914,633 | | | | | | 736,799 | | |
General and administrative | | | | | 1,936,740 | | | | | | 1,454,426 | | |
Total operating expenses | | | | | 8,178,439 | | | | | | 7,751,119 | | |
Loss from operations | | | | | (3,880,089) | | | | | | (3,356,301) | | |
Other income (expense), net | | | | | | | | | | | | | |
Interest expense | | | | | (1,724,450) | | | | | | (1,214,983) | | |
Change in fair value of derivative liability | | | | | 551,000 | | | | | | (946,000) | | |
Other income | | | | | 168,859 | | | | | | 41,733 | | |
Interest income | | | | | 630 | | | | | | 1,499 | | |
Other expense, net | | | | | (1,003,961) | | | | | | (2,117,751) | | |
Net loss before benefit from income taxes | | | | | (4,884,050) | | | | | | (5,474,052) | | |
Benefit from income taxes | | | | | 157,000 | | | | | | 127,000 | | |
Net loss | | | | $ | (4,727,050) | | | | | $ | (5,347,052) | | |
Net loss per share | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.91) | | | | | $ | (1.03) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,190,810 | | | | | | 5,196,485 | | |
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2018 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,359,115 | | | | | $ | 537 | | | | | | 130,954 | | | | | $ | (131) | | | | | $ | 1,207,200 | | | | | $ | (14,399,401) | | | | | $ | (13,191,795) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 1,125 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,215 | | | | | | — | | | | | | 1,215 | | |
Repurchase of restricted common stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 40,954 | | | | | | (41) | | | | | | — | | | | | | — | | | | | | (41) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 113,921 | | | | | | — | | | | | | 113,921 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,347,052) | | | | | | (5,347,052) | | |
Balance at December 31, 2018 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,125 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,674 | | | | | | — | | | | | | 3,674 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 360,379 | | | | | | — | | | | | | 360,379 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,727,050) | | | | | | (4,727,050) | | |
Balance at December 31, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
| | | Years Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (4,727,050) | | | | | $ | (5,347,052) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 360,379 | | | | | | 113,921 | | |
Amortization of internally developed software | | | | | 577,605 | | | | | | 438,007 | | |
Depreciation and amortization of property and equipment | | | | | 57,360 | | | | | | 31,166 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 551,993 | | | | | | 767,716 | | |
Change in fair value of derivative liability | | | | | (551,000) | | | | | | 946,000 | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | 192,253 | | | | | | (393,192) | | |
Accounts receivable – unbilled | | | | | (305,576) | | | | | | — | | ��� |
Inventory | | | | | (7,621) | | | | | | (12,663) | | |
Prepaid expenses and other current assets | | | | | 20,791 | | | | | | 17,212 | | |
Tax credit receivable | | | | | (157,000) | | | | | | (127,000) | | |
Accounts payable | | | | | 40,882 | | | | | | 584,051 | | |
Accrued expenses | | | | | 94,725 | | | | | | (147,178) | | |
Accrued interest | | | | | 1,172,359 | | | | | | 447,263 | | |
Net cash used in operating activities | | | | | (2,679,900) | | | | | | (2,681,749) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (28,183) | | | | | | (55,958) | | |
Capitalization of internally developed software | | | | | (1,447,062) | | | | | | (969,679) | | |
Net cash used in investing activities | | | | | (1,475,245) | | | | | | (1,025,637) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of convertible notes payable | | | | | — | | | | | | 1,350,000 | | |
Proceeds from issuance of bridge notes payable | | | | | 3,075,000 | | | | | | 2,175,000 | | |
Payment of debt issuance costs | | | | | — | | | | | | (10,868) | | |
Proceeds from exercise of stock options | | | | | 3,674 | | | | | | 1,215 | | |
Repurchase of restricted common stock | | | | | — | | | | | | (41) | | |
Net cash provided by financing activities | | | | | 3,078,674 | | | | | | 3,515,306 | | |
Net decrease in cash | | | | | (1,076,471) | | | | | | (192,080) | | |
Cash at beginning of period | | | | | 1,130,364 | | | | | | 1,322,444 | | |
Cash at end of period | | | | $ | 53,893 | | | | | $ | 1,130,364 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | — | | | | | $ | — | | |
Income taxes paid | | | | $ | — | | | | | $ | — | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Debt issuance cost included in accrued expenses | | | | $ | (3,862) | | | | | $ | — | | |
Derivative liability for embedded conversion features on convertible notes issued | | | | $ | — | | | | | $ | 314,000 | | |
| | | Balance at December 31, 2018 | | | Adjustments | | | Balance at January 1, 2019 | | |||||||||
Accounts receivable – unbilled | | | | $ | — | | | | | $ | 149,000 | | | | | $ | 149,000 | | |
Accrued expenses | | | | $ | 291,759 | | | | | $ | 81,000 | | | | | $ | 372,759 | | |
Accumulated deficit | | | | $ | (19,746,453) | | | | | $ | 68,000 | | | | | $ | (19,678,453) | | |
| | | 2019 | | | 2018 | | ||||||
Specimens – contracts with customers | | | | $ | 4,215,002 | | | | | $ | 4,304,376 | | |
Shipping and other | | | | | 83,348 | | | | | | 90,442 | | |
Revenue | | | | $ | 4,298,350 | | | | | $ | 4,394,818 | | |
Asset category | | | Estimated Useful Life | |
Website | | | 3 years | |
Computer equipment and purchased software | | | 5 years | |
Equipment | | | 5 years | |
Furniture and fixtures | | | 5 years | |
Leasehold improvements | | | Shorter of useful life of asset or lease term | |
| | | 2019 | | | 2018 | | ||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,247,198 | | | | | | 503,656 | | |
Shares issuable upon exercise of stock warrants | | | | | 129,254 | | | | | | 129,254 | | |
| | | 2019 | | | 2018 | | ||||||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,481 | | | | | | 56,298 | | |
Equipment | | | | | 35,134 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,935 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,110 | | | | | | 308,927 | | |
Accumulated depreciation | | | | | (217,189) | | | | | | (159,829) | | |
Total property and equipment, net | | | | $ | 119,921 | | | | | $ | 149,098 | | |
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
|
| | | Fair value at December 31, 2018 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
Total liabilities | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
| | | 2019 | | | 2018 | | ||||||
Balance, beginning of period | | | | $ | 2,765,000 | | | | | $ | 1,505,000 | | |
Derivative liability for embedded conversion features on Convertible Notes | | | | | — | | | | | | 314,000 | | |
(Gain) loss included in earnings | | | | | (551,000) | | | | | | 946,000 | | |
Balance, end of period | | | | $ | 2,214,000 | | | | | $ | 2,765,000 | | |
Years Ended December 31, | | | Operating Leases | | |||
2020 | | | | $ | 162,597 | | |
2021 | | | | | 161,062 | | |
2022 | | | | | 163,158 | | |
2023 | | | | | 165,254 | | |
2024 | | | | | 27,601 | | |
Total | | | | $ | 679,672 | | |
| | | 2019 | | | 2018 | |
Assumptions: | | | | | | | |
Risk-free interest rate | | | 1.59% – 2.58% | | | 2.33% – 3.13% | |
Expected term (in years) | | | 5.00 – 6.14 | | | 4.83 – 9.08 | |
Expected volatility | | | 41.00% – 43.92% | | | 39.74% – 43.17% | |
Expected dividend yield | | | —% | | | —% | |
| | | Options Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term in Years | | |||||||||
Balance at January 1, 2018 | | | | | 371,343 | | | | | $ | 1.14 | | | | | | 8.63 | | |
Granted | | | | | 247,250 | | | | | | 1.49 | | | | | | | | |
Exercised | | | | | (1,125) | | | | | | 1.08 | | | | | | | | |
Cancelled/forfeited | | | | | (113,812) | | | | | | 1.36 | | | | | | | | |
Balance at December 31, 2018 | | | | | 503,656 | | | | | $ | 1.27 | | | | | | 6.92 | | |
Granted | | | | | 898,523 | | | | | | 1.02 | | | | | | | | |
Exercised | | | | | (3,125) | | | | | | 1.18 | | | | | | | | |
Cancelled/forfeited | | | | | (151,856) | | | | | | 1.10 | | | | | | | | |
Balance at December 31, 2019 | | | | | 1,247,198 | | | | | $ | 1.10 | | | | | | 8.78 | | |
Options exercisable at December 31, 2019 | | | | | 872,519 | | | | | $ | 1.08 | | | | | | 8.72 | | |
| | | 2019 | | | 2018 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 5,600,000 | | | | | $ | 4,600,000 | | |
Other | | | | | 1,000,000 | | | | | | 800,000 | | |
Total deferred tax assets | | | | | 6,600,000 | | | | | | 5,400,000 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Intangibles | | | | | (150,000) | | | | | | (70,000) | | |
Total deferred tax liabilities | | | | | (150,000) | | | | | | (70,000) | | |
Net deferred tax assets before valuation allowance | | | | | 6,450,000 | | | | | | 5,330,000 | | |
Valuation allowance | | | | | (6,450,000) | | | | | | (5,330,000) | | |
Net deferred tax asset | | | | $ | — | | | | | $ | — | | |
| | | 2019 | | | 2018 | | ||||||
Reconciliation to statutory rates | | | | | | | | | | | | | |
Expected federal income taxes benefit at statutory rates | | | | | (21)% | | | | | | (21)% | | |
Expected state tax benefit at statutory rates, net of federal benefit | | | | | (8) | | | | | | (8) | | |
Change in valuation allowance | | | | | 29 | | | | | | 29 | | |
Income tax expense (benefit) | | | | | —% | | | | | | —% | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 957,246 | | | | | $ | 53,893 | | |
Accounts receivable | | | | | 1,758,407 | | | | | | 833,580 | | |
Accounts receivable – unbilled | | | | | 323,763 | | | | | | 454,576 | | |
Inventory | | | | | 26,734 | | | | | | 54,908 | | |
Prepaid expenses and other current assets | | | | | 114,371 | | | | | | 79,227 | | |
Tax credit receivable, current portion | | | | | 179,376 | | | | | | 104,478 | | |
Total current assets | | | | | 3,359,897 | | | | | | 1,580,662 | | |
Property and equipment, net | | | | | 87,364 | | | | | | 119,921 | | |
Internally developed software, net | | | | | 2,572,378 | | | | | | 2,306,882 | | |
Tax credit receivable, net of current portion | | | | | — | | | | | | 179,522 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,212,058 | | | | | $ | 737,794 | | |
Accrued expenses | | | | | 600,992 | | | | | | 471,348 | | |
Accrued interest | | | | | 3,119,654 | | | | | | 1,745,515 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,489,728 | | | | | | 5,350,278 | | |
Derivative liability for embedded conversion features | | | | | 2,290,000 | | | | | | 2,214,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 4,588,504 | | | | | | 3,586,326 | | |
Bridge notes payable, related parties | | | | | 1,905,000 | | | | | | 1,655,000 | | |
Note payable, current portion | | | | | 473,239 | | | | | | — | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Total current liabilities | | | | | 20,261,087 | | | | | | 15,760,261 | | |
Note payable, net of current portion | | | | | 309,769 | | | | | | — | | |
Total liabilities | | | | | 20,570,856 | | | | | | 15,760,261 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $10,483,253) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,540 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $771,685) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $3,896,301) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 issued and outstanding at September 30, 2020 and December 31, 2019 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,766,986 | | | | | | 1,686,389 | | |
Treasury stock, 171,908 shares at September 30, 2020 and December 31, 2019, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (27,464,043) | | | | | | (24,405,503) | | |
Total stockholders’ deficit | | | | | (25,696,692) | | | | | | (22,718,749) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | — | | | | | | 29 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (523,390) | | | | | | (612,674) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (1,246,326) | | | | | | (2,145,243) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.24) | | | | | $ | (0.41) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | Shares | | | | | | Amount | | | | | | Shares | | | | | | Amount | | | | | | Shares | | | | | | Amount | | | | | | | Shares | | | | | | Amount | | | | | | Shares | | | | | | Amount | | | | | | |||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | ��� | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | |
Amortization of internally developed software | | | | | 599,425 | | | | | | 432,781 | | |
Depreciation and amortization of property and equipment | | | | | 33,563 | | | | | | 43,020 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 141,628 | | | | | | 415,736 | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (924,827) | | | | | | 389,405 | | |
Accounts receivable – unbilled | | | | | 130,813 | | | | | | (100,435) | | |
Inventory | | | | | 28,174 | | | | | | (7,864) | | |
Prepaid expenses and other current assets | | | | | (35,144) | | | | | | 3,693 | | |
Tax credit receivable | | | | | 104,624 | | | | | | (117,750) | | |
Accounts payable | | | | | 474,264 | | | | | | (40,708) | | |
Accrued expenses | | | | | 129,644 | | | | | | 102,931 | | |
Accrued interest | | | | | 1,374,139 | | | | | | 791,154 | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Net cash used in operating activities | | | | | (263,728) | | | | | | (1,851,395) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (1,006) | | | | | | (38,176) | | |
Capitalization of internally developed software | | | | | (864,921) | | | | | | (1,081,068) | | |
Net cash used in investing activities | | | | | (865,927) | | | | | | (1,119,244) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of bridge notes payable | | | | | 1,250,000 | | | | | | 2,370,000 | | |
Proceeds from issuance of note payable | | | | | 783,008 | | | | | | — | | |
Proceeds from exercise of stock options | | | | | — | | | | | | 3,674 | | |
Net cash provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | |
Net increase (decrease) in cash | | | | | 903,353 | | | | | | (596,965) | | |
Cash at beginning of period | | | | | 53,893 | | | | | | 1,130,364 | | |
Cash at end of period | | | | $ | 957,246 | | | | | $ | 533,399 | | |
| | | 2019 | | | 2018 | | ||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,247,198 | | | | | | 503,656 | | |
Shares issuable upon exercise of stock warrants | | | | | 129,254 | | | | | | 129,254 | | |
| | | 2019 | | | 2018 | | ||||||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,481 | | | | | | 56,298 | | |
Equipment | | | | | 35,134 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,935 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,110 | | | | | | 308,927 | | |
Accumulated depreciation | | | | | (217,189) | | | | | | (159,829) | | |
Total property and equipment, net | | | | $ | 119,921 | | | | | $ | 149,098 | | |
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
|
| | | Fair value at December 31, 2018 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
Total liabilities | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
| | | 2019 | | | 2018 | | ||||||
Balance, beginning of period | | | | $ | 2,765,000 | | | | | $ | 1,505,000 | | |
Derivative liability for embedded conversion features on Convertible Notes | | | | | — | | | | | | 314,000 | | |
(Gain) loss included in earnings | | | | | (551,000) | | | | | | 946,000 | | |
Balance, end of period | | | | $ | 2,214,000 | | | | | $ | 2,765,000 | | |
Years Ended December 31, | | | Operating Leases | | |||
2020 | | | | $ | 162,597 | | |
2021 | | | | | 161,062 | | |
2022 | | | | | 163,158 | | |
2023 | | | | | 165,254 | | |
2024 | | | | | 27,601 | | |
Total | | | | $ | 679,672 | | |
| | | 2019 | | | 2018 | |
Assumptions: | | | | | | | |
Risk-free interest rate | | | 1.59% – 2.58% | | | 2.33% – 3.13% | |
Expected term (in years) | | | 5.00 – 6.14 | | | 4.83 – 9.08 | |
Expected volatility | | | 41.00% – 43.92% | | | 39.74% – 43.17% | |
Expected dividend yield | | | —% | | | —% | |
| | | Options Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term in Years | | |||||||||
Balance at January 1, 2018 | | | | | 371,343 | | | | | $ | 1.14 | | | | | | 8.63 | | |
Granted | | | | | 247,250 | | | | | | 1.49 | | | | | | | | |
Exercised | | | | | (1,125) | | | | | | 1.08 | | | | | | | | |
Cancelled/forfeited | | | | | (113,812) | | | | | | 1.36 | | | | | | | | |
Balance at December 31, 2018 | | | | | 503,656 | | | | | $ | 1.27 | | | | | | 6.92 | | |
Granted | | | | | 898,523 | | | | | | 1.02 | | | | | | | | |
Exercised | | | | | (3,125) | | | | | | 1.18 | | | | | | | | |
Cancelled/forfeited | | | | | (151,856) | | | | | | 1.10 | | | | | | | | |
Balance at December 31, 2019 | | | | | 1,247,198 | | | | | $ | 1.10 | | | | | | 8.78 | | |
Options exercisable at December 31, 2019 | | | | | 872,519 | | | | | $ | 1.08 | | | | | | 8.72 | | |
| | | 2019 | | | 2018 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 5,600,000 | | | | | $ | 4,600,000 | | |
Other | | | | | 1,000,000 | | | | | | 800,000 | | |
Total deferred tax assets | | | | | 6,600,000 | | | | | | 5,400,000 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Intangibles | | | | | (150,000) | | | | | | (70,000) | | |
Total deferred tax liabilities | | | | | (150,000) | | | | | | (70,000) | | |
Net deferred tax assets before valuation allowance | | | | | 6,450,000 | | | | | | 5,330,000 | | |
Valuation allowance | | | | | (6,450,000) | | | | | | (5,330,000) | | |
Net deferred tax asset | | | | $ | — | | | | | $ | — | | |
| | | 2019 | | | 2018 | | ||||||
Reconciliation to statutory rates | | | | | | | | | | | | | |
Expected federal income taxes benefit at statutory rates | | | | | (21)% | | | | | | (21)% | | |
Expected state tax benefit at statutory rates, net of federal benefit | | | | | (8) | | | | | | (8) | | |
Change in valuation allowance | | | | | 29 | | | | | | 29 | | |
Income tax expense (benefit) | | | | | —% | | | | | | —% | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 957,246 | | | | | $ | 53,893 | | |
Accounts receivable | | | | | 1,758,407 | | | | | | 833,580 | | |
Accounts receivable – unbilled | | | | | 323,763 | | | | | | 454,576 | | |
Inventory | | | | | 26,734 | | | | | | 54,908 | | |
Prepaid expenses and other current assets | | | | | 114,371 | | | | | | 79,227 | | |
Tax credit receivable, current portion | | | | | 179,376 | | | | | | 104,478 | | |
Total current assets | | | | | 3,359,897 | | | | | | 1,580,662 | | |
Property and equipment, net | | | | | 87,364 | | | | | | 119,921 | | |
Internally developed software, net | | | | | 2,572,378 | | | | | | 2,306,882 | | |
Tax credit receivable, net of current portion | | | | | — | | | | | | 179,522 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,212,058 | | | | | $ | 737,794 | | |
Accrued expenses | | | | | 600,992 | | | | | | 471,348 | | |
Accrued interest | | | | | 3,119,654 | | | | | | 1,745,515 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,489,728 | | | | | | 5,350,278 | | |
Derivative liability for embedded conversion features | | | | | 2,290,000 | | | | | | 2,214,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 4,588,504 | | | | | | 3,586,326 | | |
Bridge notes payable, related parties | | | | | 1,905,000 | | | | | | 1,655,000 | | |
Note payable, current portion | | | | | 473,239 | | | | | | — | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Total current liabilities | | | | | 20,261,087 | | | | | | 15,760,261 | | |
Note payable, net of current portion | | | | | 309,769 | | | | | | — | | |
Total liabilities | | | | | 20,570,856 | | | | | | 15,760,261 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $10,483,253) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,540 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $771,685) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $3,896,301) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 issued and outstanding at September 30, 2020 and December 31, 2019 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,766,986 | | | | | | 1,686,389 | | |
Treasury stock, 171,908 shares at September 30, 2020 and December 31, 2019, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (27,464,043) | | | | | | (24,405,503) | | |
Total stockholders’ deficit | | | | | (25,696,692) | | | | | | (22,718,749) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | — | | | | | | 29 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (523,390) | | | | | | (612,674) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (1,246,326) | | | | | | (2,145,243) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.24) | | | | | $ | (0.41) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | |
Amortization of internally developed software | | | | | 599,425 | | | | | | 432,781 | | |
Depreciation and amortization of property and equipment | | | | | 33,563 | | | | | | 43,020 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 141,628 | | | | | | 415,736 | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (924,827) | | | | | | 389,405 | | |
Accounts receivable – unbilled | | | | | 130,813 | | | | | | (100,435) | | |
Inventory | | | | | 28,174 | | | | | | (7,864) | | |
Prepaid expenses and other current assets | | | | | (35,144) | | | | | | 3,693 | | |
Tax credit receivable | | | | | 104,624 | | | | | | (117,750) | | |
Accounts payable | | | | | 474,264 | | | | | | (40,708) | | |
Accrued expenses | | | | | 129,644 | | | | | | 102,931 | | |
Accrued interest | | | | | 1,374,139 | | | | | | 791,154 | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Net cash used in operating activities | | | | | (263,728) | | | | | | (1,851,395) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (1,006) | | | | | | (38,176) | | |
Capitalization of internally developed software | | | | | (864,921) | | | | | | (1,081,068) | | |
Net cash used in investing activities | | | | | (865,927) | | | | | | (1,119,244) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of bridge notes payable | | | | | 1,250,000 | | | | | | 2,370,000 | | |
Proceeds from issuance of note payable | | | | | 783,008 | | | | | | — | | |
Proceeds from exercise of stock options | | | | | — | | | | | | 3,674 | | |
Net cash provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | |
Net increase (decrease) in cash | | | | | 903,353 | | | | | | (596,965) | | |
Cash at beginning of period | | | | | 53,893 | | | | | | 1,130,364 | | |
Cash at end of period | | | | $ | 957,246 | | | | | $ | 533,399 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Specimens – contracts with customers | | | | $ | 2,223,057 | | | | | $ | 680,556 | | | | | $ | 5,408,012 | | | | | $ | 2,942,268 | | |
Shipping and other | | | | | 27,090 | | | | | | 12,151 | | | | | | 58,363 | | | | | | 65,643 | | |
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
| | | 2019 | | | 2018 | | ||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,247,198 | | | | | | 503,656 | | |
Shares issuable upon exercise of stock warrants | | | | | 129,254 | | | | | | 129,254 | | |
| | | 2019 | | | 2018 | | ||||||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,481 | | | | | | 56,298 | | |
Equipment | | | | | 35,134 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,935 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,110 | | | | | | 308,927 | | |
Accumulated depreciation | | | | | (217,189) | | | | | | (159,829) | | |
Total property and equipment, net | | | | $ | 119,921 | | | | | $ | 149,098 | | |
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
|
| | | Fair value at December 31, 2018 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
Total liabilities | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
| | | 2019 | | | 2018 | | ||||||
Balance, beginning of period | | | | $ | 2,765,000 | | | | | $ | 1,505,000 | | |
Derivative liability for embedded conversion features on Convertible Notes | | | | | — | | | | | | 314,000 | | |
(Gain) loss included in earnings | | | | | (551,000) | | | | | | 946,000 | | |
Balance, end of period | | | | $ | 2,214,000 | | | | | $ | 2,765,000 | | |
Years Ended December 31, | | | Operating Leases | | |||
2020 | | | | $ | 162,597 | | |
2021 | | | | | 161,062 | | |
2022 | | | | | 163,158 | | |
2023 | | | | | 165,254 | | |
2024 | | | | | 27,601 | | |
Total | | | | $ | 679,672 | | |
| | | 2019 | | | 2018 | |
Assumptions: | | | | | | | |
Risk-free interest rate | | | 1.59% – 2.58% | | | 2.33% – 3.13% | |
Expected term (in years) | | | 5.00 – 6.14 | | | 4.83 – 9.08 | |
Expected volatility | | | 41.00% – 43.92% | | | 39.74% – 43.17% | |
Expected dividend yield | | | —% | | | —% | |
| | | Options Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term in Years | | |||||||||
Balance at January 1, 2018 | | | | | 371,343 | | | | | $ | 1.14 | | | | | | 8.63 | | |
Granted | | | | | 247,250 | | | | | | 1.49 | | | | | | | | |
Exercised | | | | | (1,125) | | | | | | 1.08 | | | | | | | | |
Cancelled/forfeited | | | | | (113,812) | | | | | | 1.36 | | | | | | | | |
Balance at December 31, 2018 | | | | | 503,656 | | | | | $ | 1.27 | | | | | | 6.92 | | |
Granted | | | | | 898,523 | | | | | | 1.02 | | | | | | | | |
Exercised | | | | | (3,125) | | | | | | 1.18 | | | | | | | | |
Cancelled/forfeited | | | | | (151,856) | | | | | | 1.10 | | | | | | | | |
Balance at December 31, 2019 | | | | | 1,247,198 | | | | | $ | 1.10 | | | | | | 8.78 | | |
Options exercisable at December 31, 2019 | | | | | 872,519 | | | | | $ | 1.08 | | | | | | 8.72 | | |
| | | 2019 | | | 2018 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 5,600,000 | | | | | $ | 4,600,000 | | |
Other | | | | | 1,000,000 | | | | | | 800,000 | | |
Total deferred tax assets | | | | | 6,600,000 | | | | | | 5,400,000 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Intangibles | | | | | (150,000) | | | | | | (70,000) | | |
Total deferred tax liabilities | | | | | (150,000) | | | | | | (70,000) | | |
Net deferred tax assets before valuation allowance | | | | | 6,450,000 | | | | | | 5,330,000 | | |
Valuation allowance | | | | | (6,450,000) | | | | | | (5,330,000) | | |
Net deferred tax asset | | | | $ | — | | | | | $ | — | | |
| | | 2019 | | | 2018 | | ||||||
Reconciliation to statutory rates | | | | | | | | | | | | | |
Expected federal income taxes benefit at statutory rates | | | | | (21)% | | | | | | (21)% | | |
Expected state tax benefit at statutory rates, net of federal benefit | | | | | (8) | | | | | | (8) | | |
Change in valuation allowance | | | | | 29 | | | | | | 29 | | |
Income tax expense (benefit) | | | | | —% | | | | | | —% | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 957,246 | | | | | $ | 53,893 | | |
Accounts receivable | | | | | 1,758,407 | | | | | | 833,580 | | |
Accounts receivable – unbilled | | | | | 323,763 | | | | | | 454,576 | | |
Inventory | | | | | 26,734 | | | | | | 54,908 | | |
Prepaid expenses and other current assets | | | | | 114,371 | | | | | | 79,227 | | |
Tax credit receivable, current portion | | | | | 179,376 | | | | | | 104,478 | | |
Total current assets | | | | | 3,359,897 | | | | | | 1,580,662 | | |
Property and equipment, net | | | | | 87,364 | | | | | | 119,921 | | |
Internally developed software, net | | | | | 2,572,378 | | | | | | 2,306,882 | | |
Tax credit receivable, net of current portion | | | | | — | | | | | | 179,522 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,212,058 | | | | | $ | 737,794 | | |
Accrued expenses | | | | | 600,992 | | | | | | 471,348 | | |
Accrued interest | | | | | 3,119,654 | | | | | | 1,745,515 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,489,728 | | | | | | 5,350,278 | | |
Derivative liability for embedded conversion features | | | | | 2,290,000 | | | | | | 2,214,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 4,588,504 | | | | | | 3,586,326 | | |
Bridge notes payable, related parties | | | | | 1,905,000 | | | | | | 1,655,000 | | |
Note payable, current portion | | | | | 473,239 | | | | | | — | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Total current liabilities | | | | | 20,261,087 | | | | | | 15,760,261 | | |
Note payable, net of current portion | | | | | 309,769 | | | | | | — | | |
Total liabilities | | | | | 20,570,856 | | | | | | 15,760,261 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $10,483,253) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,540 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $771,685) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $3,896,301) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 issued and outstanding at September 30, 2020 and December 31, 2019 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,766,986 | | | | | | 1,686,389 | | |
Treasury stock, 171,908 shares at September 30, 2020 and December 31, 2019, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (27,464,043) | | | | | | (24,405,503) | | |
Total stockholders’ deficit | | | | | (25,696,692) | | | | | | (22,718,749) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | — | | | | | | 29 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (523,390) | | | | | | (612,674) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (1,246,326) | | | | | | (2,145,243) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.24) | | | | | $ | (0.41) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | |
Amortization of internally developed software | | | | | 599,425 | | | | | | 432,781 | | |
Depreciation and amortization of property and equipment | | | | | 33,563 | | | | | | 43,020 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 141,628 | | | | | | 415,736 | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (924,827) | | | | | | 389,405 | | |
Accounts receivable – unbilled | | | | | 130,813 | | | | | | (100,435) | | |
Inventory | | | | | 28,174 | | | | | | (7,864) | | |
Prepaid expenses and other current assets | | | | | (35,144) | | | | | | 3,693 | | |
Tax credit receivable | | | | | 104,624 | | | | | | (117,750) | | |
Accounts payable | | | | | 474,264 | | | | | | (40,708) | | |
Accrued expenses | | | | | 129,644 | | | | | | 102,931 | | |
Accrued interest | | | | | 1,374,139 | | | | | | 791,154 | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Net cash used in operating activities | | | | | (263,728) | | | | | | (1,851,395) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (1,006) | | | | | | (38,176) | | |
Capitalization of internally developed software | | | | | (864,921) | | | | | | (1,081,068) | | |
Net cash used in investing activities | | | | | (865,927) | | | | | | (1,119,244) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of bridge notes payable | | | | | 1,250,000 | | | | | | 2,370,000 | | |
Proceeds from issuance of note payable | | | | | 783,008 | | | | | | — | | |
Proceeds from exercise of stock options | | | | | — | | | | | | 3,674 | | |
Net cash provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | |
Net increase (decrease) in cash | | | | | 903,353 | | | | | | (596,965) | | |
Cash at beginning of period | | | | | 53,893 | | | | | | 1,130,364 | | |
Cash at end of period | | | | $ | 957,246 | | | | | $ | 533,399 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Specimens – contracts with customers | | | | $ | 2,223,057 | | | | | $ | 680,556 | | | | | $ | 5,408,012 | | | | | $ | 2,942,268 | | |
Shipping and other | | | | | 27,090 | | | | | | 12,151 | | | | | | 58,363 | | | | | | 65,643 | | |
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,424,041 | | | | | | 1,279,398 | | | | | | 1,424,041 | | | | | | 1,279,398 | | |
Shares issuable upon exercise of warrants to purchase common stock | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,588 | | | | | | 84,481 | | |
Equipment | | | | | 35,449 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,936 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,533 | | | | | | 337,110 | | |
Accumulated depreciation | | | | | (250,169) | | | | | | (217,189) | | |
Total property and equipment, net | | | | $ | 87,364 | | | | | $ | 119,921 | | |
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
|
| | | Fair value at December 31, 2018 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
Total liabilities | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
| | | 2019 | | | 2018 | | ||||||
Balance, beginning of period | | | | $ | 2,765,000 | | | | | $ | 1,505,000 | | |
Derivative liability for embedded conversion features on Convertible Notes | | | | | — | | | | | | 314,000 | | |
(Gain) loss included in earnings | | | | | (551,000) | | | | | | 946,000 | | |
Balance, end of period | | | | $ | 2,214,000 | | | | | $ | 2,765,000 | | |
Years Ended December 31, | | | Operating Leases | | |||
2020 | | | | $ | 162,597 | | |
2021 | | | | | 161,062 | | |
2022 | | | | | 163,158 | | |
2023 | | | | | 165,254 | | |
2024 | | | | | 27,601 | | |
Total | | | | $ | 679,672 | | |
| | | 2019 | | | 2018 | |
Assumptions: | | | | | | | |
Risk-free interest rate | | | 1.59% – 2.58% | | | 2.33% – 3.13% | |
Expected term (in years) | | | 5.00 – 6.14 | | | 4.83 – 9.08 | |
Expected volatility | | | 41.00% – 43.92% | | | 39.74% – 43.17% | |
Expected dividend yield | | | —% | | | —% | |
| | | Options Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term in Years | | |||||||||
Balance at January 1, 2018 | | | | | 371,343 | | | | | $ | 1.14 | | | | | | 8.63 | | |
Granted | | | | | 247,250 | | | | | | 1.49 | | | | | | | | |
Exercised | | | | | (1,125) | | | | | | 1.08 | | | | | | | | |
Cancelled/forfeited | | | | | (113,812) | | | | | | 1.36 | | | | | | | | |
Balance at December 31, 2018 | | | | | 503,656 | | | | | $ | 1.27 | | | | | | 6.92 | | |
Granted | | | | | 898,523 | | | | | | 1.02 | | | | | | | | |
Exercised | | | | | (3,125) | | | | | | 1.18 | | | | | | | | |
Cancelled/forfeited | | | | | (151,856) | | | | | | 1.10 | | | | | | | | |
Balance at December 31, 2019 | | | | | 1,247,198 | | | | | $ | 1.10 | | | | | | 8.78 | | |
Options exercisable at December 31, 2019 | | | | | 872,519 | | | | | $ | 1.08 | | | | | | 8.72 | | |
| | | 2019 | | | 2018 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 5,600,000 | | | | | $ | 4,600,000 | | |
Other | | | | | 1,000,000 | | | | | | 800,000 | | |
Total deferred tax assets | | | | | 6,600,000 | | | | | | 5,400,000 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Intangibles | | | | | (150,000) | | | | | | (70,000) | | |
Total deferred tax liabilities | | | | | (150,000) | | | | | | (70,000) | | |
Net deferred tax assets before valuation allowance | | | | | 6,450,000 | | | | | | 5,330,000 | | |
Valuation allowance | | | | | (6,450,000) | | | | | | (5,330,000) | | |
Net deferred tax asset | | | | $ | — | | | | | $ | — | | |
| | | 2019 | | | 2018 | | ||||||
Reconciliation to statutory rates | | | | | | | | | | | | | |
Expected federal income taxes benefit at statutory rates | | | | | (21)% | | | | | | (21)% | | |
Expected state tax benefit at statutory rates, net of federal benefit | | | | | (8) | | | | | | (8) | | |
Change in valuation allowance | | | | | 29 | | | | | | 29 | | |
Income tax expense (benefit) | | | | | —% | | | | | | —% | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 957,246 | | | | | $ | 53,893 | | |
Accounts receivable | | | | | 1,758,407 | | | | | | 833,580 | | |
Accounts receivable – unbilled | | | | | 323,763 | | | | | | 454,576 | | |
Inventory | | | | | 26,734 | | | | | | 54,908 | | |
Prepaid expenses and other current assets | | | | | 114,371 | | | | | | 79,227 | | |
Tax credit receivable, current portion | | | | | 179,376 | | | | | | 104,478 | | |
Total current assets | | | | | 3,359,897 | | | | | | 1,580,662 | | |
Property and equipment, net | | | | | 87,364 | | | | | | 119,921 | | |
Internally developed software, net | | | | | 2,572,378 | | | | | | 2,306,882 | | |
Tax credit receivable, net of current portion | | | | | — | | | | | | 179,522 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,212,058 | | | | | $ | 737,794 | | |
Accrued expenses | | | | | 600,992 | | | | | | 471,348 | | |
Accrued interest | | | | | 3,119,654 | | | | | | 1,745,515 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,489,728 | | | | | | 5,350,278 | | |
Derivative liability for embedded conversion features | | | | | 2,290,000 | | | | | | 2,214,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 4,588,504 | | | | | | 3,586,326 | | |
Bridge notes payable, related parties | | | | | 1,905,000 | | | | | | 1,655,000 | | |
Note payable, current portion | | | | | 473,239 | | | | | | — | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Total current liabilities | | | | | 20,261,087 | | | | | | 15,760,261 | | |
Note payable, net of current portion | | | | | 309,769 | | | | | | — | | |
Total liabilities | | | | | 20,570,856 | | | | | | 15,760,261 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $10,483,253) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,540 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $771,685) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $3,896,301) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 issued and outstanding at September 30, 2020 and December 31, 2019 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,766,986 | | | | | | 1,686,389 | | |
Treasury stock, 171,908 shares at September 30, 2020 and December 31, 2019, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (27,464,043) | | | | | | (24,405,503) | | |
Total stockholders’ deficit | | | | | (25,696,692) | | | | | | (22,718,749) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | — | | | | | | 29 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (523,390) | | | | | | (612,674) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (1,246,326) | | | | | | (2,145,243) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.24) | | | | | $ | (0.41) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | |
Amortization of internally developed software | | | | | 599,425 | | | | | | 432,781 | | |
Depreciation and amortization of property and equipment | | | | | 33,563 | | | | | | 43,020 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 141,628 | | | | | | 415,736 | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (924,827) | | | | | | 389,405 | | |
Accounts receivable – unbilled | | | | | 130,813 | | | | | | (100,435) | | |
Inventory | | | | | 28,174 | | | | | | (7,864) | | |
Prepaid expenses and other current assets | | | | | (35,144) | | | | | | 3,693 | | |
Tax credit receivable | | | | | 104,624 | | | | | | (117,750) | | |
Accounts payable | | | | | 474,264 | | | | | | (40,708) | | |
Accrued expenses | | | | | 129,644 | | | | | | 102,931 | | |
Accrued interest | | | | | 1,374,139 | | | | | | 791,154 | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Net cash used in operating activities | | | | | (263,728) | | | | | | (1,851,395) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (1,006) | | | | | | (38,176) | | |
Capitalization of internally developed software | | | | | (864,921) | | | | | | (1,081,068) | | |
Net cash used in investing activities | | | | | (865,927) | | | | | | (1,119,244) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of bridge notes payable | | | | | 1,250,000 | | | | | | 2,370,000 | | |
Proceeds from issuance of note payable | | | | | 783,008 | | | | | | — | | |
Proceeds from exercise of stock options | | | | | — | | | | | | 3,674 | | |
Net cash provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | |
Net increase (decrease) in cash | | | | | 903,353 | | | | | | (596,965) | | |
Cash at beginning of period | | | | | 53,893 | | | | | | 1,130,364 | | |
Cash at end of period | | | | $ | 957,246 | | | | | $ | 533,399 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Specimens – contracts with customers | | | | $ | 2,223,057 | | | | | $ | 680,556 | | | | | $ | 5,408,012 | | | | | $ | 2,942,268 | | |
Shipping and other | | | | | 27,090 | | | | | | 12,151 | | | | | | 58,363 | | | | | | 65,643 | | |
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,424,041 | | | | | | 1,279,398 | | | | | | 1,424,041 | | | | | | 1,279,398 | | |
Shares issuable upon exercise of warrants to purchase common stock | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,588 | | | | | | 84,481 | | |
Equipment | | | | | 35,449 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,936 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,533 | | | | | | 337,110 | | |
Accumulated depreciation | | | | | (250,169) | | | | | | (217,189) | | |
Total property and equipment, net | | | | $ | 87,364 | | | | | $ | 119,921 | | |
| | | Fair value at September 30, 2020 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability for embedded conversion features | | | | $ | 2,290,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,290,000 | | |
Total liabilities | | | | $ | 2,290,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,290,000 | | |
|
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability for embedded conversion features | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
|
| | | Fair value at December 31, 2018 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
Total liabilities | | | | $ | 2,765,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,765,000 | | |
| | September 30, 2020 | | September 30, 2019 | | | 2019 | | 2018 | | ||||||||||||||||
Balance, beginning of period | | | $ | 2,214,000 | | | | $ | 2,765,000 | | | | | $ | 2,765,000 | | | | $ | 1,505,000 | | | ||||
Derivative liability for embedded conversion features on Convertible Notes | | | | — | | | | | 314,000 | | | |||||||||||||||
(Gain) loss included in earnings | | | | 76,000 | | | | | (725,000) | | | | | | (551,000) | | | | | 946,000 | | | ||||
Balance, end of period | | | $ | 2,290,000 | | | | $ | 2,040,000 | | | | | $ | 2,214,000 | | | | $ | 2,765,000 | | |
Year Ending December 31, | | Operating Leases | | |||||||||||
2020 (remaining) | | | $ | 39,829 | | | ||||||||
Years Ended December 31, | | Operating Leases | | |||||||||||
2020 | | | $ | 162,597 | | | ||||||||
2021 | | | | 161,062 | | | | | | 161,062 | | | ||
2022 | | | | 163,158 | | | | | | 163,158 | | | ||
2023 | | | | 165,254 | | | | | | 165,254 | | | ||
2024 | | | | 27,601 | | | | | | 27,601 | | | ||
Total | | | $ | 556,904 | | | | | $ | 679,672 | | |
| | 2020 | | 2019 | | | 2019 | | 2018 | | ||||
Assumptions: | | | | | | | | | | | ||||
Risk-free interest rate | | 0.30%-1.41% | | 1.86%-2.51% | | | 1.59% – 2.58% | | 2.33% – 3.13% | | ||||
Expected term (in years) | | 5.32-6.14 | | 5.00-6.13 | | | 5.00 – 6.14 | | 4.83 – 9.08 | | ||||
Expected volatility | | 43.11%-50.14% | | 41.12%-43.92% | | | 41.00% – 43.92% | | 39.74% – 43.17% | | ||||
Expected dividend yield | | —% | | —% | | | —% | | —% | |
| | Options Outstanding | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term in Years | | | Options Outstanding | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term in Years | | ||||||||||||||||||||||||
Balance at December 31, 2019 | | | | 1,247,198 | | | | $ | 0.18 | | | | | 8.78 | | | ||||||||||||||||||||||
Balance at January 1, 2018 | | | | 371,343 | | | | $ | 1.14 | | | | | 8.63 | | | ||||||||||||||||||||||
Granted | | | | 240,000 | | | | | 0.18 | | | | | | | | | | | 247,250 | | | | | 1.49 | | | | | | | | ||||||
Exercised | | | | — | | | | | — | | | | | | | | | | | (1,125) | | | | | 1.08 | | | | | | | | ||||||
Cancelled/forfeited | | | | (63,157) | | | | | 0.18 | | | | | | | | | | | (113,812) | | | | | 1.36 | | | | | | | | ||||||
Balance at September 30, 2020 | | | | 1,424,041 | | | | $ | 0.18 | | | | | 8.29 | | | ||||||||||||||||||||||
Options exercisable at September 30, 2020 | | | | 979,777 | | | | $ | 0.18 | | | | | 8.05 | | | ||||||||||||||||||||||
Balance at December 31, 2018 | | | | 503,656 | | | | $ | 1.27 | | | | | 6.92 | | | ||||||||||||||||||||||
Granted | | | | 898,523 | | | | | 1.02 | | | | | | | | ||||||||||||||||||||||
Exercised | | | | (3,125) | | | | | 1.18 | | | | | | | | ||||||||||||||||||||||
Cancelled/forfeited | | | | (151,856) | | | | | 1.10 | | | | | | | | ||||||||||||||||||||||
Balance at December 31, 2019 | | | | 1,247,198 | | | | $ | 1.10 | | | | | 8.78 | | | ||||||||||||||||||||||
Options exercisable at December 31, 2019 | | | | 872,519 | | | | $ | 1.08 | | | | | 8.72 | | |
| | | 2019 | | | 2018 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 5,600,000 | | | | | $ | 4,600,000 | | |
Other | | | | | 1,000,000 | | | | | | 800,000 | | |
Total deferred tax assets | | | | | 6,600,000 | | | | | | 5,400,000 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Intangibles | | | | | (150,000) | | | | | | (70,000) | | |
Total deferred tax liabilities | | | | | (150,000) | | | | | | (70,000) | | |
Net deferred tax assets before valuation allowance | | | | | 6,450,000 | | | | | | 5,330,000 | | |
Valuation allowance | | | | | (6,450,000) | | | | | | (5,330,000) | | |
Net deferred tax asset | | | | $ | — | | | | | $ | — | | |
| | | 2019 | | | 2018 | | ||||||
Reconciliation to statutory rates | | | | | | | | | | | | | |
Expected federal income taxes benefit at statutory rates | | | | | (21)% | | | | | | (21)% | | |
Expected state tax benefit at statutory rates, net of federal benefit | | | | | (8) | | | | | | (8) | | |
Change in valuation allowance | | | | | 29 | | | | | | 29 | | |
Income tax expense (benefit) | | | | | —% | | | | | | —% | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 957,246 | | | | | $ | 53,893 | | |
Accounts receivable | | | | | 1,758,407 | | | | | | 833,580 | | |
Accounts receivable – unbilled | | | | | 323,763 | | | | | | 454,576 | | |
Inventory | | | | | 26,734 | | | | | | 54,908 | | |
Prepaid expenses and other current assets | | | | | 114,371 | | | | | | 79,227 | | |
Tax credit receivable, current portion | | | | | 179,376 | | | | | | 104,478 | | |
Total current assets | | | | | 3,359,897 | | | | | | 1,580,662 | | |
Property and equipment, net | | | | | 87,364 | | | | | | 119,921 | | |
Internally developed software, net | | | | | 2,572,378 | | | | | | 2,306,882 | | |
Tax credit receivable, net of current portion | | | | | — | | | | | | 179,522 | | |
Security deposits | | | | | 27,601 | | | | | | 27,601 | | |
Total assets | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,212,058 | | | | | $ | 737,794 | | |
Accrued expenses | | | | | 600,992 | | | | | | 471,348 | | |
Accrued interest | | | | | 3,119,654 | | | | | | 1,745,515 | | |
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | | | | | 5,489,728 | | | | | | 5,350,278 | | |
Derivative liability for embedded conversion features | | | | | 2,290,000 | | | | | | 2,214,000 | | |
Bridge notes payable, net of debt issuance costs | | | | | 4,588,504 | | | | | | 3,586,326 | | |
Bridge notes payable, related parties | | | | | 1,905,000 | | | | | | 1,655,000 | | |
Note payable, current portion | | | | | 473,239 | | | | | | — | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Total current liabilities | | | | | 20,261,087 | | | | | | 15,760,261 | | |
Note payable, net of current portion | | | | | 309,769 | | | | | | — | | |
Total liabilities | | | | | 20,570,856 | | | | | | 15,760,261 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized, 3,174,363 shares issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $10,483,253) | | | | | 7,999,997 | | | | | | 7,999,997 | | |
Series A-1 convertible preferred stock, $0.0001 par value, 556,540 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $771,685) | | | | | 561,041 | | | | | | 561,041 | | |
Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019 (preference in liquidation of $3,896,301) | | | | | 2,612,038 | | | | | | 2,612,038 | | |
Total convertible preferred stock | | | | | 11,173,076 | | | | | | 11,173,076 | | |
Stockholders’ Deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,000,000 shares authorized, 5,363,365 issued and outstanding at September 30, 2020 and December 31, 2019 | | | | | 537 | | | | | | 537 | | |
Additional paid-in capital | | | | | 1,766,986 | | | | | | 1,686,389 | | |
Treasury stock, 171,908 shares at September 30, 2020 and December 31, 2019, at cost | | | | | (172) | | | | | | (172) | | |
Accumulated deficit | | | | | (27,464,043) | | | | | | (24,405,503) | | |
Total stockholders’ deficit | | | | | (25,696,692) | | | | | | (22,718,749) | | |
Total liabilities, convertible preferred stock and stockholders’ deficit | | | | $ | 6,047,240 | | | | | $ | 4,214,588 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | | | | 903,862 | | | | | | 486,665 | | | | | | 2,032,111 | | | | | | 1,506,820 | | |
Technology | | | | | 413,381 | | | | | | 302,934 | | | | | | 1,131,695 | | | | | | 778,892 | | |
Sales and marketing | | | | | 506,641 | | | | | | 357,209 | | | | | | 1,305,897 | | | | | | 1,029,049 | | |
Supply development | | | | | 133,007 | | | | | | 205,659 | | | | | | 395,200 | | | | | | 593,377 | | |
Fulfillment | | | | | 241,785 | | | | | | 227,182 | | | | | | 642,140 | | | | | | 701,037 | | |
General and administrative | | | | | 774,407 | | | | | | 645,627 | | | | | | 1,431,262 | | | | | | 1,561,532 | | |
Total operating expenses | | | | | 2,973,083 | | | | | | 2,225,276 | | | | | | 6,938,305 | | | | | | 6,170,707 | | |
Loss from operations | | | | | (722,936) | | | | | | (1,532,569) | | | | | | (1,471,930) | | | | | | (3,162,796) | | |
Other income (expense), net | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (469,477) | | | | | | (454,859) | | | | | | (1,517,697) | | | | | | (1,209,857) | | |
Change in fair value of derivative liability | | | | | (54,000) | | | | | | (158,000) | | | | | | (76,000) | | | | | | 725,000 | | |
Other income | | | | | — | | | | | | 29 | | | | | | 6,691 | | | | | | 151,073 | | |
Interest income | | | | | 87 | | | | | | 156 | | | | | | 396 | | | | | | 609 | | |
Other expense, net | | | | | (523,390) | | | | | | (612,674) | | | | | | (1,586,610) | | | | | | (333,175) | | |
Net loss before benefit from income taxes | | | | | (1,246,326) | | | | | | (2,145,243) | | | | | | (3,058,540) | | | | | | (3,495,971) | | |
Benefit from income taxes | | | | | — | | | | | | 39,250 | | | | | | — | | | | | | 117,750 | | |
Net loss | | | | $ | (1,246,326) | | | | | $ | (2,105,993) | | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.24) | | | | | $ | (0.41) | | | | | $ | (0.59) | | | | | $ | (0.65) | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,191,457 | | | | | | 5,190,583 | | |
| | | Nine months ended September 30, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series B Convertible Preferred Stock | | | Series A-1 Convertible Preferred Stock | | | Series A Convertible Preferred Stock | | | | Common Stock | | | Treasury Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,360,240 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,322,336 | | | | | $ | (19,746,453) | | | | | $ | (18,423,752) | | |
Cumulative effect from adoption of ASC 606 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 68,000 | | | | | | 68,000 | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 3,062 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,606 | | | | | | — | | | | | | 3,606 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,658 | | | | | | — | | | | | | 28,658 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,521 | | | | | | 133,521 | | |
Balance at March 31, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,302 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,354,600 | | | | | | (19,544,932) | | | | | | (18,189,967) | | |
Issuance of common stock through exercise of stock options | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 63 | | | | | | — | | | | | | — | | | | | | — | | | | | | 68 | | | | | | — | | | | | | 68 | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,918 | | | | | | — | | | | | | 27,918 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,405,749) | | | | | | (1,405,749) | | |
Balance at June 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,382,586 | | | | | | (20,950,681) | | | | | | (19,567,730) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 283,287 | | | | | | — | | | | | | 283,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,105,993) | | | | | | (2,105,993) | | |
Balance at September 30, 2019 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,665,873 | | | | | $ | (23,056,674) | | | | | $ | (21,390,436) | | |
Balance at January 1, 2020 | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,686,389 | | | | | $ | (24,405,503) | | | | | $ | (22,718,749) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,044 | | | | | | — | | | | | | 22,044 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,604,514) | | | | | | (1,604,514) | | |
Balance at March 31, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,708,433 | | | | | | (26,010,017) | | | | | | (24,301,219) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,287 | | | | | | — | | | | | | 29,287 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (207,700) | | | | | | (207,700) | | |
Balance at June 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | | 7,999,997 | | | | | | 556,540 | | | | | | 561,041 | | | | | | 3,427,871 | | | | | | 2,612,038 | | | | | | | 5,363,365 | | | | | | 537 | | | | | | 171,908 | | | | | | (172) | | | | | | 1,737,720 | | | | | | (26,217,717) | | | | | | (24,479,632) | | |
Share-based compensation expense | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,266 | | | | | | — | | | | | | 29,266 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,246,326) | | | | | | (1,246,326) | | |
Balance at September 30, 2020 (unaudited) | | | | | 3,174,363 | | | | | $ | 7,999,997 | | | | | | 556,540 | | | | | $ | 561,041 | | | | | | 3,427,871 | | | | | $ | 2,612,038 | | | | | | | 5,363,365 | | | | | $ | 537 | | | | | | 171,908 | | | | | $ | (172) | | | | | $ | 1,766,986 | | | | | $ | (27,464,043) | | | | | $ | (25,696,692) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (3,058,540) | | | | | $ | (3,378,221) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Share-based compensation | | | | | 80,597 | | | | | | 339,863 | | |
Amortization of internally developed software | | | | | 599,425 | | | | | | 432,781 | | |
Depreciation and amortization of property and equipment | | | | | 33,563 | | | | | | 43,020 | | |
Amortization of discount and debt issuance costs on convertible notes | | | | | 141,628 | | | | | | 415,736 | | |
Change in fair value of derivative liability | | | | | 76,000 | | | | | | (725,000) | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (924,827) | | | | | | 389,405 | | |
Accounts receivable – unbilled | | | | | 130,813 | | | | | | (100,435) | | |
Inventory | | | | | 28,174 | | | | | | (7,864) | | |
Prepaid expenses and other current assets | | | | | (35,144) | | | | | | 3,693 | | |
Tax credit receivable | | | | | 104,624 | | | | | | (117,750) | | |
Accounts payable | | | | | 474,264 | | | | | | (40,708) | | |
Accrued expenses | | | | | 129,644 | | | | | | 102,931 | | |
Accrued interest | | | | | 1,374,139 | | | | | | 791,154 | | |
Deferred revenue | | | | | 581,912 | | | | | | — | | |
Net cash used in operating activities | | | | | (263,728) | | | | | | (1,851,395) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (1,006) | | | | | | (38,176) | | |
Capitalization of internally developed software | | | | | (864,921) | | | | | | (1,081,068) | | |
Net cash used in investing activities | | | | | (865,927) | | | | | | (1,119,244) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of bridge notes payable | | | | | 1,250,000 | | | | | | 2,370,000 | | |
Proceeds from issuance of note payable | | | | | 783,008 | | | | | | — | | |
Proceeds from exercise of stock options | | | | | — | | | | | | 3,674 | | |
Net cash provided by financing activities | | | | | 2,033,008 | | | | | | 2,373,674 | | |
Net increase (decrease) in cash | | | | | 903,353 | | | | | | (596,965) | | |
Cash at beginning of period | | | | | 53,893 | | | | | | 1,130,364 | | |
Cash at end of period | | | | $ | 957,246 | | | | | $ | 533,399 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Specimens – contracts with customers | | | | $ | 2,223,057 | | | | | $ | 680,556 | | | | | $ | 5,408,012 | | | | | $ | 2,942,268 | | |
Shipping and other | | | | | 27,090 | | | | | | 12,151 | | | | | | 58,363 | | | | | | 65,643 | | |
Revenue | | | | $ | 2,250,147 | | | | | $ | 692,707 | | | | | $ | 5,466,375 | | | | | $ | 3,007,911 | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2020 | | | 2019 | | ||||||||||||
Shares issuable upon conversion of preferred stock | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | | | | | 7,158,774 | | |
Shares issuable upon exercise of stock options | | | | | 1,424,041 | | | | | | 1,279,398 | | | | | | 1,424,041 | | | | | | 1,279,398 | | |
Shares issuable upon exercise of warrants to purchase common stock | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | | | | | 129,254 | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (unaudited) | | | | | | | | |||
Website | | | | $ | 105,376 | | | | | $ | 105,376 | | |
Computer equipment and purchased software | | | | | 84,588 | | | | | | 84,481 | | |
Equipment | | | | | 35,449 | | | | | | 35,134 | | |
Furniture and fixtures | | | | | 87,184 | | | | | | 87,184 | | |
Leasehold improvements | | | | | 24,936 | | | | | | 24,935 | | |
Total property and equipment | | | | | 337,533 | | | | | | 337,110 | | |
Accumulated depreciation | | | | | (250,169) | | | | | | (217,189) | | |
Total property and equipment, net | | | | $ | 87,364 | | | | | $ | 119,921 | | |
| | | Fair value at September 30, 2020 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability for embedded conversion features | | | | $ | 2,290,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,290,000 | | |
Total liabilities | | | | $ | 2,290,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,290,000 | | |
|
| | | Fair value at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liability for embedded conversion features | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
Total liabilities | | | | $ | 2,214,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,214,000 | | |
| | | September 30, 2020 | | | September 30, 2019 | | ||||||
Balance, beginning of period | | | | $ | 2,214,000 | | | | | $ | 2,765,000 | | |
(Gain) loss included in earnings | | | | | 76,000 | | | | | | (725,000) | | |
Balance, end of period | | | | $ | 2,290,000 | | | | | $ | 2,040,000 | | |
Year Ending December 31, | | | Operating Leases | | |||
2020 (remaining) | | | | $ | 39,829 | | |
2021 | | | | | 161,062 | | |
2022 | | | | | 163,158 | | |
2023 | | | | | 165,254 | | |
2024 | | | | | 27,601 | | |
Total | | | | $ | 556,904 | | |
| | | 2020 | | | 2019 | |
Assumptions: | | | | | | | |
Risk-free interest rate | | | 0.30%-1.41% | | | 1.86%-2.51% | |
Expected term (in years) | | | 5.32-6.14 | | | 5.00-6.13 | |
Expected volatility | | | 43.11%-50.14% | | | 41.12%-43.92% | |
Expected dividend yield | | | —% | | | —% | |
| | | Options Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term in Years | | |||||||||
Balance at December 31, 2019 | | | | | 1,247,198 | | | | | $ | 0.18 | | | | | | 8.78 | | |
Granted | | | | | 240,000 | | | | | | 0.18 | | | | | | | | |
Exercised | | | | | — | | | | | | — | | | | | | | | |
Cancelled/forfeited | | | | | (63,157) | | | | | | 0.18 | | | | | | | | |
Balance at September 30, 2020 | | | | | 1,424,041 | | | | | $ | 0.18 | | | | | | 8.29 | | |
Options exercisable at September 30, 2020 | | | | | 979,777 | | | | | $ | 0.18 | | | | | | 8.05 | | |
| | | Amount to be paid | | |||
SEC registration fee | | | | $ | 2,313.38 | | |
FINRA filing fee | | | | | * | | |
Exchange listing fee | | | | | * | | |
Accounting fees and expenses | | | | | * | | |
Legal fees and expenses | | | | | * | | |
Printing expenses | | | | | * | | |
Transfer agent and registrar fees | | | | | * | | |
Miscellaneous expenses | | | | | * | | |
Total | | | | $ | * | | |
| Name | | | Position | | | Date | |
| /s/ Christopher Ianelli Christopher Ianelli | | | Chief Executive Officer, President and Director (Principal Executive Officer) | | | | |
| /s/ Jill Mullan Jill Mullan | | | Chief Operating Officer, Secretary, Treasurer and Director | | | | |
| /s/ Tracy Curley Tracy Curley | | | Chief Financial Officer (Principal Financial and Accounting Officer) | | | | |
| /s/ Andrew L. Ross Andrew L. Ross | | | Chairman of the Board | | | | |
| /s/ George “Bud” Scholl George “Bud” Scholl | | | Director | | | | |
| /s/ Steven Gullans Steven Gullans | | | Director | | | |